Poland: EC opens state aid investigation, retail sector taxation

Poland: EC opens state aid investigation, retail sector

The European Commission today announced the opening of an in-depth investigation into a Polish tax on the retail sector.

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According to the EC release, there are concerns that the progressive rates based on turnover give companies with a low turnover a selective advantage over their competitors in breach of EU state aid rules. The EC also issued an injunction, requiring Poland to suspend the application of the tax until the EC concludes this investigation. 

Today’s action follows a decision that the EC took in July 2016 when it determined that a progressive turnover-based tax on the retail sector in Hungary was in breach of the EU state aid rules (because the Hungarian tax regime granted a selective advantage to companies with low turnover over their competitors). 

Background

The investigation opened today concerns a tax adopted by Poland in July 2016 that applies to companies that operate in Poland and are active in the retail sale of goods. The tax was effective 1 September 2016, and no tax payments are due yet. Under the tax, companies in the retail sector pay a monthly tax to the government based on their turnover from retail sales. In particular, the retail tax features a progressive rate structure with three different brackets and rates:

  • A tax rate of 0% applies to the part of the company's monthly turnover below PLN 17 million (approximately €3.92 million)
  • A tax rate of 0.8% is levied on the part of the company's monthly turnover between PLN 17 million and PLN 170 million (approximately €39.2 million)
  • A tax rate of 1.4% is levied on the part of the company's monthly turnover above PLN 170 million

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