Installation of photovoltaic panels has become a new energy trend in Poland. Just In 2021 the number of installations increased by 88%, And all over the country there's already about them one million. Tax issues in this area naturally involve a growing number of questions, particularly when it comes to excise duties on electricity. The position of the tax office in this matter again amazes experts.
Photovoltaic causes problems
The solar panels visible on the roofs of houses are increasingly common in Poland. No wonder, because they allow the conversion of solar energy into electricity for their own needs[1]. It makes it independent, albeit partially, of property owners from external sources and is an ecological alternative.
Although according to Article 9(1)(3)(4) Act dated 6 December 2008 on excise duty (i.e.
Journal of Laws of 2022, item 143 as amended, Further: The Excise Tax Act) in the case of electricity is the subject of taxation of electricity consumption by the concession holder and electricity consumption by the non-licensed entity which produced that energy, a significant exemption from that obligation has been introduced.
Based on section 5 section 1 Regulations of the Minister of Finance, Funds and Regional Policy dated 28 June 2021 on excise duty exemptions (Journal of Laws, item 1178 as amended) The consumption of electricity produced from generators with a total power not exceeding 1 MW by the entity that uses this energy[2].
Such an entity shall also be exempted from the obligation to register for excise duty[3], and non-business natural persons are additionally exempted from the obligation to submit excise declarations[4] and record the quantity of electricity under certain conditions[5].
What surprised experts in the case of photovoltaic installations was the reply of the Director of National Tax Information (hereinafter: Director of KIS) given in an individual interpretation from 25 May 2022 No reference no. 0111-KDIB3-3.4013.80.2022.1.JS.
The taxpayer asked questions in the request about the possible obligation to pay excise duty on electricity produced from installed photovoltaic panels when providing a comprehensive rental service[6]. The taxpayer argued that in such a case the subject of the contract was the rental of the property rather than the supply of energy.
However, according to the interpretation of the body, not only will there be an excise duty obligation, but it will not be exempt, which will also impose bureaucratic obligations on the taxpayer.
It should be recalled that according to the provisions of the “anti-inflationary shield”[7] If the current obtained from photovoltaic installations is used by tenant the householder is landlord the property does not have to pay excise duty until the end of July.
The experts are surprised.
Although the applicant in this case was a legal person, there is no doubt that it will also affect individuals when such a position is established.
After the expiry of the ‘anti-inflation shield’, the hiring of a property using photovoltaic panels would be taxed at the rate 5 PLN For a megawatt hour[8] with the imposition of all bureaucratic duties. This rate applies only to tenant the householder.
Otherwise landlord should pay an excise duty of 4.6 PLN for a megawatt hour during the ‘anti-inflation shield’ period, and 5 PLN After it expires. This will lead to tax payers paying a small tax having to comply with extremely stringent regulatory, registration and information obligations.
„On the basis of excise duty, it is irrelevant that the subject of the contract will be a rental service rather than a supply of electricity. In this situation, the Company also sells electricity produced by it from renewable energy sources to other entities that use it for rented premises.’[9] Experts point out that such an interpretation of the Director of KIS is incomprehensible. Excise law contains cases where excise goods are used for the purposes of services provided without a tax obligation, such as in the case of the provision of a traffic or maintenance service, where the trader uses lubricants as a user and this is not treated as a sale to the customer. It is therefore surprising to see a separate approach in this issue. Does this mean that a hotel guest using an outlet to charge a phone buys energy from the hotel? Such conclusions are definitely absurd, so how are they different from those presented by the Director of KIS? It is also worth considering energy regulations that do not make such a distinction, to which the Excise Tax Act often refers. This clearly indicates the intention of the legislator to ensure that the two legal systems are interdependent.
It seems that, if the tax authorities do not change their interpretation in this respect, the Ministry of Finance should consider regulating this issue directly in tax legislation.
[1] Photovoltaic is a field of science involved in the conversion of solar radiation into electricity
[2] However, it is also worth noting section 2 „Where energy products other than those derived from renewable energy sources are used for the production of electricity within the meaning of Act dated 20 February 2015 with renewable energy sources (Journal of Laws of 2021, items 610, 1093) exemption from excise duty in question Under section 1, may be used provided that excise duties have been paid on these energy products in due amount.’
[3] Article 16(7a)(1) Excise duty laws
[4] Article 24e(2) Excise duty laws
[5] Article 138h(2) Excise duty laws
[6] The taxpayer also asked other questions in which the Director of KIS agreed with its interpretation, but because they are not relevant to the content of this Article, they were omitted.
[7] Act dated 12 May 2022 amending the Goods and Services Tax Act and certain other laws (Journal of Laws, item 1137).
[8] Article 89(3) Excise duty laws
[9] Individual interpretation of the Director of KIS from 25 May 2022 No reference no. 0111-KDIB3-3.4013.80.2022.1.JS.
Author: Damian Kuszewski
The author is a graduate of the Warsaw School of Economics in Finance and Accounting, and a graduate of the Faculty of Law at SWPS. From 2018 Associated with Russel Bedford Poland. His professional interests are tax law and, in particular, income taxes.