Month: March 2021

On 30 March, the Sejm Infrastructure Committee adopted a draft act aimed at re-regulating the principles of purchasing flats on the primary market. Establishment of the Development Guarantee Fund is the main novelty. It is the entity to which contributions from the price of each new flat are to be paid. The contribution is to depend on what trust bank account used by the developer. Most of the market is based on open accounts. The contribution will then amount to a maximum of 2% of the flat value.

Comments from real estate law experts: Paweł Wójcik, managing partner at GWW legal, attorney-at-law, Konrad Płochocki, general director of the Polish Association of Developers, attorney-at-law, prof. Bartłomiej Gliniecki from the University of Gdańsk.

The article was published in today's issue of Rzeczpospolita: https://www.rp.pl/Nieruchomosci/303319910-Nowa-ustawa-deweloperska—legislacyjna-fuszerka-w-Sejmie.html 

On the occasion of the forthcoming Easter, we wish to give you our best wishes. May Easter this year bring you a lot of health. We wish you as many as possible joyful and beautiful moments this spring!

Best wishes from GWW partners and associates

Despite announcements of the government, the new regulations on family foundations may not be as favorable as stakeholders might expect. All because of imprecise tax regulations. It may turn out that foundations will not be able to benefit from tax exemption so easily. It is also unknown how they will calculate tax costs.

In the opinion of Aldona Leszczyńska-Mikulska, attorney-at-law and partner at GWW Tax, supervisor of the private client advisory team, these tax benefits give an advantage to the family foundation over any other solution currently available in the Polish law. – On the other hand, operations of the family foundation will be taxed according to general rules, which does not bring such spectacular benefits (lack of 9% CIT). I do believe, however, that due to the purpose of setting up the foundation, it is not a significant defect of the draft act – notes the expert. In her opinion, the problem of many people setting up private foundations abroad was the taxation of benefits provided to beneficiaries by the foundation during the life of the founder or after his death. Income obtained by natural persons from a foreign foundation was subject to taxation, in the best option with a 20% tax on inheritance and donations or a PIT tax (17 or 32%). According to the draft act, the income of the founder and the beneficiary from the so-called the zero group (the closest family members – a spouse, parents, children, siblings) received from the family foundation, will not be subject to PIT taxation.

The article with a commentary by Aldona Leszczyńska-Mikulska was published on Prawo.pl:
https://www.prawo.pl/podatki/korzysci-podatkowe-dla-fundacji-rodzinnych-w-projekcie-ustawy,507387.html

The Polish Development Fund (PFR) announced that the process of remitting subsidies granted under the PFR Financial Shield 1.0 will start after 29 April 2021.

• An amendment to the regulations of the Financial Shield 1.0 relating to the remittance of liabilities will be published no later than by 9 April this year.
• Companies whose activities have at least one of 54 PKD (Polish Classification of Activities) codes assigned and that have benefited from the PFR Financial Shield 2.0 will be able to take advantage of 100% remittance of subsidies, as long as they comply with formal requirements.
• Starting from 15 April this year, every day there will open online trainings for entrepreneurs relating to the rules of settlement and remittance of the PFR Financial Shield 1.0 .

The issue of the legitim and the possibility of waiving it is discussed by Aldona Leszczyńska-Mikulska, supervisor of the GWW private client advisory team.

In the vast majority of cases, a company built over years is the entrepreneur's property. Immovables, fixed assets, machinery and devices that are used to generate revenues are related to it. All spare funds are reinvested by the entrepreneur or used to pay off loans. A perspective of the legitim means that even if the company is worth a lot, heirs do not have free funds to pay the legitim in cash. The sale of the company or its part destroys the entire inheritance or succession plan. As a result, instead of developing in the next generations, the family business is begining to crumble. – says Aldona Leszczyńska-Mikulska.

The article was published on Prawo.pl: https://www.prawo.pl/podatki/porozumienie-w-sprawie-zrzeczenia-sie-zachowku-aldona,507324.html

On Monday, the draft Family Foundation Act was published. What are its advantages and disadvantages? What should be changed in it to respond to the needs of interested parties? An article by Aldona Leszczyńska-Mikulska, attorney-at-law in charge of the practice of advising private clients of GWW, is available on Prawo.pl.

The tax advantage of a Polish family foundation over a foreign one may be that relatives will be exempt from the inheritance and donation tax as long as benefits paid to them come from the property contributed to the foundation by the founder. However, it is not clear whether the property acquired by the foundation during its lifetime will also be covered by the exemption – writes Aldona Leszczyńska-Mikulska from GWW.

The exper's article can be found on Prawo.pl: https://www.prawo.pl/podatki/projekt-przepisow-o-fundacji-rodzinnej-wymaga-doprecyzowania,507320.html

A draft Family Foundation Act was published on 22 March 2021. According to the announcements of the Ministry of Finance, family foundations are supposed to become part of legal transactions at the beginning of next year.

You will find the main assumptions here:.https://www.linkedin.com/feed/update/urn:li:activity:6780178483931873280 

The issue of analyzing the obligation to prepare tax documentation has so far been the case mainly in transactions between related parties. Documentation of transactions between unrelated entities happened rarely and, in practice, involved documenting payments for goods or services purchased from a tax paradise entity.

Starting from 2021, as a result of the amendment to the Income Tax Act, the documentation obligation affects transactions between related and unrelated entities to a much wider extent. The Ministry of Finance has published a draft explanatory note on the controversial amendment, announcing the start of tax consultations on this document.

Detailed information is available in our alert:
http://newsletter.gww.pl/alert/Szerszy_obowiazek_dokumentacji_cen_transferowych_032021.pdf

The Court of Justice of the European Union issued a judgment in a case filed by the Voivodship Administrative Court in Gliwice (decision of 4 November 2019, ref. No. I SA/Gl 495/19), concerning  compliance of national regulations with the VAT Directive in the scope of recognition of input and output tax on intra-Community acquisition of goods in two different settlement periods. Polish regulations introduced in 2017 raised doubts regarding observance of the principle of VAT neutrality. In the opinion of the CJEU, introduction by the Polish legislator of an additional requirement, which leads to disclosing of output and input VAT in two different settlement periods, is contrary to the essence of regulations applicable to the common system of value added tax.

The judgment concerns intra-Community acquisition of goods transactions, however it is worth noting that it can be used to support refund of overpaid interest in connection with other transactions based on the reverse charge mechanism. If an application for overpayment is submitted within 30 days from the publication of the CJEU judgment, the refund may be increased by an appropriate interest rate.

Photo by katarina_dzurekova