Wardynski & Partners
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Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
According to the Polish Act on the Goods and Services Tax (“VAT Act”), the supply of aircraft is, generally, a taxable event. The standard VAT rate of 23% is applicable unless the aircraft is supplied for the purpose of use in international air transport. If the aircraft is to be used mainly in international air transport, the preferential VAT rate of 0% applies. The same goes for replacement parts and on-board equipment. The supply (sale) of an aircraft in Poland for export purposes will not involve VAT but will necessitate a formal confirmation of the aircraft being exported outside the European Union. If the aircraft is sold to a buyer within the EU, then, according to the principles of intra-community supply of goods, the seller can apply the 0% VAT rate. Again, the seller will be required to provide documents confirming that the aircraft will be exported from Poland to another EU member state. If the seller fails to present these documents, then the standard 23% VAT rate will apply.
Generally no, but:
Air passenger transport duty – APD is an excise duty levied on the carriage, from a Polish airport, of chargeable passengers on a chargeable aircraft. It is paid by the operator of the aircraft. The amount due depends on the final destination and class of travel of the chargeable passenger. A draft of APD rates is prepared by airport management after its approval by representatives of airlines that use the airport. Then the draft goes for approval to the Director of the Civil Aviation Authority.
Carbon Dioxide Emission Scheme – The Aviation Emissions Directive came into force on 2 February 2009. It provides that, from 1 January 2012, the EU Emissions Trading Scheme will apply to all aircraft flying to and from airports located in EU member states. Under the scheme, aircraft operators are allocated a limited right to emit carbon dioxide and are required to purchase additional rights if their emissions exceed the granted limit. The fee for exceeding the limit will be collected in 2013. However, according the latest decision of the EU Commission, application of the scheme to flights into and out of Europe is deferred at least until the ICAO General Assembly in autumn 2013, when the multilateral agreement on this issue within ICAO is to be reached.
Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest)
Mortgage tax – According to the Civil-Law Transactions Tax Act (“CLTT Act”), the establishment of a mortgage is subject to the CLTT. The applicable rate depends on whether (i) the mortgage secures existing liabilities – then the applicable rate is 0.1% of the total amount of secured liability, or (ii) whether the mortgage secures an undetermined liability – then the CLTT will amount to PLN 19.
Promissory note – No.
Conditional sales tax – No.
Taxes of loan payments and taxes on interest – companies with the resident or permanent establishment status in Poland are subject to the corporate income tax on all their profits regardless of the place where they were generated. This includes profits on loan interest and rental income. The corporate income tax rate is 19%. Companies that are not Polish residents and extend loans to Polish companies may be subject to a 20% withholding tax on interest, except when the applicable double taxation prevention treaty is in place. Moreover, a loan may be subject to the CLTT at the rate of 2%. However, this tax will not apply:
- If one of the parties to the loan agreement will be VAT taxable or exempt from VAT in connection with this particular loan;
- The sum of the loan will be placed outside of Poland prior to conclusion of the loan agreement and the agreement will be concluded outside of Poland.
Lease (tax on payments other than income)
Generally, corporate lessors with the resident status in Poland or trading in Poland through a branch or agency (permanent establishment) will be subject to the Polish corporate income tax on all their profits. In the case of non-resident lessors, leasing to a Polish operator (or sub-lessor) will be subject to a 20% withholding tax would apply unless there is a double taxation prevention treaty in place that mitigates this rate. Please note that the 20% withholding tax can be reduced to 5% (and 0% as of July 2013) if one of the companies holds at least 25% of shares in the other company and the company (or the permanent establishment) receiving lease payments has its tax residency in a EU or EEA member state.
Polish withholding taxes may be levied on certain kinds of profits paid by a Polish resident to a non-Polish resident. Rates vary depending on the kind of profit but the most common rate is 20% (a 10% rate is applicable to payments connected to shipping and air transportation). In case of interest (e.g. default interest) and a lease of means of transportation, the standard 20% withholding tax is applicable. This rate may differ if a double taxation prevention treaty is in place.
Import of aircraft, replacement parts and on-board equipment to Poland is subject to the 0% VAT rate if it is supplied to a client engaged mainly in international air transport. Otherwise the standard 23% VAT rate applies. The taxable base consists of the dutiable value plus the amount of tariff. VAT is paid by the importer of goods.
Please note that the 0% rate of customs duty will apply provided that an explicit permission of the Head of the Customs Office is obtained.
According to the Polish VAT Act, recognition of export of goods taxable at the preferential rate of 0% requires meeting the following conditions:
- Export of goods begins in Poland and ends in a non-EU country;
- Export constitutes one of the activities referred to in Article 7 of the Polish VAT Act (i.e. delivery of goods);
- Export was confirmed by the customs office explicitly named in the customs legislation;
- Export was effected by a supplier or purchaser (or on his behalf) whose registered seat is located outside Poland.
Please note that there will be no customs duty.
The owner/user of an aircraft who wants to register it should submit a written application to the Civil Aircraft Registry kept by the Civil Aviation Authority. Depending on the total weight of the aircraft, an amount of registration stamp duty will apply. Rates range between PLN 70 for gliders to PLN 2000 for aircraft with the total weight exceeding 20,000 kg.
FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.
DISCLAIMER: The above information should not be relied upon by the reader for legal advice as it is intended merely as a preliminary guide to the laws and regulations governing the taxation of aviation business and aircraft in Poland. This is only a summary-level information about certain tax issues affecting general aviation and aircraft. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aviation business and aircraft.