First ruling on the 8.5% Lump-Sum Tax. The 8.5% lump-sum tax remains a popular choice among entrepreneurs in the IT sector. However, there are ongoing uncertainties about which activities qualify for the 8.5% lump-sum rate and which fall under the 12% rate. The reasoning behind the recent groundbreaking ruling by the NSA (case no. II FSK 622/24) includes conclusions that may be seen as unfavorable to some. Today, Rzeczpospolita published an article containing a commentary from Piotr Sekulski, PhD regarding this ruling.
8.5% Lump-Sum Tax in IT – A Shift in KIS’s Approach
Quick Recap
We have previously discussed the core issues of this dispute in our blog posts and press publications. It’s worth revisiting a previous entry:
Definitions
As a reminder – in IT an 8.5% rate will not be applied by thoseproviding services “related to software” or “related to software consulting”.
Article 12 par. 1 point 2b lit. b of the Act on lump-sum of taxation (…) 12% of revenues from the provision of services: (…)
b)(…) related to software (PKWiU ex 62.01.1), (…), related to software consulting (PKWiU ex 62.02), (…) , related to network and IT systems management (PKWiU 62.03.1);
Therefore, everything comes down to defining both concepts.
We have previously written about other rulings in similar cases:
NSA Ruling on the 8.5% Lump-Sum Tax in IT (II FSK 622/24)
In the ruling from August 23, 2024, the NSA (I SA/Kr 202/24) shared its view on this issue. The case involved a taxpayer providing services related to the design and development of IT technologies for networks and computer systems (PKWiU 62.01.12.0) as well as technical support services. KIS did not challenge this classification. The services in question included:
- Analyzing the functioning of existing computer systems, infrastructure, and client data.
- Maintaining the operation of computer systems or cloud infrastructure, especially in areas like configuration, updates, monitoring, and system and service management.
- Manually verifying the proper implementation of system components and processes.
- Creating technical documentation for computer systems and infrastructure.
- Designing procedures for data access control in networks and computer systems.
- Configuring IT tools and preparing users to work with IT tools, including data migration from other systems.
- Managing configurations and optimizing systems, IT tools, and cloud services.
- Analyzing requirements and specifications for process automation in computer systems and their components based on provided documentation.
- Modeling and designing automation logic for processes in computer systems, delivering changes, verifying proper implementation, and testing system integration.
- Manually testing and verifying the accuracy of results in system integrations and automated processes..
Once again, the KIS assumed that if activities fall under grouping 62.01.1 PKWiU, they automatically qualify as “related to software” under the 12% lump-sum tax rate. The court didn’t criticize the fact that the authority did not attempt to define “related to software” and did not explain why these services were categorized as such. The Regional Administrative Court (WSA) in Gliwice found no violations and upheld KIS’s stance in its ruling (case no. I SA/Gl 670/23). The question remained: what NSA ruling on the 8.5% Lump-Sum Tax, will be?
According to the NSA ruling on the 8.5% Lump-Sum Tax (II FSK 622/24): “The fact that the complainant is not responsible for creating software does not sufficiently prove that the services provided are not related to software.”.
Our commentary on the NSA ruling on the 8.5% Lump-Sum Tax
This Judgment also does not clearly explain the definition of “software” or clearly define what activities are and what are not “software-related”. No objective criteria were outlined to justify the decision. It’s important to note that the change in KIS’s approach was not preceded by any legal amendments. As a result, both positive interpretations for similar scopes (before 2023) and negative interpretations (issued recently) coexist in legal practice. Despite its definitive nature, this ruling does not address the most pressing questions.
For more insights into the relationship between the NSA ruling and the 8.5% lump-sum tax, and what this decision means for the IT industry, see the article available through this link.
tax advisor Piotr Sekulski, PhD
“– The court listed all the duties of an IT professional and simply concluded that these are services related to software. I would have expected a deeper analysis from the NSA, with a precise definition of which activities meet this criterion. Hopefully, future rulings will be more thorough. And after more in-depth consideration, it might turn out that the taxpayers are right (…)”
“–Just two years ago, the tax authorities accepted a lower lump-sum tax rate, stating that activities related to software mainly involve writing/modifying code. At the beginning of 2023, they changed their approach, and recently most interpretations have been negative. However, regional administrative courts have varying stances on this issue (…)”
8.5% rate for IT – our services
We support our clients by assessing the feasibility of implementing lump-sum taxation and help determine the appropriate tax rate. This often requires a thorough analysis of the B2B contract and the specific activities performed. We also provide detailed calculations. During individual consultations, we address any questions or concerns and discuss potential strategies for mitigating tax risks.
In more complex cases or when clients seek to utilize lower lump-sum tax rates (e.g. 8.5%), we assist in a comprehensive analysis of the B2B contract, prepare an opinion for the Central Statistical Office, file applications for tax rulings with KIS, and identify necessary adjustments to CEIDG.
If you have any questions regarding lump-sum taxation, please do not hesitate to contact us www.outsourced.pl .
