Articles & Publications

The History of Divorce: A Look Back at the Evolution of Marriage Dissolution

Divorce, the legal process of ending a marriage, has a long and varied history that spans back thousands of years. From ancient civilizations to modern times, the laws and attitudes surrounding divorce have undergone significant changes, reflecting the shifting cultural and societal norms of each era.

Ancient Times: Divorce was recognized in ancient civilizations such as Babylon, Egypt, and Greece. However, it was typically restricted to the wealthy and powerful, and was often granted only for limited reasons, such as adultery or cruelty. In these early societies, women were often viewed as the property of their husbands and were not granted the right to initiate a divorce.

The Roman Empire: The Roman Empire saw a significant expansion of the grounds for divorce, including such reasons as abandonment and mutual consent. During this time, the right to divorce was extended to women, who were allowed to initiate proceedings if their husbands failed to fulfill their marital obligations.

The Middle Ages: During the Middle Ages, the Catholic Church exerted significant control over the laws surrounding marriage and divorce. Divorce was not recognized as a valid option and the only way to end a marriage was through annulment, which declared the marriage to be null and void from the beginning. This practice was reserved for the wealthy and powerful and was often used to dissolve marriages for political or financial reasons.

The Reformation: The Reformation marked a significant turning point in the history of divorce. Protestant leaders, including Martin Luther and John Calvin, rejected the authority of the Catholic Church and advocated for the recognition of divorce in certain circumstances, such as adultery or abuse. This was a significant shift from the strict ban on divorce in previous eras.

The Modern Era: In the 19th and 20th centuries, the laws surrounding divorce continued to evolve, reflecting changing attitudes towards marriage and family. In many countries, the right to divorce was extended to the general population and the grounds for divorce were expanded to include such reasons as incompatibility and desertion. The introduction of no-fault divorce, which allows for the dissolution of a marriage without assigning blame, marked a major shift in the laws surrounding divorce and has become a widely accepted option in many countries.

Conclusion: The history of divorce is a rich and varied one, reflecting the changing cultural, societal, and religious norms of each era. From ancient times to the present day, the laws surrounding divorce have undergone significant changes, expanding the grounds for divorce and granting greater rights and freedoms to individuals seeking to dissolve their marriages. Today, divorce continues to evolve, reflecting the changing attitudes and expectations of modern society.


Divorce: Understanding the Process and Its Implications

Divorce is the legal process of ending a marriage. It can be a complex and emotional process that requires careful consideration and planning. The process of divorce involves the dissolution of the legal and financial ties between the parties and can have far-reaching implications for both parties.

Grounds for Divorce: In order to file for divorce, a person must have grounds, or a reason, for the divorce. The grounds for divorce vary depending on the jurisdiction, but common grounds include irreconcilable differences, adultery, and abandonment. In some jurisdictions, no-fault grounds, such as irreconcilable differences, are available, while in others, fault-based grounds are required.

Divorce Process: The divorce process typically begins with the filing of a divorce petition, which is a formal request for the court to dissolve the marriage. The petition must be filed in the jurisdiction where either the petitioner or the respondent resides. Once the petition is filed, the respondent has the opportunity to respond and may file a counter-petition, outlining their own requests for the divorce.

Property Division: One of the most complex aspects of divorce is the division of property and assets. The property that is acquired during the marriage is subject to division, and the court must determine how to divide the property in a way that is fair and equitable to both parties. This can include real property, personal property, and financial assets. In some jurisdictions, the court uses a community property system, which divides the property equally between the parties, while in others, the court uses an equitable distribution system, which divides the property based on a number of factors, including the length of the marriage and the contributions of each party.

Child Custody: If the parties have children, the court must determine custody arrangements. This can include physical custody, which determines where the child will live, and legal custody, which determines who has the authority to make decisions about the child’s upbringing. The court will consider the best interests of the child when making custody arrangements, taking into account factors such as the child’s relationship with each parent and the stability of each parent’s home environment.

