NEWSLETTER - July 2013

Dear Readers,

We would like to present you the July issue of WBW newsletter.

First of all, we wish to recommend you the article on the expected changes in the Polish Code of civil procedure. These include e.g. the effectiveness of posting litigation documents at post offices within the EU territory. In one of our articles, we also discuss the question of introducing longer notice periods in employment contracts for an indefinite period of time than those prescribed in the Labour Code.

Furthermore, we mention the decision of the European Court of Justice in the scope of taxation of storage services.

We would also like to draw your attention to an interesting judgement of the Supreme Administrative Court in a case concerning tax deductible costs on account of parking fees and toll incurred by employees as part of business travel.
We wish you a pleasant read.

WBW Team

Posting a litigation document in any EU member state will be tantamount to filing it with a court

The works on another amendment of the code on civil procedure have reached its final stage. A new rule will soon be implemented according to which posting a litigation document (at “a public operator post office”) in any EU member state is tantamount to filing it with a court. This rule already applies to litigation documents posted within the territory of Poland.

The amendment also introduces a rule according to which a party to court proceedings who does not have a permanent address/domicile/seat in Poland or in any other EU member state and, at the same time, has not appointed an attorney domiciled in Poland to conduct the case will be obliged to appoint a service agent in Poland. At present, this obligation lies with anyone without an address (and litigation attorney) in Poland, including citizens of other EU member states.

The said amendment was forced upon Poland by the European Commission, which had noticed non-compliance of the Polish regulations with the European law, i.e. the Treaty on the Functioning of the European Union prohibiting any discrimination on grounds of nationality.

The text of the amendment (the act of 13 June 2013 amending the Code of civil procedure) can be found on the website of the Polish parliament at$file/1272_u.pdf.

Nastazja Lisek, trainee legal advisor

Possibility to include a 12-months' notice period in an employment contract for an indefinite period of time

Notice periods which can be included in an employment contract for an indefinite period of time are regulated in article 36 of the Polish Labour Code (the act of 26 June 1974). They are, respectively, 2 weeks for employment of less than 6 months, 1 month for employment lasting at least 6 months and 3 months for employment of over 3 years.

However, in its judgement of 30 November 2013, the Supreme Court (case number: I PK 132/12) stated that, according to the employee privilege principle prescribed in article 18 of the Labour Code, these notice periods apply only if an employment contract does not provide for solutions which are more beneficial to an employee. The Supreme Court recognised that it is permissible to introduce a 12-months’ notice period in an employment contract because it does not aim at circumventing law and it does not break the provisions of the Labour Code or principles of social interaction. Furthermore, the Supreme Court pointed out that legality of this contractual provision should be analysed from the point of view of its development.

To sum it up, it is permissible to establish a 12-months’ notice period for an employment contract for an indefinite period of time both from the point of view of the Labour Code as well as the judicature. This way, an employer may suggest his or her future employee a notice period of e.g. one year instead of 3 months.

Dominika Kaszynska, lawyer

Goods storage service in the light of VAT tax obligations

On 27 June 2013, the European Court of Justice passed a judgement in the case no. C-155/12 in which it answered a question referred for a preliminary ruling by the Supreme Administrative Court in Warsaw. The Supreme Administrative Court in Warsaw requested for a preliminary ruling with regard to the interpretation of Article 47 of Council Directive 2006/112/EC (on the common system of value added tax as amended by Council Directive 2008/8/EC) in relation to the storage of goods, together with the service of admission of the goods to a warehouse, placing them on the appropriate storage shelves, storing those goods, packaging the goods for customers and issuing, unloading and loading the goods, rendered by a Polish company for the benefit of its foreign customers.

A legal issue in the said case arose from article 28e of the act on VAT (of 11 March 2004) which recognises the place of supply of services connected with immovable property as the place where the immovable property is located (this provision is the counterpart of article 47 of the said directive). The Polish company argued that its services relating to the storage of goods cannot be regarded as a service connected with immovable property and, therefore, article 28e of the act does not apply in this case and the services provided to foreign entities should not be subject to VAT in Poland. The Head of the Tax Office issuing an individual tax interpretation was of a different opinion. Finally, the case was brought to the Supreme Administrative Court, which decided to stay the proceedings and to refer a question to the Court of Justice for a preliminary ruling.

The Court of Justice found it crucial to determine whether in this situation the immovable property was the very core or rather a constitutive element of the service. As a consequence, the Court of Justice stated that article 47 of the directive applies to a storage service only if a customer has been granted a right to use all or part of immovable property on account of storage of goods. Otherwise, a storage service offered to foreign entities will not be subject to VAT in Poland because it is not connected with immovable property.     

Daria Pawełczak, trainee solicitor

Parking fees and toll may be posted as tax deductible cost only up to mileage allowance

In the case no. II FSK 1945/11, the Supreme Administrative Court confirmed the stand of the tax chamber. Under the act on corporate income tax, business travel expenses can be deducted only up to a certain limit. This limit is determined in the Regulation of the Minister of Infrastructure of 25 March 2002 on the conditions for fixing and reimbursing the costs of using cars, motorbikes and mopeds not owned by the employer for official purposes. Under § 2 of this Regulation, the costs of using vehicles for official purposes are reimbursed by an employer according to mileage rate which, in case of passenger cars, should not exceed PLN 0.5214 (for cylinder capacity of up to 900 cm3) and PLN 0.8358 (for cylinder capacity above 900 cm3) per kilometre.    

It should be noted that, so far, tax authorities would only recognise the costs of car maintenance and petrol as the costs of using a car by an employee. In its decision discussed above, the Supreme Administrative Court stated that apart from car maintenance and petrol also parking fees and toll should be included into this category.   

As a result, an employer cannot recognise the entire cost incurred in relation to employee’s business travel as tax deductible because such costs are limited up to the amount of the so-called “mileage rate”. This is of pivotal importance especially in the light of the resolution of 1 March 2013 on amounts payable to state or territorial governmental official for official travel, which provides for a minimum scope of protection for employees from the private sector, owing to the fact that the said resolution obliges an employer to reimburse any documented and necessary expenses, including parking fees and toll.

Jerzy Kozerski, lawyer

This Newsletter is for general informational purposes only. It is not intended and shall not be treated as professional advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

Previous issues