From March 2020, successive Anti-Crisis Shields have been successively implemented in order to offset the economic effects in Poland caused by many restrictions and other activities caused by the COVID-19 epidemic. Despite the fact that there are no new versions of the shield, you can still use the help offered.
According to the information provided by the Ministry of Development, the Anti-Crisis Shield continues and thanks to it, entrepreneurs have already received over PLN 135 billion. The assistance received includes, among others: exemption from paying ZUS (Social Insurance Institution) contributions for the months from March to May 2020, postponement or distribution into installments or standstill benefits (about PLN 22.31 billion), co-financing from the FGŚP (Fund of Guaranteed Employee Benefits) for job protection or for salaries of employees from the ESF (European Social Fund) and micro-loans for entrepreneurs (approximately PLN 25.12 billion), subsidies from the PFR (Polish Development Fund Group) Financial Shield (approximately PLN 60.49 billion), securing BGK loans (approximately PLN 27.02 billion), as well as support from ARP (Industrial Development Agency) (in the amount of PLN 62.8 billion). In addition, as the head of KAS (National Revenue Administration) informs, about 94,000 applications for relief in connection with the COVID-19 pandemic, of which 90,000 has already been settled, and about 55,000 applications received positive decisions for a total amount of over PLN 4 billion. The presented data show how many is the interest in the aid offered by the government, so it is worth using the proposed aid, which is still possible to use. Additionally, it should be noted that there is a high probability that the versions of the next Anti-Crisis Shields will not appear, so it is worth getting acquainted with the possibilities of the already introduced anti-crisis shields.
Some time ago, a tax explanation regarding new preferences was published on the website of the Ministry of Finance due to negative economic consequences due to COVID-19. The prepared explanations are intended to protect taxpayers against the negative consequences of possible errors. The protection applies when the taxpayer complies with the explanations and the actual state of the taxpayer coincides with the state presented in the explanations. The ministry issued clarifications as many doubts arose in relation to the introduction of target solutions.
Here are some examples of issues that were raised in the explanations issued by the Ministry of Finance:
- “Incurring negative economic consequences due to the COVID-19 coronavirus”, – no definition of this concept in any of the previously introduced acts. The explanations show that this is a deliberate measure, as each entrepreneur may experience the effects of COVID-19 in his company in a different way. This could be a loss of liquidity, a decline in turnover, or the need to curtail your business. This means that the catalog of negative effects caused by the coronavirus is open and each entrepreneur may have different effects caused by the pandemic. However, it should also be noted that the assessment by the tax authority of negative effects in the case of two different companies may also be different, in particular, taking into account the current practice of the tax authorities, it may be a negative assessment.
- Exempted social security and health insurance contributions cannot be included in the calculation of income tax, nor can they be included directly in tax deductible costs.
- Epidemic expenses are not only expenses that the entrepreneur incurred as a result of COVID-19 (e.g. purchase of gloves, masks, thermometers), but also expenses that were incurred before the introduction of an epidemic emergency (e.g. planned business trips, meetings, conferences, fairs) that have been canceled due to COVID-19 or if the entrepreneur was unable to participate in them. Such an expense may be recognized as tax deductible costs if it meets all the required conditions to be included as an expense.
Anti-Crisis Shield solutions that can be used at the present time:
- Relief for donations (term donation until 30th September 2020) – it is possible to deduct donations for counteracting COVID-19 from the tax base. This applies to donors who are taxpayers of personal income tax (according to the tax scale or 19%), flat-rate income tax calculated in the form of a lump-sum income tax on recorded income and corporate income tax. In order to be eligible for the relief, donation should be made to entities listed in the Act (including entities performing medical activities, the Material Reserves Agency, the Central Base of Sanitary and Anti-Epidemic Reserves or houses for mothers with underage children and pregnant women, night shelters, shelters for homeless people). The essence is that the donation should be made to fight the COVID-19 pandemic and that the recipient of the donation should be the entity listed in the act. The donation may be in cash or other form and should be made between January 1 and September 30, 2020. The deductible value depends on the date on which it will be transferred:
- 1st January 2020 – 30th April 2020 – a deduction of 200% of the donation value,
- May 2020 – 150% of the donation value,
- 1st June 2020 – 30th September 2020 – a deduction is made for the amount corresponding to the value of the donation.
If the donation were to be returned, the amount that was previously deducted should be added.