Alimony: In some cases, one party may be required to pay alimony, or spousal support, to the other party. Alimony is typically awarded to the party who is in a disadvantaged financial position or who has made significant contributions to the marriage. The amount of alimony and the duration of the payments are determined by the court based on a number of factors, including the length of the marriage, the earning potential of each party, and the standard of living established during the marriage.

Conclusion: Divorce can be a complex and emotional process that requires careful consideration and planning. The process of divorce involves the dissolution of the legal and financial ties between the parties and can have far-reaching implications for both parties. It is important to seek the assistance of a qualified attorney to help guide you through the process and ensure that your rights and interests are protected.


The History of Taxation

Taxation has been a part of human civilization for thousands of years, dating back to ancient civilizations such as the Egyptians and the Greeks. Throughout history, taxes have been used to finance government operations, fund public goods, and redistribute wealth.

Ancient Egypt: In ancient Egypt, taxes were collected in the form of agricultural products, livestock, and labor. These taxes were used to finance public works projects, such as the construction of pyramids and temples.

Ancient Greece: The Ancient Greeks also used taxes to finance their city-states and their military. The city-state of Athens, for example, imposed taxes on its citizens to pay for the maintenance of its navy and the construction of its Acropolis.

The Roman Empire: The Roman Empire also relied on taxes to finance its vast military and public works projects. Roman citizens were required to pay taxes in the form of money, goods, and services. The Roman tax system was so extensive that it covered not only citizens but also conquered territories and subject peoples.

The Middle Ages: During the Middle Ages, taxes were primarily collected by feudal lords from their serfs and were used to finance the maintenance of castles, roads, and other infrastructure. The Church also collected taxes in the form of tithes, which were used to support the clergy and fund religious institutions.

History of Tax

The Renaissance and Enlightenment: During the Renaissance and Enlightenment, the concept of taxation shifted towards the idea of representation and consent. The monarchs of Europe began to view taxes as a means of financing government operations, rather than a tool of oppression. This led to the creation of parliamentary systems of government and the growth of representative democracies.

The Modern Era: In the modern era, taxes have become a crucial part of financing government operations, funding public goods, and redistributing wealth. The rise of progressive taxation has allowed governments to use taxes to reduce income inequality and promote economic growth.

Today, taxation continues to play a vital role in shaping society and funding government operations. The complexity and scope of modern tax systems have grown significantly, reflecting the changing needs and priorities of society. Despite its history, taxation remains one of the most controversial and debated topics in politics and economics, with different countries having different approaches to taxation.

In conclusion, the history of taxation is a long and complex one, spanning thousands of years and countless civilizations. Despite its many challenges, taxation remains an essential tool for financing government operations and funding public goods, and will likely continue to play a critical role in shaping society for generations to come.


Fiscal secrecy versus protection of contractors. Warsaw, January 31, 2023

Tax Ordinance provisions allow all taxpayers to obtain detailed economic and commercial information about their contractors.

The law permits exceptions to fiscal secrecy when disclosure of information is deemed to have greater legal importance. An exemption from fiscal secrecy can be granted to a specific entity upon request for information in the form of a certificate by a business owner, who is a contractor of a taxpayer, regarding events that the taxpayer was required to report in their tax declaration as per tax law provisions.

Information on the activities of entrepreneurs that may be disclosed to their contractors includes:

1) information that the entrepreneur has not submitted or submitted a declaration or other document, which he was obliged to submit under the provisions of tax laws;

2) information about the failure or recognition by the entrepreneur in the submitted declaration or other document, the events to which he was obliged under the provisions of tax laws;

3) information on the entrepreneur’s arrears or non-arrears in taxes resulting from the declaration or other document submitted on the basis of the provisions of tax laws.

The term “contractor” in this context is interpreted broadly. This allows for a wide range of information to be obtained from tax authorities. Both court rulings and legal doctrine support a broad interpretation of “contractor,” including partners and parties to both commercial and non-commercial agreements. The term can refer to general economic relations with a business owner, not necessarily tied to a specific transaction, or to the transaction itself (as per the 2022 Voivodship Administrative Court decision).

