Planned changes in tax interpretations for 2024 – what are the implications for entrepreneurs?

The Ministry of Finance prepared an amendment to the Tax Ordinance in June of this year, which aims to introduce changes concerning, among other things, tax interpretations. The new provisions are intended to come into force on 1 July 2024 and the draft legislation is currently undergoing consultations. The most significant changes will concern fees for applications, the validity period of tax interpretations, and the method of submitting applications by professional representatives and entrepreneurs. Tax interpretations are an important guarantee instrument from the point of view of business entities, so it is worth analysing the planned changes and assessing their impact on the situation of companies in Poland.

New fees for tax interpretations

Under the current legal framework, pursuant to Article 14f §1 of the Tax Ordinance, an application for the issuance of a tax interpretation is subject to a fee of PLN 40, which must be paid within 7 days of submitting the application. It should be clarified that the fee does not strictly apply to one application but to one factual situation or future event described in the application. In the draft prepared by the Ministry of Finance, Article 14f §1 is to be reworded as follows: “§1. An application for the issuance of an individual interpretation is subject to a fee, determined on the day of its submission, not exceeding 100% of the minimum wage, whereby for applicants who are natural persons not conducting business activity within the meaning of the Act of 6 March 2018 – the Entrepreneurs’ Law, the fee shall not exceed 1% of the minimum wage. The fee must be paid within 7 days of the date of submission of the application.” This means that the statutory amount of PLN 40 will be removed and the application fee will be linked to the amount of the minimum wage. The specific amounts will be set by a regulation of the Minister of Finance. Fees for tax interpretation applications will vary depending on the entity submitting the application. The planned fees for individual groups are as follows:

• for applicants whose cases are handled by the Head of the First Mazovian Tax Office in Warsaw – PLN 2,800
• for applicants whose cases are handled by a tax office head other than the locally competent one, excluding applicants mentioned in point 1 – PLN 1,400
• for applicants whose cases are handled by the locally competent tax office head and for all other applicants not listed in points 1, 2 and 4 – PLN 400
• for applicants who are natural persons not conducting business activity within the meaning of the Act of 6 March 2018 – the Entrepreneurs’ Law and for natural persons conducting business activity who apply for an individual interpretation in a matter unrelated to their business – PLN 40

It is advisable to consult a legal or tax adviser who can help determine the correct fee in case of doubt.

Entrepreneurs submitting an application will have to reckon with much higher costs than currently. The increase in rates may lead some entities to refrain from submitting applications for financial reasons, which in turn may limit access to the guarantee instrument that tax interpretations constitute.

Validity periods of tax interpretations

The draft legislation also introduces a completely new concept concerning interpretations, which will now have a set validity period. Under the current legal framework, such a solution does not apply. Interpretations are issued indefinitely, and to end their validity, a declaration of expiry or revocation must be made on the basis of conditions set out in the regulations. The planned amendments propose a 5-year expiry period. After this time, each interpretation will lose its validity, and in order to extend its effect, a new fee will need to be paid. The validity date will not be affected by whether the legal provisions remain unchanged – even then, the interpretation will become invalid after five years. All interpretations issued before 2019 will expire on 1 January 2024. The explanatory note states that the imposition of a time limit will help to standardise and ensure the consistent application of tax law. However, this solution also appears to create negative consequences for businesses, as even in the case of no changes to the legal framework, they will be forced to incur additional costs to extend the validity of an individual interpretation.

Method of submitting applications by entrepreneurs and professional representatives

Further changes provided for in the draft legislation relate to the method of submitting applications for interpretations by the above-mentioned entities. The amendment provides that entrepreneurs and professional representatives will only be able to submit applications electronically. These entities will be able to use either an electronic delivery address or, upon consenting to electronic delivery, an account in the IT system of the tax authority competent to issue the interpretation – the e-Urząd system.
This change, from the perspective of professional market participants, should be viewed positively. Digitisation of application submissions and communication with public administration significantly accelerates the entire procedure.

Summary

The changes planned by the Ministry of Finance for 2024 in the field of tax interpretations will have a significant impact on professional entities operating in the economic sphere. The most serious change for entrepreneurs will be the significantly increased fees. Currently, the application fees for issuing an interpretation are relatively affordable, but this will change when the amendment comes into effect. Additionally, interpretations will now be subject to a five-year time limit, after which further costs will need to be incurred. These changes are not yet final, as the draft legislation is still in the consultation phase.