tax | In Principle

The Bitcoin exchange rate has been smashing records recently. People who bought this currency at much lower rates may realise significant profits. But the issue of how to tax such income has generated doubts for a long time. A recent change in the statistical classification of trading in Bitcoin has only added to these uncertainties.

As of 2016, the limit for cash transactions is EUR 15,000, and there is no tax sanction for violating this limit. All of this will change from 1 January 2017.

On the last day of October a notice was published on the Sejm website on filing of a parliamentarian’s bill to amend the Personal Income Tax Act and the Corporate Income Tax Act. The changes to the CIT Act, to enter into force on 1 January 2017, would eliminate the exemption from corporate income tax for closed-end investment funds (FIZ). This exemption has been used as a major instrument for tax optimisation, for example for entities involved in trading of debt and real property, and for taxpayers seeking protection against rules governing controlled foreign corporations (CFC).

A new tax rate for income of legal persons will enter into force on 1 January 2017. It will not apply to all taxpayers, however, but will depend on the amount of income. The same amending act introduces several other significant changes, particularly affecting the practice of corporate reorganisations (e.g. exchange of shares or in-kind contributions).

The basic tool for determining whether there is a grant of state aid is Art. 107 of the Treaty on the Functioning of the European Union. One of the ways a member state may be found to violate state aid rules is through its tax laws.

Tightening up the tax system is one of the priorities of the current Polish government. Inter-ministerial consultations are now underway concerning a draft amendment that would expand the catalogue of offences in the Criminal Code and vest the public authorities, including the newly created National Treasury Administration, with broad enforcement powers. All of this is designed to combat VAT fraud.

The proposed Retail Sales Tax Act was announced in January and was the subject of much debate and many revisions. Finally the President of Poland signed the act into law on 30 July 2016, introducing an entirely new type of tax into the Polish fiscal system. It will enter into force on 1 September 2016. Who will be subject to the retail sales tax, what will be the amount of the tax, and how will it be paid?

Regulations reintroducing a general anti-abuse rule into the Polish tax system—after an absence of over a decade—enter into force on 15 July 2016. The impact will be felt not only by Polish residents, but also by foreign entities planning to do business in Poland.

Poland is introducing regulations implementing a new global standard for automatic exchange of information about tax matters, developed by the OECD.

The amendment to Poland’s Penal Code which entered into force on 15 April 2016 modified the rules concerning liability for perjury. The increased sanctions affect persons making false statements pursuant to requirements arising out of implementation of FATCA rules in Poland.

Introduction of the OECD’s common standard for automatic exchange of financial information, as well as worldwide enforcement of FATCA by the United States, means that structures previously offering confidentiality will now be affected by the mandatory international system of exchange of tax information. This applies in particular to trusts and foundations.

Work in the OECD to expand the exchange of tax information seeks to bring into the mainstream jurisdictions that have typically been regarded as tax havens or countries applying harmful tax competition.