The regulations require the entity seeking information to be a business owner. However, there is no such requirement for the entity applying for a certificate. Any individual or entity who is a contractor (in a broad sense) of a business owner may apply for a certificate, regardless of whether they themselves are involved in business activities (as per the 2019 Voivodship Administrative Court decision).

The following objectives were indicated as justification for the introduction of provisions enabling obtaining such information in the draft act amending the Tax Ordinance:

1) protection of taxpayers against raising the consequences of dishonesty of contractors,

2) introduction of a procedure for reliable assessment of contractors,

3) enabling the taxpayer to obtain information about the tax situation of the counterparty.

As a result, taxpayers should be able to obtain information about their contractors beyond their direct transactions. If a contractor accurately records a transaction with a taxpayer but engages in fraudulent activities elsewhere, the goals of the law cannot be achieved. The aim of the law would not be met if verification of contractors was limited only to a narrow aspect of their activity.

Due diligence or caution may necessitate multiple verifications of a contractor. Therefore, it should be possible to obtain information about a contractor’s business activities from tax authorities even beyond the period of transactions between the contractor and the taxpayer requesting the information, which is protected by fiscal secrecy.

Obtaining information in this way is not limited only to VAT settlements, but can and should be used to verify all tax liabilities of our contractors.

Bernard Łukomski
tax advisor
phone +48 608 093 541

Taxation of dividends paid by a Polish company to non-Polish individuals. Warsaw, September 6, 2022

According to Polish tax law, there is a general rule that a flat-rate tax of 19% is charged on income paid in the form of dividends.  If a dividend is paid by a Polish company, it withholds tax on that dividend.

The company then transfers the tax withheld to a relevant tax office.  Failure to do so (e.g., failure to withhold tax and/or transfer the correct amount of tax to a tax office) may constitute a violation of fiscal criminal law and may be subject to fiscal criminal liability.  Fiscal criminal liability is borne by specific individuals responsible for the correct tax settlement, not the company itself.

The above standard tax rate (i.e., 19%) may be reduced depending on how this matter is regulated by a double taxation avoidance agreement concluded between Poland and the country of the dividend recipient.

The application for the reduced tax rate resulting from the double taxation agreement is possible providing that the place of residence of the dividend recipient is properly documented with a certificate of his tax residence.  Therefore, one should make sure that the certificate of tax residence meets the conditions set out by the law in order not to be exposed to the aforementioned criminal liability.

For example, according to the OECD Model Tax Convention (a model for countries concluding bilateral tax conventions), dividends paid by a company established in Poland to a resident of a foreign country may be taxed in Poland.  However, the tax charged may not exceed 15% of the gross amount of the dividend.  If the Polish company does not receive a tax residence certificate from the shareholder (i.e., the dividend recipient) or the certificate does not meet certain formal conditions, then the Polish company will not be entitled to apply the reduced tax rate resulting from the relevant double taxation agreement.

Moreover, the fact that the dividend paid (by a Polish company to a resident of another country) will be taxed in Poland does not mean that such a dividend cannot be taxed in that other country, as well. The provisions of most double taxation agreements explicitly stipulate that dividends may be taxed in both countries. On the other hand, if the dividend could be exempt from taxation in that other country (as long as the internal regulations of that other country allow such exemption), it will not result in the dividend not being taxed in Poland.

In other words, foreign rules will not apply in Poland.  A Polish company paying dividends will have to apply Polish tax regulations and will not be able to apply tax regulations of another country.  On the other hand, the recipient of the dividend (i.e., a foreign tax resident) will most likely have to make his tax settlements according to the tax regulations of his/her country of tax residence, taking into account the tax paid (withheld) in Poland.

