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Europe opens investigation into Poland's tax on the retail sector

Staff Writer |
The European Commission has opened an in-depth investigation into a Polish tax on the retail sector.

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The European Commission has also issued an injunction, requiring Poland to suspend the application of the tax until the Commission has concluded its assessment.

This follows a decision the Commission took in July 2016 on a progressive turnover-based tax on the retail sector in Hungary, which the Commission found to be in breach of EU state aid rules because it granted a selective advantage to companies with low turnover over their competitors.

The investigation opened concerns a tax adopted by Poland in July 2016 which applies to companies that operate in Poland and are active in the retail sale of goods. The tax only entered into force on 1 September 2016, and no payments were due yet.

Under the tax, companies in the retail sector would pay a monthly tax to the State based on their turnover from retail sales.

In particular, the retail tax features a progressive rate structure with three different brackets and rates:

- a tax rate of 0% applies to the part of the company's monthly turnover below PLN 17 million (approximately €3.92 million),

- a tax rate of 0.8% is levied on the part of the company's monthly turnover between PLN 17 million and PLN 170 million (approximately €39.2 million), and

- a tax rate of 1.4% is levied on the part of the company's monthly turnover above PLN 170 million.

The Commission started to look into the matter following media reports. Poland did not notify the tax to the Commission. In August 2016, the Commission also received a complaint alleging that the Polish retail tax is in breach of EU state aid rules.

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