- Registration of excise goods
- Possession of a concession for the production of electricity and obligations in excise duty
- Transactions subject to excise duty on electricity
- Quarterly declarations – doubts
- CPPAs and excise duty
- Registration of excise entities
From 1 February 2021, the so-called Central Register of Excise Entities (hereinafter: CRPA) has been in operation, which replaced the existing registers kept by the heads of tax offices in the field of excise duty. Thus, all excise tax payers are obliged to register in the new register. Unfortunately, the lack of clarity of the regulations means that many other entities that are not effective VAT payers should also be registered in the CRPA. This applies in particular to taxpayers exempt from excise duty or taxed at the rate of PLN 0 excise duty. These taxpayers usually do not pay excise duty effectively, but at the same time it often depends on registering or performing other duties, e.g. accounting duties.
If the entity conducts business activity in the field of excise goods or is an entity that does not conduct economic activity, but consumes excise goods exempt from excise duty due to their intended use, it must submit a registration declaration in the CRPA. Such an obligation applies, for example, to entities that: (i) consume excise goods exempt from excise duty (e.g. they use gas for heating purposes); (ii) consume excise goods subject to a zero rate of excise duty; (iii) are intermediaries (e.g. buy and sell energy products exempt from excise duty, such as lubricants or solvents, or represent a foreign entity in the trade in electricity or gas products); (iv) carry out activities subject to excise duty in general.
It should be noted that entities producing electricity from generators with a total capacity not exceeding 1 MW, which is consumed by them, regardless of whether part of the energy produced is discharged to interconnected and cooperating installations or not, are exempt from the obligation to register with CRPA, provided that excise duty has been paid in the amount due on the energy products used in the production of that energy. Payment of excise duty in full also means payment of it “in price”. Excise duty is an indirect tax, but a single-phase tax, so it can be paid at any stage of trade, but if this has not happened, it will be charged to the holder of the products subject to excise duty. In electricity, of course, it is difficult to talk about possession, and in this case consumption is taxed.
2. Concession for electricity generation and tax liabilities
If the taxpayer has a concession, it should be remembered that in the case of electricity, the subject of excise duty is the consumption of electricity by the entity holding the concession.
It should be noted that in tax ruling of 19 August 2020 (file no. 0111-KDIB3-3.4013.109.2020.2.PJ), in a situation where an entity obtains a concession, it automatically loses the status of the final buyer, which may potentially result in a tax liability in the field of excise duty in the form of registration, keeping records, submitting declarations, calculating and paying tax in relation to the electricity consumed by it.
In addition, in accordance with the tax ruling of 11 October 2019 (file no. 0111-KDIB3-3.4013.163.2019.2.WR), the authority concluded that: “In a situation where the Applicant obtains a concession for the production of electricity, i.e. acts as an entity holding one of the concessions listed in Article 9(1)(2) of the Excise Duty Act and, on the basis of a sales contract, purchases electricity also from an entity holding one of the concessions listed in this provision, and the electricity taken from the grid is consumed for its own needs to the extent that the photovoltaic installations owned by it do not cover its needs, the Applicant is obliged to pay excise duty on electricity consumed by the entity holding the concession. In the presented situation, the Applicant, after obtaining a concession for the production of electricity, ceases to be the final buyer within the meaning of the provisions on excise duty.’
3. Transactions subject to excise duty on electricity and energy from renewable sources.
Pursuant to Article 9(1) of the Excise Duty Act, the subject of excise duty is m.in:
- the sale of electricity to the final buyer within the national territory, including by an entity without a licence to generate, store, transmit, distribute or trade in electricity, as well as the consumption of electricity by the entity holding the licence;
- electricity consumption by the licensed entity;
- the consumption of electricity by a non-licensed entity that produced the electricity;
- the consumption of electricity by the final customer, if the excise duty due has not been paid on it and the entity that sold the electricity to the final buyer cannot be identified.
The mere fact that a transaction or factual situation is subject to excise duty does not mean that that tax will be effectively paid. Especially in the case of renewable sources, the system of subject exemptions is expanded. Electricity produced from renewable energy sources shall be exempt from excise duty on the basis of a document confirming the redemption of the certificate of origin of energy, within the meaning of the provisions of the Energy Law or the provisions of the Act of 20 February 2015 on renewable energy sources, and this exemption shall apply no earlier than upon receipt of the document confirming the redemption of the certificate of origin of energy, by reducing the excise duty due on electricity for the next billing periods.
As you can see, this exemption does not work “automatically”, but only at the moment and to the extent that the certificate of origin of energy will be canceled by the President of the Energy Regulatory Office. Secondly, an effective exemption from excise duty does not mean that the taxpayer in some cases must: register for excise duty, submit quarterly returns or keep records.