Therefore, it should be examined if another country has the analogous rules as Poland with regard to dividends received by Polish residents from abroad.  According to Polish regulations, if a Polish tax resident receives a dividend from abroad, his/her income is taxed with 19% Polish tax on dividends.  However, from this calculated amount, he can deduct (provided certain conditions are met) the tax paid abroad (e.g., withheld by a foreign company) but still no more than 19%.  Any difference created in this way is subject to payment to a Polish tax office.  The shareholder (Polish resident) shows both the income and the amounts of Polish and foreign taxes in his annual tax return.

It is worth pointing out that the above general principles may be subject to certain modifications depending, inter alia, on the rules on which a Polish company is taxed. Other circumstances concerning the foreign resident’s relation with Poland or the nature of his ties with Poland may also be relevant.

Bernard Łukomski
tax advisor
phone +48 608 093 541

The Polish Deal 2.0: Amendment of corporate income tax

A draft amendment to the CIT Law has recently been published, which is a modification of the regulations which became effective in January 2022. Below we present the most important aspects of the planned changes to the Polish Deal.

Modification and postponement of the entry into force of the minimum income tax rules

The proposed amendments provide that the minimum income tax rules will be suspended for one year (i.e. from 1 January 2022 to 31 December 2022). They would consequently only start to be applied from 2023. In addition, the legislator foresees changes in the construction of the tax itself, in particular:

  1. The profitability index will be increased from 1% to 2% and at the same time the methodology for its calculation will be changed. The following will not be taken into account:
  • Tax deductible costs being the payment under a fixed asset lease agreement
  • Revenues being the value of trade receivables sold to entities in the factoring industry, and
  • Excise duty
  • The calculation of the minimum income tax will change. Currently, the levy is 10% of an amount equivalent to 4% of the value of income other than capital gains and passive expenses (concerning i.e. debt financing and intangible services). The draft does not change the tax rate which is still 10%; however, there will be two alternative methods from which the taxpayer can choose the more favourable one. The basis, depending on the taxpayer’s preference, will be either 4% of the value of revenues or 2% of revenues plus passive costs.
  • Among others, municipal companies, medical entities, small taxpayers, entities in bankruptcy or liquidation and those whose profitability in one of the last 3 tax years was above 2% will not be subject to minimum CIT at all.

Amendment of the regulations on controlled foreign entities/company (CFC)

The modifications to the CFC are based on 3 pillars:

  • Eliminating double or multiple taxation of CFC when cascading dividends in holding structures
  • Clarification of the rationale for the high profitability of a foreign entity relative to the assets held in case of potential disposal of assets during the year
  • Clarification of the definition of a subsidiary.

Amendments to the rules on taxation of flipped income

The aim of the proposed solutions is to eliminate the doubts raised by the business community by i.e.:

  • To include in the scope of the tax on flipped income only costs that are deductible
  • Clarification that the related entity for which the costs are incurred does not have its registered office or central administration in the territory of the Republic of Poland
  • Clarification of the condition concerning 50% of the revenue generated by a related entity and the condition concerning the transfer of revenue to another entity (at least 10%)
  • Simplification of the condition relating to preferential taxation in the country of residence, management, registration or location of the related party.

Changes to withholding tax (WHT)

The new rules aim to ease the WHT mechanism in force from 1 January 2019 by:

  • Exclusion of the application of certain obligations of broadly understood payers with regard to withholding tax on interest and discount on treasury securities (treasury bills and treasury bonds) by extending the material scope of the non-resident taxpayer exemption from income tax to include also treasury bills and bonds offered in the domestic market
  • In addition, the validity of a declaration by the board of directors that, in the exercise of due diligence, the payer was not aware of circumstances preventing the application of a lower withholding tax rate or tax exemption (provided for in an international double tax treaty) is to be extended.

Amendment of the rules on debt financing costs

As regards tax treatment of debt financing costs, the Ministry intends to eliminate interpretation doubts reported by taxpayers. This includes a clear indication that the amount of PLN 3 million or 30% of EBITDA – whichever is higher – will be excluded from tax costs. In addition, the provisions on debt financing costs will not apply:

  • Where the financier of the equity transaction is a bank or cooperative savings and credit union established in an EU or EEA country
  • In the case of debt financing granted to acquire or take up shares or all rights and obligations in entities unrelated to the taxpayer.

