Dear Clients,

In the face of the global COVID-19 pandemic, we would like to convey to all our clients and their families expressions of support and solidarity. The current situation requires action to be taken primarily to protect the health of our clients and colleagues. The Warsaw office of the Hogan Lovells law firm has implemented the procedures recommended by WHO, EU organizations, and Polish authorities that pursue this goal, among others introducing hygiene policy recommendations, enabling all colleagues to work remotely, forbidding business travel, cancelling direct meetings with clients.

However, we have not suspended our activities. In this difficult period, we are obliged to provide the widest possible support to our clients.

The new situation, both in Poland and on a global scale requires entrepreneurs and companies to quickly adapt to dynamically changing conditions. We want to support you with our knowledge and experience. Therefore, we immediately implement a project in which we will explain all tax issues that are related to the current situation on an ongoing basis. We will inform you about your rights arising from existing provisions, plans and legislative initiatives, as well as their implementation. We hope that this will facilitate the functioning of your businesses in these extraordinary conditions.

We will communicate via the Tax Newsletter sent to your mailboxes. Of course, we also encourage you to contact us, either by email or by phone. Below you will find contact details for all members of the tax team.

We believe that together we will survive this difficult time.

Below we present our first Tax Newsletter, in which you will find information on tax issues that are significant for the functioning of business entities in the crisis caused by the COVID-19 pandemic.

Information from the European Commission

On March 13, Vice-President of the European Commission Margrethe Vestager announced that EU countries do not need to obtain prior approval from the Commission for the implementation of relieves in VAT and income taxes. At the same time, she explained that "there are many ways in which governments can help without having to get permission for the public aid." In her opinion, states are authorized to support businesses, including by introducing the possibility to obtain subsidies or suspending the obligation to pay income taxes and VAT.

The above position was supported by the head of the European Commission Ursula von der Leyen, who assured that the Commission would show maximum flexibility in the situation when EU countries would need support in the field of public aid and changes in tax regulations.

The presented position is an important hint and recommendation for all EU governments regarding the wide range of tax changes they can be introduced to protect business entities from the negative effects of the current crisis. In addition, since the Commission declares that it will not introduce administrative barriers, all changes will be able to be implemented in a very short time it will largely depend on the operability of individual governments.

Proposals of the Polish government

The Polish government has declared the introduction of a shielding package for business entities. Its scope would include, among others:

• deferment of tax payment deadlines,
• payment of taxes in instalments,
• in special situations, remission of taxes,
• in the scope of income taxes - enabling settlement of losses with a retrospective date, i.e. losses for 2020 in the settlement for 2019,
• faster VAT refunds,
• facilitating the use of split-payment mechanism.

As announced by the Minister of Development Jadwiga Emilewicz, in the event of deferral of taxes or payment in instalments, no extension fee will be charged. It is not known, however, what about interest for late payment.

These are the first signals from the government and we will probably know the details in the coming days.

Proposals for changes in taxes presented by the National Chamber of Tax Advisers.

The Chamber's experts have developed a draft of 46 proposed changes in tax regulations, which are to be part of the protection act for business entities prepared by the government.
In addition to the government's proposals, the changes recommended by the Chamber include:

• suspension of the application of the relief for bad debts in the field of VAT and income taxes,
• releasing funds accumulated on VAT accounts during the crisis,
• conditional exemption from the obligation to prepare transfer pricing documentation
• conducting tax audits only on the basis of documents submitted electronically,
• recognition of the current situation related to the occurrence of coronavirus as a premise justifying the absence of guilt in the event of failure to meet deadlines in tax proceedings,

The report is not made public.

The government declares that it will seriously consider including the Chamber's recommendations in the content of the intended legal act.

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