TOPIC OF THE MONTH
Monika Lewandowska, Adrian Stępień
p. 12
TAX ADVISERS’ VOICE
Dariusz M. Malinowski
Sale of a Building Erected on Another Entity’s Land: VAT Consequences
p. 3
PROFESSIONAL PRACTICE
Adam Bartosiewicz
p. 6
TAX AUTHORITIES’ PRACTICE
Tomasz Janicki, Natalia Kociak
Split Payment: Interpretation Problems
p. 10
TAXES
Adam Mariański
p. 21
Beata Rogowska-Rajda, Tomasz Tratkiewicz
p. 31
Wojciech Dmoch
p. 41
Paweł Selera, Maria Supera-Markowska
p. 47
COURTS’ DECISIONS
Ewa Prejs
CoJ rulings: review
p. 55
Krzysztof Lasiński-Sulecki
CoJ rulings: review
p. 59
NEWS FROM BRUSSELS
Filip Majdowski
News from Brussels
p. 62
Subscription
p. 64
Monika Lewandowska, Adrian Stępień
The Court of Justice on Abuse of Withholding Tax Exemption: Surprising Disappointment or Foreseeable Interpretation Direction? Are Polish Provisions Inconsistent with EU Law?
On 26 February 2019 the Court of Justice issued two important judgments based on EU directives: Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States and Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, both in the context of abuse of the right to exemptions from withholding tax provided for in these directives.
The opinions on operative parts of the judgments soon proved to vary. They were described as breakthroughs, milestones, important or disappointing. Undoubtedly, CJ judgments were issued at the time when the topics of tax law abuse, assessment of the so-called business substance or structuring in the tax proceedings of the relationship between the taxpayer (tax remitter) and the tax authority pose a challenge for many international structures, with broad legislative initiatives being taken to address them. The now-emerging case law (including, precisely, CJ judgments) is therefore a necessary element of the process of ensuring certainty and transparency of tax law.
This article aims to analyse both these CJ judgments and indicate their possible implications for international structures, in particular those connected with investments in Poland, taking into account selected aspects of the new rules concerning deduction of withholding tax, which have been in force since 1 January 2019.
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dr Adam Bartosiewicz
Retail Sales Tax. Are We Sure We Can Play Fanfares Already?
The Polish retail sales tax was to be introduced a few years back. Yet, the application of provisions regulating this tax was suspended, on the suspicion that they were incompatible to EU provisions. However, the EU court recently rejected a complaint of the European Commission against Poland, as it did not fi nd the provisions on this tax to infringe any EU regulations on state aid. The author believes that this does not automatically mean that these regulations are consistent with EU law. There remain other (than state aid) areas of potential incompatibility.
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dr hab. Adam Mariański, prof. UŁ
Exit Tax: An Example of Misguided Tax Legislation
On 1 January 2019 fundamental amendments took effect in the income tax acts, one of the amendments being the introduction of the so-called exit tax. Tax on income from unrealized gains was also imposed on natural persons. The construction of the new duty and the manner in which it has been regulated give rise to considerable doubts about the scope of application of these provisions. The provisions of the Act of 26 July 1991 on Personal Income Tax relating to this duty are analysed in the context of their compatibility to EU law, but also – in selected aspects – examples of many interpretation doubts are indicated. Due to the limitations of space, it is impossible to identify all practical problems in this article.
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dr Beata Rogowska-Rajda, dr Tomasz Tratkiewicz
Has the Issue of ‘Pre-Ratio’ in VAT Been Finally Resolved?
The judgment of the Court of Justice of 8 May 2019, C-566/17, Związek Gmin Zagłębia Miedziowego w Polkowicach v. Szef Krajowej Administracji Skarbowej, ends the long years of discourse on applying the so-called pre-ratio in VAT. In Poland, the interpretation of provisions in this area has in recent years been undergoing considerable changes, resulting in a legal uncertainty among taxpayers. The authors discuss in detail the rules of applying the pre-ratio, with special emphasis on the national context of the case. They also question the last element in this area that still awaits resolution: the issue of settlement periods to which limitation does not yet apply, in which periods the preratio was applied, at variance with EU law.
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dr Wojciech Dmoch
The Principle of Legal Certainty in the Context of Thin Capitalization
The principles resulting from Article 7 of the Act of 27 October 2017 on Amendments to the Personal Income Tax Act, the Corporate Income Tax Act, and the Act on the Flat-Rate Income Tax on Certain Revenues of Natural Persons and concerning thin capitalization, which taxpayers are obligated to apply with respect to interest on loans actually obtained before 1 January 2015, infringe the legal security, understood as the certainty that a certain project, once begun, will be able to be implemented over a certain period and that it will be safe to apply the legal rules that were in force when the implementation of this project started. There is, therefore, a justifi ed concern that this provision infringes the principle of legal certainty, which means that it is contrary to the principle of citizens’ trust in the state and the laws it enacts, thus infringing the democratic rule-of-law clause expressed in Article 2 of the Polish Constitution of 2 April 1997.
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dr Paweł Selera, dr Maria Supera-Markowska
Fiscal Unities: Reform Conceptions with Special Focus on Comparative Analysis and International Aspects (1). Corporate Income Tax
In business transactions between legally separate entities there may be links actually making these entities a unity in commercial terms. Both tax law and accounting law in many countries – albeit differently – do take notice of the particularities of operation of such entities and contain adequate regulations that enable determining the tax capacity of such entities and their earnings, while taking into account their aforementioned unity in commercial terms. These issues will be presented in the context of proposals of reforms of the Polish system of taxing groups of companies – in the fi eld of both tax and accounting laws – in a series of articles, beginning with the present one.
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