4. Obligation to submit quarterly declarations
The obligation to submit tax returns in the field of excise duty results from Article 21(1) of the Excise Duty Act. According to this provision, the taxpayer is obliged, without a request from the tax authority, to submit tax returns to the competent head of the tax office, according to the established formula, for monthly settlement periods, by the 25th day of the month following the month in which the tax obligation arose, unless special provisions provide otherwise.
From 1 January 2021, declarations for excise duty will be submitted only electronically via the PUESC platform.
The amendment of 30 March 2021 added Article 24e to the Excise Duty Act, pursuant to which the legislator imposed on certain groups of entities the obligation to submit to the competent head of the tax office, without a separate request, tax returns for quarterly settlement periods (AKC-KZ) by the 25th day of the second month following the quarter in which the tax obligation in the field of excise goods arose:
(1) exempt from excise duty, with the exception of partial exemptions or exemptions in the form of refunds of excise duty or exemptions for losses of excise goods or total destruction of excise goods referred to in Article 30(3).
2) listed in the annex to the Act, taxed at a zero rate of excise duty.
In terms of quarterly declarations, which should be emphasized, the situation is unclear, and the tax office issues contradictory and unclear tax decisions. Therefore, it is worth obtaining a tax interpretation referring to the precisely described situation of your company as a taxpayer.
In the case of activities using electricity, if it was related to its consumption and additionally concerns a situation in which the taxpayer is entitled to an exemption, then in principle there will be an obligation to submit quarterly AKC-KZ tax returns. For example, this will apply to entities producing and consuming energy from renewable energy sources for their own needs, which do not have a concession for the generation, distribution or trading of electricity.
As a rule, the obligation to submit a return exists both if the taxpayer will be obliged to pay excise duty on the electricity consumed, and if this consumption will be exempt from excise duty.
The above principle is not absolute, as shown by the individual interpretation of 9 March 2021, sign: 0111-KDIB3-3.4013.7.2021.2.MK The Director of the National Tax Information stated that the electricity purchased by the taxpayer, taxed with excise duty on the consumption of electricity pursuant to Article 9(1)(3) of the Act (electricity consumption by the entity holding the concession) as a rule, results in the need to settle the excise duty and submit a declaration pursuant to Article 24 paragraph 1 point 3 of the Act. However, if the taxpayer, despite having a concession, purchases electricity with excise duty included, then by purchasing electricity in this way and not performing other activities giving rise to tax liability, he is not obliged to submit declarations, including the so-called zero. In such a situation, the obligation to submit a return and pay excise duty is incumbent not on the taxpayer, but on the entity selling electricity to the taxpayer. ‘Pursuant to Article 24(1)(3) of the Law on excise duty, in the case of electricity, the taxable person is obliged, without requesting the tax authority, to submit tax returns to the competent head of the tax office according to the established formula (on form AKC-4, AKC-4/H) and to calculate and pay excise duty to the account of the competent tax office, by the 25th day of the month following the month, in which electricity consumption occurred – in the cases referred to in Article 9(1)(3), (4) and (6) of the Act.
5. CPPAs and excise duty
Another important issue for producers of electricity from RES are cPPA contracts. These contracts, in short, are long-term contracts for the purchase of electricity concluded directly by an energy producer and an industrial enterprise, which is usually a significant consumer of electricity. This is the meaning of these agreements, it is protection against increases in electricity prices. The first solution, concluded on the basis of cPPA contracts , is a contract for the physical supply of electricity. It is based on the sale of electricity, and from the point of view of excise duty, the transaction (sale) just performed is subject to taxation, but it must be a sale to the final buyer in the territory of the country, including by an entity without a concession for the generation, storage, transmission, distribution or trading of electricity within the meaning of the provisions of the Act of 10 April 1997 – Energy Law, who produced this energy.
Determining the party who is obliged to pay is therefore recognizing the status of an entity buying energy. The taxable transaction will occur only at the stage of sale to the final buyer, i.e. to an entity without a concession (with some exceptions). The second type of cPPA is of a financial nature and is based on the contract for difference mechanism. This means that in a situation where the market price is higher than the agreed cPPA agreement, the producer pays the difference to the customer, while similarly when the market price is lower, the differences are paid by the energy customer.
However, these agreements may cause a problem with the application of the exemption by the seller of energy produced from RES, because it exempts electricity produced from renewable energy sources from excise duty, however, provided that the certificate of origin (the so-called green certificate) is presented, and in the case of these contracts there is only the so-called guarantee of origin.
Different problems arise from PV contracts, i.e. leasing photovoltaics, which we write about in more detail here
6. Let’s meet at PSEW
We cordially invite you on June 13-15. to participate in the PWEA 2022 Conference organized by the Polish Wind Energy Association, of which we have the opportunity to be a Partner. It is the largest industry event devoted to wind energy in Poland and Central and Eastern Europe. On the third day of the conference, we will conduct workshops during which practical tips related to the taxation of RES investments in Poland will be presented.