Month: January 2022

We are pleased to present the first GWW Labor Law Newsletter this year. What topics did we cover?

• Act of 17 December 2021 amending the act on foreigners and certain other acts | Marta Wegner-Sarzyńska
• Work-Life Balance Directive | Mikołaj Kawka
• Employment of a foreigner – language of the employment contract and other documents | dr Joanna Łukaszczuk
• Paid nature of the non-competition clause following termination of employment | Ines Borkowska

We invite you to read the whole newsletter at: https://newsletter.gww.pl/alert/Newsletter_prawo_pracy_01_2022.pdf

The Sejm is working on an amendment to the Code of Commercial Companies and Partnerships. The entry into force of the new regulations may significantly affect the day-to-day operation of commercial companies and partnerships, including rights and obligations of their governing bodies. According to draft amendments, a new solution will be introduced in Polish legislation – a holding company with the possibility of applying a binding instruction. The corporate operation practice will also be affected by a change in rules of liability applicable to members of management boards and supervisory boards. The planned changes are ultimately intended to increase the efficiency of supervisory boards in companies.

 

The following areas will be particularly important from the point of view of the companies' functioning:

1.    Introduction of holding law regulations to the Code of Commercial Companies and Partnerships 
Current provisions of the Code of Commercial Companies and Partnerships contain only fragmentary regulations relating to holding companies. The planned amendment will introduce new solutions regarding the holding law to the Polish legal system. They will define formal aspects of creating groups of companies, the institution of a binding instruction and complying with it or refusing to comply with it, and the functioning of groups of companies. This means new rights and obligations for entities operating in capital groups.

 

According to one of the planned changes, a shareholder/minority shareholder (representing no more than 10% of the share capital) will be entitled to demand placing in an agenda include of a resolution on compulsory repurchase of shares or stocks by the parent company.

2.    Increasing the effectiveness of supervisory boards 
In the draft provisions of the Code of Commercial Companies and Partnerships, the legislator specified obligations and powers of supervisory boards, as well as rules of liability for its actions and omissions. One of the most important proposed powers of the supervisory board will consist in obtaining the consent of the supervisory board to conclude a transaction of significant value with the parent company, a subsidiary and a related company. The changes are aimed at increasing the effectiveness and role of supervisory boards, which will affect the day-to-day operation of commercial companies.

3. Clarification of liability of members of management boards and supervisory boards.
The principle of liability of members of management boards and supervisory boards specified in the Code of Commercial Companies and Partnerships was modified. Accoridng to draft regulations, a member of the management board and supervisory board will not be in breach of his or her obligations to act with due professional care when they act within the limits of justified economic risk, including on the basis of information, analyzes and opinions, which should be taken into account in respective circumstances when making a careful assessment. This means that the liability of members of management boards and supervisory boards has been significantly clarified. The legislator intends to introduce the possibility of excluding the liability of a corporate body member for damage caused to the company as a result of a decision of the company's body, even if it turns out to be incorrect, provided that it was taken within the limits of justified economic risk.

A detailed study of the above-mentioned amendments can be found in an article prepared by Mikołaj Kawka, a trainee attorney-at-law from the legal advisory team. Visit the Lexplorers portal: http://lexplorers.pl/nowelizacja-ksh-3-zalozenia/.

On 14 January 2022, the Supreme Administrative Court issued an important judgment regarding the taxation of income from unrealized profits (the so-called exit tax). Family succession can become less costly.

Introduction of the tax on income from unrealized profits (the so-called exit tax) in 2019 raised a lot of controversy and the unclear wording of some provisions required clarification. After two years, we finally have a very clear position of the Supreme Administrative Court (case ref. No. II FSK 12/21) on the exit tax applicable to donations made of personal assets.

It ought to be explained that the problem related to the transfer of shares in a capital company by way of a donation to a person other than a Polish tax resident, which had to be subject to exit tax. Director of the National Tax Information (KIS) was of the opinion that the unpaid transfer of assets located in the territory of the Republic of Poland to another entity, as a result of which Poland would lose the right to tax income from the sale of such asset, will be subject to exit tax (cf. e.g. individual interpretation 0115-KDIT3.4011.228.2020.1.KR). This in fact closed the way to a tax-free donation of any assets located in Poland to a non-Polish tax resident.

