Archive for: VAT

Tax law, case I FSK1644/11

August 27th, 2012, Tomasz Rychlicki

A taxpayer who sold the old porcelain and books which were inherited from grandparents and parents, and bought on the antique fairs, was ordered by the Polish tax authorities to pay VAT for four years. Every year the taxpayer sold hundreds of these things, for more than three thousand PLN. Only 3089 PLN is the amount of income received during the year that is deemed as free of tax,. According to tax authorities this activity could not be regarded as a hobby, but as a professional activity, that should be taxed.

The Supreme Administrative Court in its judgment of 9 August 2012 case file I FSK 1644/11 dismissed the complaint of the taxpayer.

Tax law, case I SA/Ol 270/11

September 24th, 2011, Tomasz Rychlicki

The Director of a Tax office decided that a person who led undeclared but taxable economic activity is subject to VAT. This decision was based on the basis of bank statements and information provided by the auction website Allegro. The amount of the tax obligation was set out in the amount of tax due, without reduction of input tax, because the tax payer did not submit any invoices that would serve as evidence of purchase of the goods that were later resold via Allegro.

The Voivodeship Administrative Court in Olsztyn in its judgment of 29 June 2011 case file I SA/Ol 270/11 held that a person who conducts business activities that were undeclared to tax, has the right to deduct the input VAT due, but such person must have the purchase invoices, because without them, the tax authorities are unable to verify the prices of the goods resold.

Tax law, case I SA/Wr 1080/10

November 27th, 2010, Tomasz Rychlicki

The Voivodeship Administrative Court in Wrocław in its judgment of 24 November 2010 case file I SA/Wr 1080/10 ruled that the client can deduct all the VAT in case of advance payment of fees for the entire period of software maintenance. The position of a tax authority stating that deduction is possible only in the settlement period in which service will be completely provided, is incorrect. It is another judgment favorable to taxpayers.

Tax law, case III SA/Wa 1823/09

May 17th, 2010, Tomasz Rychlicki

The Director of Tax Control Office in Warsaw ruled that the amounts of cash referred to as a “license to exercise the media rights” that were received by Legia football club from the Polish Football Association (PZPN), should be subject to tax on goods and services. Legia argued that such an agreement is not a contract of sale of rights, but the license agreement. However, the Director has found that the PZPN was the sole owner of intangible (economic and non econimic) property rights to the Polish national championships. To be the sole owner of the rights to football matches, PZPN had to acquire these rights. Therefore, Legia had to transfer these rights in some way, and that included proper fee.

The Director referred to a series of court decisions and pointed out that the sports’ event, namely football games, do not constitute a copyrightable work under the Polish Act on Authors Rights and Neighbouring Rights – ARNR – (in Polish: ustawa o prawie autorskim i prawach pokrewnych) of 4 February 1994, published in Journal of Laws (Dziennik Ustaw) No. 24, item 83, consolidated text of 16 May 2006, Journal of Laws (Dziennik Ustaw) No. 90, item 631. Legia as a football club does not take action on the creative nature. In the opinion of the Director, it is not precluded that on the legal market may exist licensing agreements relating to intangible property, other than works that are defined in the ARNR.

Only article 43(1) pt 13 of the Act on Goods and Services Tax – GSTA – (in Polish: ustawa o podatku od towarów i usług) of 11 March 2004, Journal od Laws (Dziennik Ustaw) No. 54, item 535, includes a reference to the ARNR.

Art. 43. 1. The following shall be exempted from the tax:
13) licensing or authorization to use a license, as well as assignment of the proprietary right within the meaning of the copyright law – in relation to computer programmes – free of charge, for educational facilities, referred to in paragraph 9.

That provision indicates the grant of the license or authorization to use copyright licenses and the transfer of property rights under copyright law (the ARNR). The absence of such references in other regulations means that the transfer of copyright may affect the rights of the author, or a sole owner of any intangible property, which does not have the characteristics of the copyrightable work. A similar situation will occur in the case of a license. Wherever there is no reference to copyright law (ARNR) it will also mean the license agreement for the use of intangible property other than the copyrightable work.

The Tax Office ruled that Legia transfered “media rights” to the PZPN, so the Association could fully manage of them, and so enter into an agreement concerning the disposition of such rights. The rate of the tax shall be 22% for such service. The tax shall become chargeable upon the receipt of all or part of payment, though not later than upon the expiry of the due date specified in the contract or invoice – for the performance in the territory of the country of services referred to in article 27(4) pt 1 of the GSTA.

4. The provision of paragraph 3 shall apply to the following services:
1) sale of rights or granting of licenses or sublicenses, transfers and assignments of copyrights, patents, trademarks, letting joint trademarks or joint guarantee marks for use, or other related rights.

Legia did not agree with the decision of the Director of Tax Control Office and filed a complaint against. The Voivodeship Administrative Court in Warsaw in its judgment of 26 March 2010 case file III SA/Wa 1823/09 dismissed it.

Tax law and Internet, case III SA/Wa 1013/09

January 7th, 2010, Tomasz Rychlicki

On 24 November 2008, a Polish citizen (P.C.) requested the Minister of Finance to provide a written interpretation of tax law on individual case concerning personal income tax with regard to taxation of interest on loans granted over the Internet.

The system which is available at website allows for contacting people who need loans (the borrower – PB), with people who have the means to lend (the lender – PD). PB initiates a transaction by providing information on how much he or she wants to borrow, the period of repayment and interest. It is called an “auction” but there is no bidding at all. PD makes offer in the “auction” by making payments to website with an indication of the “auction”. The payment made by each user (PD) cannot exceed 500 PLN. If the “action” is finalized the system generates a series of electronic contracts (PB with each PD) and transfers all the payments made by the PDs to PB. Then PB pays a monthly installment loan to website, and the site distribute money between the accounts of all PD. The monthly payment is an adequate of a received share capital and it is increased by fixed interest. The sole income of PD is the interest rate determined by the PB while setting up the “auction”.

The Voivodeship Administrative Court (VAC) in Warsaw in a judgment of 29 October 2009, case file III SA/Wa 1013/09 ruled that P.C. receives income from interest on loans. This interpretation was based on articles 10(7) and 17(1) pt. 1 of the Polish Act on Personal Income Tax – PITA – (in Polish: ustawa o podatku dochodowym od osób fizycznych) of 26 July 1991, Journal of Laws (Dziennik Ustaw) No. 80, item 350, with later amendments.

Article 10. 1. The sources of revenues shall include:
7) financial investments and property rights, including selling property rights other than those referred to in subparagraph 8 letters (a)-(c),
Article 17. 1. Revenues from financial capital shall be:
1) interest on loans;

This means that the income should be classified as another source of income than non-agricultural economic activities. Consequently, even if it would be recognized that the P.C. grants loans using the site in an organized and continuing manner, this activity could not be deemed as non-agricultural commercial activities as defined in article 5a(6) of the PITA.

See also “Tax law and Internet, case I SA/Gd 17/10“.

Tax law, case USPP-IV-440/30/06/P-I/23717

April 21st, 2006, Tomasz Rychlicki

The Tax Office in Chorzów in its interpretation of 27 marca 2006 case file USPP-IV-440/30/06/P-I/23717 held that publishing of a computer program free of charge via the Internet with the possibility of its use by all, is not based on legal title, indicating the obligation for service and the salary and the amount of donations is not dependent on the service, so actons of the applicant cannot be deemed as performed for remuneration. Furthermore, there was no reason to believe that these actions were services provided free-of-charge and therefore this activity is not subject to tax on goods and services.