On 30 March 2018 the request for an individual interpretation of corporate income tax in determining the value of services falling within the quota limit (Article 15e(1) updop) and the inclusion in the cost of obtaining VAT on services exceeding the limit.
The bank asked for a solution two questions:
-„Is the quota limit referred to in Article 15e(1) Updop refers to expenditure on acquisition of Services, expressed in net amounts − both in the case of acquisition of Services from taxable persons registered in Poland as active VAT payers (domestic purchases) and in the case of acquisition of them from entities established outside Poland (import of services);’
-„Does the exclusion from the cost of obtaining the revenue referred to in Article 15e(1) Updop, is subject to the net amount of the liability to the related entity, whereas the amount of the input tax on non-re deducted goods and services – both in the case of the acquisition of Services from taxable persons registered in Poland as active VAT payers (domestic purchases) and in the case of acquisition of them from entities established outside Poland (import of services) − represents the cost of obtaining revenue according to Article 16(1)(46) point (a) to (c).’
The bank’s position is directly based on a literal interpretation Article 15e(1) Updop. This provision clearly determines the categories of expenditure to be limited in relation to the expenditure incurred to entities associated with the term ‘costs of services’ or ‘costs of all kinds of charges and charges’.
In view of the neutrality and nature of VAT, it cannot be concluded that the amount of VAT falls within the concept of ‘service costs’.
The view that the quota limit referred to in Article 15e(1) Updop, refers to expenditure on the acquisition of services expressed in net amounts, is also a consequence of the basic design feature of the tax on goods and services – i.e. its neutrality.
The Bank made a clear statement stating that the VAT neutrality, which is respected on the basis of income taxes, is the reason why the tax should be disregarded in the analysis of the Corporate Income Tax Act, unless the law itself provides otherwise.
Thus the limit referred to in Article 15e the adoption, in the absence of a clear indication that the above general rule does not apply, should refer to net amounts representing the actual remuneration of the service provider and, at the same time, the actual cost of purchasing the services by the recipient.
But answering the question second, The bank took the view that the method of accounting for input or input VAT resulting from the Goods and Services Tax Act determines whether a tax amount can be considered as a cost of obtaining revenue on the basis of Article 16(1)(46) lit. a-c udpop. No other criteria affect the distinction between the amount of VAT constituting the tax cost and the amount of VAT constituting no such cost.
Thus, after the bank has exceeded the limit referred to in Article 15e(1) Updop, will not constitute revenue costs for related parties, expressed in net amount.
However, the amount of VAT:
- to be deducted − will not cost revenue on the basis of Article 16(1)(46) point (a) to (c) of the first subparagraph;
- not deductible − both in the case of tax on the acquisition of Services from taxable persons registered in Poland as active VAT payers (national purchases) and in the case of acquisitions from entities established outside Poland (import of services) − will be the cost of obtaining income also on the basis of Article 16(1)(46) lit. a-c updop.
In conclusion, the Director of National Tax Information agreed with the Bank that the intention of the legislator is to use taxpayers Article 15e an adjustment to the net amounts of the costs of services acquired from related parties; and Article 16(1)(46) point a-c udpop in relation to the amounts of VAT relating thereto.
In other words, regulations Article 15e updopa did not affect independence 16 section 1 point 46 point a-c udpop, which is still the only basis for the cost classification of VAT, also where the net cost of the service purchased is limited in accordance with Article 15e Updop.
Individual interpretation by day 2 August 2018 0114-KDIP2-3.4010.96.2018.6.MC
Author:
Mikołaj Stanisławski
From 2017 Associated with Russell Bedford Poland. In 2007 graduated from the Faculty of Law and Administration of the University of Warsaw. In years 2008-2011 he made an attorney's application. From 2011 entered on the list of lawyers at the District Bar Council in Warsaw. In 2016 He graduated from the Postgraduate Tax Studies and Tax Law of the University of Warsaw. Specializes in tax and tax matters.