Brussels, 18/05/2009 (Agence Europe) - The European Commission decided on Thursday 14 May to continue a number of infringement procedures against Poland and Latvia in the area of indirect taxation. In the area of direct taxation, Poland has also been asked to amend the way it taxes interest and dividends from foreign investment funds.
Poland has been referred to the European Court of Justice over the application of value added tax (VAT) to cross-border passenger transport services supplied by buses registered abroad. According to the VAT Directive, cross-frontier transport services are subject to VAT in each member state for the distance travelled therein. Poland has introduced a particular VAT scheme that leads to VAT due in Poland being collected through payment at the border of an amount calculated on the basis of an average taxable amount per traveller. This scheme deviates from the Community rules, the Commission says. Furthermore, the Polish provisions lead to fiscal cross border controls, thus contravening the essential principles of the internal market. The Commission is to send a reasoned opinion to Latvia, requesting that it stop exempting transactions involving building land from VAT. European legislation provides for taxation of building land, whether this land is used/sold for the first time, or not. Land for other purposes may be exempted from VAT.
In direct taxation, Poland is to be sent a reasoned opinion calling on it to amend its legislation which imposes a tax rate of 19% on foreign pension and investment funds, unless a tax treaty provides otherwise. Similarly, interest paid from Poland to foreign pension and investment funds is subject to a withholding tax of 20 %. Polish law exempts national pension and investment funds from corporation tax and taxes domestic financial institutions only on their net profits. Austria, too, will be sent a reasoned opinion, requesting it change its legislation on the appointment of fiscal representatives. Maintenance of the requirement on foreign investlment and real estate funds which operate in Austria to appoint fiscal representatives is, in the Commission's view, discriminatory. Also contrary to the principles of free establishment and free provision of services is the requirement that only domestic credit insitutions or accountants certified in Austria can be appointed as fiscal representatives. (M.B./transl.rt)