The European Commission Opposed To The Taxation Of Supermarkets In Poland

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By Olivier Bault.

One of the reforms promised by the PiS to its constituents was to better tax large-scale distribution, which is predominantly in the hands of foreign groups and which has been accused for years of transferring its profits abroad to reduce the taxes paid in Poland. The formula chosen in July is to impose the retail trade according to the turnover. This tax would be 0.8% of the monthly turnover if between 17 and 170 million zlotys (1 € = 4.3 zlotys) and 1.4% of the monthly turnovers which are above 170 million. Shops with an annual turnover of less than 204 million zlotys are not affected. The other objective of this progressive tax on the sales was, of course, to restore a competitive advantage to small businesses.

This is very similar to what happens in other EU countries. For example, in France, the tax on commercial premises depends on the used area and applies only to “businesses operating a retail surface area of ​​more than 400 m² and producing a pre-tax turnover of € 460,000” (source).

But in the case of Poland, the Commission considered that this tax advantage given to small businesses, less taxed than the big ones, constitutes an illegal public aid under European law. Poland challenged the Commission’s decision at the Court of Justice of the European Union, but in order to not risk repaying the tax with penalties, Polish government suspended the tax until January 1, 2018. Application of this new tax which was to bring to the Polish state budget 500 million zlotys in 2016 and 2 billion zlotys in 2017. This tax had entered into force on September 1 and the European Commission had called on Poland to suspend its application in mid-September. In mid-November the Polish Diet passed a law suspending the implementation of this tax and on December  20 President Andrzej Duda signed it.

For the Polish Ministry of Finance, the Commission’s decision is at odds with what is being done to support small and medium-sized enterprises, but the Commission declared in early December that it wants to defend its decision before the European Court.

However, in view of the numerous attacks by the Commission against Poland since the Conservatives came to power and with regard to the taxation of supermarkets in other EU countries, that Brussels finds no objection to, one might wonder if this decision of the Commission is not primarily intended to undermine even more the efforts of the government of Beata Szydło. Especially since the taxation of supermarkets was, together with the new tax on banks (which yielded 2.3 billion zlotys from January to September 2016), one of the resources the PiS counted on to finance its natalist policy.

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