Modifications to the Polish holding company (PSH)

The changes are also to apply to holding companies – a new institution, effective from 2022:

  • The right to exempt 100%, and not as at present 95%, of the dividend income received from subsidiaries. In parallel, the holding company will be able to take advantage of the dividend exemption under EU Directive 2011/96/EU (Parent Subsidiary Directive) – this is not currently possible
  • It will be possible to benefit from both types of preferences
  • Introduction of a new definition of domestic subsidiary and foreign subsidiary

The aim of all these changes is to allow more entities than before to benefit from holding exemptions.

Amendments to the rules on flat-rate taxation of company profits

Changes are also envisaged in the provisions on flat-rate corporate income, commonly known as Estonian CIT. The legislator plans to:

  • Introduce modifications to the way income from non-business expenses is determined when assets (e.g. cars) are used for business and other non-business purposes
  • Clarify the condition for extinguishing a tax liability for a preliminary adjustment, i.e. a temporary difference between tax and accounting results, Once the changes have been implemented, it will be clear that the obligation will lapse in full after at least one full flat tax period, i.e. four tax years
  • Modify the deadline for payment of the tax due on the income from the transformation (unambiguous indication that if the tax on the income from the transformation is paid in full, the taxpayer is obliged to pay the tax by the deadline for submission of the CIT-8 return for the tax year preceding the first year of flat-rate taxation)
  • Modify the deadline for the payment of a flat rate on distributed profit income and income from profit to cover losses (also applies to advances on anticipated dividends) and a flat rate on distributed net profit income.

Amendment of the rule on the procedure for the refund of tax on income from buildings

From June 2022, commercial property owners will pay building revenue tax again. This is a result of the abolition of the epidemic status from 16 May 2022.

The procedure for refunding tax on income from buildings will be changed. The legislator plans to specify that the tax will be refunded without the need for a decision when the amount of the refund is not in doubt.

Amendment of the rules on the documentation obligation in respect of “haven transactions”

The amendments are to address the rules on direct and indirect haven transactions:

  1. Elimination of presumption of residency of beneficial owner in tax haven
  2. New reporting limits for indirect tax haven transactions:
  3. PLN 2,500,000 – goods
  4. PLN 2,500,000 – financial
  5. PLN 500,000 – other (“basic threshold”)
  6. Further emphasis on the role of the statement as “sufficient to verify the documentation obligation”

Having regard to the above regulations, which are planned to be introduced by the Ministry of Finance, it should be unequivocally stated that taxpayers will have to face further radical changes, which will significantly affect business operations. For further information, please contact Bernard.

“Blame game” ends as no-fault divorce comes into force

In a move which will benefit many Britons and their children, new landmark divorce reforms were introduced in the UK on 6th April 2022. Aimed at reducing conflict between separating couples, the reforms have introduced the no-fault divorce to remove unnecessary conflict and to ease stress on couples and children.

As part of a wider action to improve the family justice system, the new Act has introduced a new minimum wait of 20 weeks between application and conditional order of divorce. This will offer time to reflect, and potentially turn back, or where reconciliation is not possible to agree important arrangements for the future.

We also see the simplification of the language of divorce to make it more understandable. This includes replacing the terms ‘decree nisi’, ‘decree absolute’ and ‘petitioner’, with ‘conditional order’, ‘final order’ and ‘applicant’.

Following the implementation of the Act the government has also committed to look into further the law around financial settlements after a divorce, such as the dividing of assets or maintenance payments.

The no-fault divorce is the biggest shake up in UK divorce law for more than 50 years, and ends completely the need for separating couples to apportion blame for the breakdown of their marriage, helping them to instead focus on key practical decisions involving children or their finances and look to the future.

Prior to this, one spouse was forced to make accusations about the other’s conduct, such as adultery or ‘unreasonable behaviour’, or face years of separation before a divorce could be granted, regardless of whether the couple had made a mutual decision to separate.

