EU Commission Concludes Polish Tax On Retail In Breach Of EU State Aid Rules

The European Commission informed that a Polish tax on the retail sector is in breach of EU state aid rules. The Commission concluded that the progressive tax rates based on turnover give companies with low turnover an advantage over their competitors.

Tax Rates Favor Certain Companies Over Others

The Commission's investigation concluded that the progressivity of the tax rates favor certain companies over others, depending on their turnover and size. Under the Polish measure, companies operating in Poland in the retail sector would pay a monthly tax based on their turnover from retail sales. The tax features a progressive rate structure with three different brackets and rates:

  • tax exemption applies to the part of the company's turnover below PLN 17 million (approximately €4.02 million);
  • tax rate of 0.8% applies on the part of the company's turnover between PLN 17 million and 170 million (approximately €40.2 million); and
  • tax rate of 1.4% applies on the turnover in excess of PLN 170 million (approximately €40.2 million).

"With this progressive tax rate structure, smaller companies would either pay no retail tax at all (if their turnover is below PLN 17 million) or face a lower average tax rate than larger competitors. This would give companies with a lower turnover an unfair economic advantage. Smaller companies should of course pay less tax than their larger competitors in absolute terms, but still in the same proportion to their turnover," the Commission stated.

Adjusting Retail Tax

Poland has not demonstrated that the progressivity of the retail tax was justified by the objective of the retail tax to raise revenues, or that companies subject to the higher rates would have a higher ability to pay. "Today's decision requires Poland to remove the unjustified discrimination between companies under the retail tax and restore equal treatment in the market," the Commission informed.

Source: European Commission

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