A distinction was also made between the possibility of deducting donations to support education in the income tax. The donation should be made, inter alia, bodies running educational institutions (e.g. kindergartens, primary schools, youth educational centers and universities). In the case of a donation to support education, the subject may be computers, laptops or tablets, functional, complete and manufactured not earlier than 3 years before the date of their transfer. The date on which you can donate to education and the value of the deduction of the donation are the same as for support for counteracting COVID-19. The difference is the transfer of a donation in cash – in the case of education, there is no deduction.
- Tax relief – it is possible to pay in installments, postpone the payment date or remit all or part of the tax arrears or pay the tax (the remission only applies to tax arrears). However, it should be borne in mind that if the application is submitted by an entrepreneur, it is also necessary to indicate under which assistance the application for the relief is submitted (Article 67b of the Tax Ordinance Act). Additionally, for the application to be complete, you should justify your request for an important interest of the entrepreneur or the public interest. The mere submission of an application does not mean that you receive such assistance. The application itself can only initiate tax proceedings, while the provided relief is a discretionary relief, so it is worth using the help of professionals in this area. In addition, due to the introduced solutions of the Anti-Crisis Shield, the prolongation fee (which is 4%) is not charged during an epidemic or an epidemic threat and 30 days after its cancellation, which makes the use of this option even more attractive.
- 0% VAT rate – in accordance with the ordinance of the Minister of Finance, the temporary application of the 0% VAT rate until 31st August 2020 has been extended until the date of revocation in the territory of the Republic of Poland of the state of epidemic announced in connection with SARS-CoV-2 virus infections. Items that are subject to the reduced 0% rate include among others: medical devices, laboratory glassware and laboratory equipment, medicinal products and active substances, biocidal products, personal protection such as masks, face shields, goggles, safety glasses, coveralls, etc. The reduced tax rate can only be applied to the supply of goods intended for the purposes of combating infection, preventing the spread, preventing and combating the effects of an infectious disease caused by SARS-CoV-2 virus, to entities specified in the VAT Act.
The Ordinance of the Minister of Finance of 28th August 2020 amending the ordinance on goods and services for which VAT rates are lowered and the conditions for applying reduced rates can be found here:
- The exemption from tax on revenues from commercial buildings – the exemption applies to the months from March to December 2020. It came into force with Shield 4.0. (amending act of 19th June 2020), which means that if the tax for these months has already been paid, you can apply for a refund of overpaid tax. Due to the introduced solution, the commercial real estate tax for 2020 should be paid only for the months of January and February 2020.
- Bad debt relief – shortening the time to 30 days to be able to take advantage of the bad debt relief and, at the same time, exemption from the obligation to increase income with unpaid invoices in relation to the debtor’s advances, if in a given settlement period it has suffered negative economic consequences of COVID-19.
- Co-financing of employees’ salaries – a decision of the Local Government Appeals Court in Warsaw has recently been issued, in which it was indicated that branches of foreign enterprises also have the right to subsidize the salaries of people employed in Poland. The case concerned one of the foreign entrepreneurs who would introduce a branch in Poland and received a negative decision in connection with an application for funding. As indicated by the Local Government Appellate Board, the introduced provisions are aimed at protecting jobs in Poland. However, it should be noted that this decision is not yet final. In addition, it should be noted that the deadline for submitting applications for financing employee salaries has also been extended to 30 days from the date of cancellation of the state of epidemic threat or epidemic (pursuant to the Act of 14th August 2020 amending the Act on special solutions related to the prevention and counteraction of and the fight against COVID-19, other infectious diseases and emergencies and certain other acts, which entered into force on 5th September 2020).
- Liquidity loans – information has recently appeared on the increase in funds for liquidity loans from PLN 1.1bn to PLN 2.15bn. It is a form of assistance intended for companies that have been affected by the effects of COVID-19. So far, according to BGK, about 1,000 contracts for almost PLN 365 million have already been concluded. The money obtained can be used for the current needs of the company, employee salaries or receivables from contractors.
- R&D relief – the possibility of using the deduction of eligible costs from the income constituting the basis for calculating advances incurred in 2020 for research and development activities aimed at counteracting COVID-19 before the end of the tax year.
- IP Box Relief – use in 2020 (starting from 1st March 2020) of the preferential 5% tax rate on qualified income from qualified intellectual property rights, which are used to counteract COVID-19.
The presented solutions do not constitute a closed catalog of possibilities offered by the target regulations. However, bearing in mind that each industry experiences the effects of the pandemic in a different way and each company has different opportunities to take advantage of the proposed reliefs, a universal catalog cannot be clearly presented. If, despite the information presented, you still have doubts as to whether you can use shield solutions, contact our experts for support in this regard.