A spouse, or a couple jointly, can now apply for divorce by stating their marriage has broken down irretrievably. It removes unnecessary finger-pointing and ill feeling at a time where emotions are already running high, and spares children from witnessing their parents mudslinging.

Importantly, it stops one partner from vengefully contesting a divorce and keeping their spouse in an unhappy marriage. In some cases, domestic abusers can use their ability to challenge the process to further harm their victims or to trap them in the relationship. The reforms will put an end to this behaviour.

On this website, we have written various posts about divorce that you may find of interest. Please click on this link – Divorce posts.

Polski Ład (Polish Deal). Taxation of the general partner of a limited joint-stock partnership (S.K.A.) – basic aspects. Warsaw, January 24, 2022

If you are looking for a remedy or solution to Polski Ład , you may wish to consider a limited joint-stock partnership (S.K.A.).

A limited joint-stock partnership can be a very effective form of running a business post the introduction of the Polish Deal.

The advantages to the general partner in relation to the taxation of a limited joint-stock partnership are presented below:

– income tax in the amount of approximately 17.3%, if S.K.A. is a “small taxpayer” (for other companies, the taxation of the general partner will be 19%);

– profit paid to the general partner is not subject to the obligation to pay social security contributions;

– the profit paid to the general partner is not subject to the obligation to pay the health insurance premium (it is a derivative of the lack of obligation to pay social security contributions);

– the profit paid to the general partner is not subject to taxation, the so-called solidarity levy (4%);

– the possible payment of the management fee to the general partner (resulting directly from the partnership agreement).

In order to take advantage of the deduction of income tax (CIT) paid by S.K.A. from the general partner’s tax (PIT), the profit of such a company should be paid within five years (counting from the end of the tax year following the year in which the company’s profit was achieved).

For further information about this topic, please contact Bernard.

Bernard Łukomski
Tax advisor
Tel: 608 093 541

VAT in relation to selling real estate plus the management of personal assets. Warsaw, September 2nd, 2021

Using a proxy to prepare a property for sale is equivalent to a business activity by the owner in the eyes of the tax authorities and is subject to VAT regulations. The position does not change, even if the buyer is the proxy. The authorities consider the seller of the property to be a VAT taxpayer even in the case of a one-off (occasional) transaction.

This position is enforced by the authorities (despite different assessments expressed by voivodeship administrative courts) even in the case of granting a power of attorney to the future buyer, who makes the purchase of a given property conditional on a change in its legal status and wants to take care of the relevant formalities himself.

During a recent case, the taxpayer defended himself by pointing out that the activities related to maintaining the status of the building plot and the request for exclusion from forest production were made at the express request of the buyer, who expected the property to comply with his requirements at the time of sale.

The property owner gave the buyer permission to perform the necessary activities on his behalf (conduct all formal and legal matters related to the entire process preceding the issuance of location decisions and building permits, apply to suppliers of all utilities to connect the planned investment to necessary networks, obtaining all decisions, resolutions, agreements and opinions in order to correctly connect the investment to the necessary utilities, etc.).

Despite this, the tax authorities found that in connection with the sale of the real estate, the owner of the real estate had become a VAT taxpayer for this one activity, which was the sale of the real estate. Thus, in the opinion of the tax authorities, the sale of real estate should have been subject to VAT.  The tax authorities also found that the owner’s activities went beyond the scope of private property management and should be considered as an economic activity in the field of real estate trading.

In the judgment of June 2021, the voivodeship administrative court did not agree with the authority’s assessment and recalled that economic activity within the meaning of the Value Added Tax Act is any activity of producers, traders or other service providers, also when the activity was performed on a one-off basis, but in circumstances indicating the intention to perform activities repeatedly.

In the opinion of the court, activities related to the ordinary exercise of the right of ownership cannot, by themselves, be regarded as conducting economic activity. The sheer number and scope of sales transactions made is not decisive, since the scope of the sales transactions cannot be used as a criterion for distinguishing between activities carried out privately which are outside the scope of the VAT directive and activities constituting an economic activity.

