KSeF invoicing and minimum corporation tax

KSeF invoicing and minimum corporation tax

From 1 January 2024, taxpayers in Poland should prepare for at least a few significant tax changes. The mandatory use of the National System of Electronic Accounts and the introduction of minimum corporation tax are just a few of them, and we will tell you about them in our new article.

Billing in KSeF

The major change in tax in 2024 was to be the introduction of the National System of e-Invoices (KSeF). KSeF was supposed to become mandatory from 1 July 2024. But at the moment the deadline for the transition to this system in Poland has been postponed to an unknown date, due to finalisation.
As a reminder, KSeF will enable the issuance and exchange of structured invoices via a special platform. Preparing for the use of KSeF will require the adaptation of systems and internal processes in companies, which will be a challenge for taxpayers in 2024.

This obligation includes the use of structured invoices issued using the KSeF system, which is an IT system. In addition to issuing invoices, KSeF also makes it possible to receive and exchange structured invoices in the form of electronic XML files and to grant, modify or revoke authorisations to use the system.
In practice, issuing a structured invoice involves issuing it through an existing accounting system and sending it to KSeF in a similar way to sending a JPK file. The invoice will be sent to KSeF where the buyer can download it through the system.
According to the legislation, all B2B transactions (transactions between business-to-business entities) must use KSeF and e-invoices. Due to the cancellation of the introduction of the system, the deadline for taxpayers will also be postponed ( previously planned for 2025).
One of the advantages of using KSeF is the shortened time to receive a refund of input VAT to 40 days instead of 60 days.
A qualified electronic signature or other forms of identification are required to use KSeF. Structured accounts are kept on the KSeF system for 10 years and then must be retained by entrepreneurs in accordance with legislation on record retention periods.

Who pays this tax and to whom the rules on payment do not apply

The minimum corporate tax will apply to the following persons/organisations:
– To taxpayers with a seat or management in the territory of the Republic of Poland, responsible for paying taxes on all their income, regardless of its origin – i.e. to limited liability companies, joint-stock companies, ordinary joint-stock companies, limited liability partnerships, joint-stock limited partnerships and, under certain conditions, general partnerships;
– On tax equity groups;
– Taxpayers carrying on business through a foreign establishment located in the Republic of Poland who incurred a loss or whose income was less than 2% of the revenue for the tax year.

The minimum tax will not apply to the following persons/organisations:

Personal Income Tax (PIT) taxpayers who are taxed on a lump sum, scale or flat tax and maintain a tax log of income and expenditure;
on companies whose partners are only PIT payers (civil partnership, general partnership subject to PIT due to the nature of the shareholders, partnership);
organisations that do not have the status of a company within the meaning of the CIT Act and operate on the basis of separate acts (e.g. cooperatives, foundations, associations or public health institutions);
small CIT taxpayers whose annual gross sales income does not exceed €2 million;
start-up taxpayers in the year they start their business and in the following two tax years.

Minimum tax and foreign companies

Foreign companies doing business in Poland through a foreign establishment may fall under the application of the minimum tax to the extent that the gains and losses are related to the activities of such an establishment. However, it is important to remember that belonging to this group does not mean an automatic obligation to pay the minimum tax. It is necessary to analyse the tax result of such an entity.

Obligation to pay minimum tax

The minimum corporate tax was introduced as of 1 January 2022 by the CIT Act. However, due to the political and economic situation, the new rules were suspended until 31 December 2023. This exemption applies to taxpayers whose tax year does not coincide with the calendar year. For example, if the tax year started before 1 January 2024 and ends after 31 December 2023, the application of the new rules will be suspended until the end of that tax year. Thus, from 2024, taxpayers will have to take into account the need to be subject to the corporate minimum tax.
CIT taxpayers taxed in Poland on all their income and tax capital groups that have incurred losses or achieved low profitability will be subject to minimum tax. The obligation to pay the minimum tax applies to CIT taxpayers who in the tax year:

– incurred a loss from a source of income other than capital gains (operating loss), or
– achieved a share of income from a source of income other than capital gains in income not exceeding 2% of total revenue (profitability level) – according to Article 24a 1 of the CIT Act.
Article 24ca 1 of the CIT Law stipulates that the minimum tax is 10% of the tax base. The tax base includes, among other things, 1.5 per cent of the taxpayer’s revenue (excluding capital gains) and debt financing costs and intangible services incurred by related parties in excess of the limit. One option is to use the simplified minimum tax calculation, where the tax base is 3% of the income (other than capital gains) received by the taxpayer for the tax year. According to section 24a 3a of the CIT Act, the taxpayer reports its choice of this method in the tax return for the relevant tax year.
The minimum corporate tax must be paid by the end of the third month of the following year. In practice, taxpayers will pay the minimum corporate tax for the first time by March 2025, setting the CIT for 2024.

If you still have questions or would like further advice on this topic, please contact us at office@progressholding.pl.