Tax News, February 2023

In the February 2023 issue of tax news, we bring you information on the proposed changes to Cross-Border Provision of Service Act, the new Act on the Emergency Measures for the Treatment of High Energy Prices, the amendments to the proposal to reform the European Union Emissions Trading System (EU ETS) and the proposal to establish a Carbon Border Adjustment Mechanism, as well as on mandatory e-invoicing in Poland.

NEW PROPOSAL OF THE ACT ON THE CROSS-BORDER PROVISION OF SERVICES

The Government has proposed changes to Cross-Border Provision of Service Act (“the Act”) which determine more detailed rules for the implementation of Regulation on Social Security (EC) No 883/2004 (“Regulation 883/2004”).

Key novelties, proposed within the Act based on the Directive 2020/1057 [1] (“Directive”) and Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System are:

• The concept of cross-border provision of services will no longer apply only to the temporary pursuit of an activity but would going forward also apply to persons who pursue their registered activity in another EU Member State, irrespective of the time-period or the nature of the working pattern.
• New distinction between competent supervisory authorities. Supervision of employers within the limits of its powers should be carried out by the Inspectorate of the Republic of Slovenia for Work (“IRSD”) and the cross-border implementation of the activities of self-employed persons and economic operators will be supervised by Financial Administration of Republic of Slovenia (“FURS”).
• In case of doubt as to the legality and compliance with the rules on cross-border provision of services, the IRSD or FURS may carry out controls independently. Based on the previous arrangement this was only possible if the Health Insurance Institute of Slovenia (“ZZZS”) received a notice of doubt about legality and compliance. Posted worker has also the possibility to express doubt about legality and compliance.
• Establishment of a new Commission to determine the merits of requests for the removal or revocation of A1 certificates. In the process of revoking the A1 certificate, the ZZZS is bound by the Commission's decision.

[1] Directive 2020/1057 laying down specific rules with respect to Directive 96/71/EC and Directive 2014/67/EU for posting drivers in the road transport sector and amending Directive 2006/22/EC as regards enforcement requirements and Regulation (EU) No 1024/2012

"WINDFALL TAX" IN SLOVENIA

On 9 December 2022, the National Assembly adopted the new Act on the Emergency Measures for the Treatment of High Energy Prices (hereinafter “the Act”), which was published in the Official Gazette of the Republic of Slovenia No. 158 on 19 December 2022. In line with the requirements of Council Regulation 2022/1854/EU, the new Act introduces, among other things, a so-called "windfall tax" or limits on the windfall profits of electricity producers and a solidarity levy. The latter is aimed at reducing electricity consumption and increasing electricity production from renewable sources.

Limitation on windfall profits

The Act introduces limits on windfall profits from the sale of electricity produced and sold on the wholesale market at EUR 180 per MWh at portfolio level, for the delivery period from 1 December 2022 to 31 December 2023. The limitation on windfall profits shall apply to the sale of electricity produced from wind, sun, geothermal energy, water (excluding pumped storage hydropower plants), biomass (solid or gaseous biomass fuels, excluding biomethane), municipal solid waste, lignite, crude oil and other oil derivatives, peat and nuclear energy. For electricity produced from lignite, a special threshold of EUR 230 per MWh has been set. Any revenue above this price is considered as windfall profit and will be channeled into the budget of the Republic of Slovenia.

These contributions will be used to finance measures to help final electricity consumers.

Solidarity levy

In addition, the Act introduces an additional solidarity contribution obligation for entities, subject to corporate income tax, that produce and process crude oil, natural gas and coal in Slovenia.

The solidarity levy is payable for tax periods starting on or after 1 January 2022 and on or after 1 January 2023. The tax rate for calculating the solidarity levy is 80% of the tax base.

The base for calculating the solidarity levy is the difference between taxable profits made by the taxable person in the tax period, subject to solidarity levy and average taxable profits made by the taxable person in the last four consecutive tax periods, starting with 1 January 2018 or later, increased by 20%.

EUROPEAN PARLIAMENT PUBLISHED AMENDMENTS ADOPTED ON PROPOSALS TO REVIEW ETS AND ESTABLISH CBAM

On 27 January 2023, the amendments to (i) the proposal to reform the European Union Emissions Trading System (EU ETS) and (ii) the proposal to establish a Carbon Border Adjustment Mechanism (CBAM), as adopted by the European Parliament, were published in the Official Journal of the European Union.

As reported in previous editions of the Tax News, reform of the EU ETS is a prerequisite for implementation of the CBAM. The implementation timeline currently remains unchanged, whereby transitional period with quarterly reporting is expected to start in late 2023 and CBAM as a levy is expected to become into force in 2027.

CBAM will not impact only producers, but also other industries, such as retail, life-science, etc. Therefore, knowing CBAM rules and being able to establish its relevance for your company can help you with determining potential financial impact and ensuring compliance with reporting requirements.

POLISH GOVERNMENT ISSUES DRAFT REGULATIONS ON MANDATORY ELECTRONIC INVOICING

In December 2022, the Polish Government issued a draft bill amending the Value-Added Tax Act, under which e-invoicing is to become mandatory in Poland starting from 1 January 2024.

Mandatory e-invoicing will primarily be about activities subject to VAT in Poland, including domestic deliveries of goods and the provision of services between businesses (B2B), public authorities (B2G), but also to consumers (B2C).