When planning to transform the Polish limited liability company. into a passenger company, questions arise concerning the continuation of tax settlements, including settlements in the tax on goods and services. Special attention is given to the question of the proportion of taxable sales to exempt and non-taxable activities.
Companies resulting from the transformation often carry out the same activities as the companies converted - taxed and exempt activities, without changing the proportion of exempt activities to taxed ones.
A personal commercial company incorporated (established) as a result of the transformation of a capital company – enters into all the laws and obligations of the company being converted under tax law.
The conversion of the capital company into a passenger company will not lead to an obligation to change the proportion or adjustment of the input tax.
As per content Article 90 The laws, in respect of goods and services which are used by the taxable person to carry out activities in respect of which he has the right to reduce the amount of tax due and the activities in respect of which such a right is not available, the taxable person is obliged to determine separately the amounts of input tax associated with the activities in respect of which the taxable person has the right to reduce the amount of tax due.
If, on the other hand, it is not possible to distinguish all or part of the amounts referred to above, the taxable person may reduce the amount of tax due by a proportion of the amount of input tax that can be proportionally attributed to the activities in respect of which the taxable person has the right to reduce the amount of tax due.
This proportion shall be determined on the basis of the annual turnover achieved in the year preceding the tax year for which the proportion is fixed. None of the provisions of the VAT Act provide for the obligation to make any additional adjustment related to the transformation of the company.
This would be all the more unjustified when the scope of the activities carried out by the converted company is not changed, as well as the ratio of exempt and taxed activities.
As per content Article 93 Tax Ordinance, a legal person bound (contributed) as a result of the transformation of another legal person, the transformation of a company without legal personality - enters into all the rights and obligations of the person or company being converted under tax law.
This provision shall apply mutatis mutandis to: a personal commercial company bound (established) as a result of the transformation: a. another company not having the legal personality of b. capital company.
These provisions Tax Ordinance indicate that the method of determining the proportion before and after the conversion of the company will be the same as the passenger company will be the successor to the capital company.
As shown by Article 93a(1)(2) Tax Ordinance – a personal trading company bound (established) as a result of the transformation of a capital company – enters into all the laws and obligations of the converted company provided for in tax law.
The result of such a regulation is the treatment of a converted company (established as a result of the transformation) as a successor to its predecessor and therefore to a converted company pass all the powers and obligations provided for in the substantive regulations.
The change in the legal form of the activity will not constitute either a paid supply of goods or a paid supply of services within the meaning of Article 7 and Article 8 VAT Act. As a consequence, there will be no occurrence which would give rise to a tax obligation in the tax on goods and services.
At the same time, on the part of the Polish limited liability company., as a converted company, there will be no obligation to change the proportion determined by applying the rules defined under Article 90(3-10) VAT Act and correction of the input tax in question under Article 90a and 91 This bill.