However, the Supreme Administrative Court (NSA) considered such positions as incorrect. In the cited judgment of the Supreme Administrative Court, dismissing the complaint of the Director of KIS, the Court stated, inter alia, as follows:

1. According to the EU law, the tax on income from unrealized profits should, as a rule, apply only to legal persons, and individual countries may keep their tax autonomy in terms of introducing under condition that the freedoms provided by the EU treaties are respected, i.e. in particular the principle of the free movement of capital and the principle of free movement. Therefore, only the transfer of assets that is related to running a business activity can be taxed. Shares or stocks in a company do not constitute such assets.
2. Personal assets of a Polish taxpayer may be taxed with exit tax only when the taxpayer's tax residence changes, not when the assets are transferred free of charge.

Any questions? Feel free to contact our expert: tomasz.krzywanski@gww.pl 

It will be a demanding year in terms of transfer pricing. The obligation of documenting and reporting will apply to controlled transactions and, for the first time, non-controlled transactions (with a limit of PLN 500,000) made by taxpayers in 2021. And all this will be taking place on the basis of amended provisions of the Polish Deal (Nowy Ład) program as well as subsequent explanations and recommendations. The material was prepared by Radosław Chudy from the GWW transfer pricing team.

https://www.prawo.pl/podatki/ceny-transferowe-i-dokumentacja-w-2022-roku,512856.html 

 

 

During the 4th convention of the Developer Academy under the patronage of Forbes, our expert,  Artur Bubrowiecki from the GWW income tax team, discussed tax options that guarantee the best financial results and legal security. And all this with regard to the development industry.

Issues touched upon during the meeting included: VAT taxation on real estate trading – sale of real estate versus sale of an undertaking or an organized part of an undertaking, VAT exemptions in real estate transactions, VAT rates in real estate trading and the moment when the VAT liability arises.

https://gww.pl/pl/aktualnosci/akademia-dewelopera-z-udziaem-gww/

 

The 6th National Congress of Tax Advisors, which was held on 14-16 January in Warsaw, elected its new chairman. This role was entrusted to the Managing Partner of GWW Tax, Andrzej Ladziński. In 2018–2021, he was a member of the National Council of Tax Advisors of the 5th term, in which he acted as the chairman of the Committee of Legal Cooperation with State Authorities operating at the National Council of Tax Advisors.

https://kidp.pl/aktualnosciall.php/10/7326

We invite you to read an article by Marcin Borkowski, Ph.D., attorney-at-law at GWW, in which he writes about the latest amendment to the Accounting Act and the new principles of signing annual financial statements resulting therefrom. The changes are important from a practical point of view, which is why we really encourage you to check the link below, as many companies will soon start working on the annual financial statements.

http://lexplorers.pl/podpisanie-sprawozdania-finansowego/

At the end of 2021, we completed with success an interesting case regarding an upward adjustment of income from the sale of real estate.

The head of the customs and tax office believed that the company concerned had lowered the selling price of the real estate by three times, which resulted in an upward adjustment of income. The company did not consult professional advisors at the stage of customs and fiscal audit and was thinking about correcting a tax return declaration and paying the outstanding tax. However, before making a final decision, they decided to consult us on this matter.

Our recommendation was clear. Evidence collected in the case allowed defending the position regarding the arm's length nature of the agreed selling price. The case required something more than just submitting a new valuation report to the authority. We had to adopt a strategy that required taking a look at all circumstances, focusing in particular on demonstrating market characteristics of the price in relation to subsequent real estate transactions. The customs and tax office concluded that the price of the real estate sold was calculated on market terms, sharing out viewpoint.

• It is worth consulting a tax advisor in disputes with tax and customs authorities
• A result of tax audit unfavorable for the taxpayer does not automatically mean that the authority will issue a decision on tax assessment decision

The case was handled by Jacek Olczyk and Mariusz Tkaczyk, GWW partner, supervisor of tax planning and income tax practice.

Market participants have received one of the most courageous and technologically advanced tools for exchanging information about economic events in the world. They now have one year to adapt to its requirements.

According to the legislator's assumptions, market participants will receive one of the most courageous and technologically advanced tools for exchanging information on economic events in the world. KSeF (the National System of E-Invoices) is a platform for the exchange of such information and the standardized invoice format (xml) is a carrier thereof. If we additionally take into account the fact that the exchange of information is to take place practically in real time and the data will be collected and processed in the cloud, we get a real revolution in the current business model. – says Rafał Berliński, Managing Director of Tax Insight.

The whole article was published in Rzeczpospolita on 3 January 2022.