The Act on the retail tax was adopted on 6 July 2016. Pursuant to the provisions of the Act, the taxable base is revenue from retail sales. The revenue surplus over PLN 17 million monthly is subject to taxation. The tax is progressive and has two tax rates:
- 0.8% of the tax base - in the part in which the tax base does not exceed PLN 170 million
- 1.4% of the excess tax base over PLN 170 million - in the part in which the tax base exceeds PLN 170 million.
Proceedings in the European Commission
In September 2016, the Commission initiated proceedings against Poland in respect of violation of EU law. In the opinion of the Commission, the construction of the tax was favorable for smaller entities involved in retail sales and violated the EU rules regarding State aid. As a result, the Commission issued a decision ordering the tax to be suspended. In response, Poland suspended the Act until 1 January 2020 and filed a complaint against the Comission’s decision to the EU Court.
The ruling of the EU Court
On 16 May 2019, the EU Court issued a judgment with regards to Polish Government's complaint against the Commission's decision. The decision is not yet legally binding, however, according to the argumentation, the Commission "could not rightly infer the existence of selective advantages accompanying the retail tax only from the progressive structure of this new tax." Thus, the EU Court considered that the Commission's decision is invalid, so Poland will be able to implement the provisions. The Commission has 60 days to appeal the verdict.
What is next with retail tax?
After the ruling becomes final, it is expected that the application of retail tax will be resumed. According to media information, the Ministry of Finance is waiting for the decision of the Commission regarding the appeal. We will monitor further steps of the Ministry.
If you have any additional questions regarding the tax on retail sales, please feel free to contact us.