The situation is different when an owner takes active measures in the field of real estate trading and engages funds similar to those used by producers, traders and service providers. Such active activities may consist, for example, in preparation of the site for the installation of utilities or in marketing activities. Such activities do not fall within the scope of the day-to-day management of private property, therefore, in such a situation, the delivery of building land cannot be regarded as an activity related to the ordinary exercise of the ownership right.

According to the court, to recognise that a given person acts as a VAT taxpayer, it is necessary to establish that he or she carries out professionally, business activities in the field of real estate trading. Each time it requires checking whether a given transaction was carried out in connection with conducting business activity in this specific scope. It is not enough to state that a given person conducts economic activity at all. It must be an activity with a specific profile, because the performance of a given activity does not prejudge its taxation even on several occasions. The assumption that a given person, selling land, acts as a VAT taxpayer conducting commercial business activity, requires establishing that his activity in this field takes a professional (business) form, which is manifested in the activity of that person in the field of real estate transactions, which may indicate that his / her activities take an organized form.

When assessing the activities of the person selling the real estate, one should also take into account the activities at individual stages of the seller’s activity as a whole, and not only separately.

For these obvious reasons, in the opinion of the court, there were no grounds to recognize the seller’s activities as an economic activity within the meaning of the VAT Law.

Despite the clear and – it seems – convincing position expressed by the voivodeship administrative court, the tax authorities decided to bring a cassation appeal. This means that taxpayers selling real estate will soon be exposed to disputes with the tax authorities. At the same time, it will cause uncertainty on the real estate market and increase transaction risk.

Bernard Łukomski
Tax advisor
Tel: 608 093 541

Fiscal offense and exclusion of punishment – art. 16a of the Tax penal code. Warsaw, September 10, 2021

On July 26, 2021, the Polish government presented a draft law introducing extensive changes to the tax and social security laws, which were the subject of public consultations conducted by the Ministry of Finance up until August 30, 2021. These changes were partially announced earlier this year and are referred to as the “Polish Deal”.

The latest draft of the Polish Deal provides for an amendment to Art. 16a of the Tax Penal Code, which enables the avoidance of criminal liability in relation to the defective filing of a tax return. The draft regulation will also release the persons responsible for submitting the books from liability.

According to the current wording of this provision, it only applies to the person who:

(1) has submitted a legally effective (within the meaning of the provisions of the Tax Ordinance or within the meaning of the provisions of the Act on the National Revenue Administration) correction of the tax declaration, and
(2) paid in full, immediately or within the time limit set by the authorized body, the tax depleted or subject to depletion.

However, in the case of tax returns relating to legal persons, it is difficult for the perpetrator (i.e. a natural person) to meet the requirement to “pay” a public debt (e.g. VAT payable by the company). After all, a board member, CFO, accountant, etc. cannot pay taxes from their own resources on behalf of the companies they manage. The proposed wording of Art. 16a of the Tax Penal Code provides only for the necessity to pay the amount due without demanding that the amount payable be paid by the perpetrator himself.

The draft provision stipulates that if, in connection with a prohibited act, there has been a reduction in taxes paid, avoidance of liability is possible only when the liability has been paid immediately, but not later than within the time limit set by the financial authority of the preparatory proceedings. In other words, it is necessary to pay the tax without awaiting any indications in this regard from the tax authorities. However, it is important that the amount paid is in the correct amount. Otherwise, it will not be possible to avoid criminal liability.

Moreover, the proposed provision of Art. 16a of the Tax Penal Code specifies who may take advantage of its benefits, indicating that it is the perpetrator of a prohibited act concerning:
(1) submitting a return or
(2) submitting the books.

The provision in the current wording defined the beneficiary of this regulation, indicating this person in a general way, by referring to actions (activities) that exculpate him, taken post factum.

What is very important, the proposed provision clarifies that the exemption from liability shall not apply if, prior to the submission of a correction to the declaration or book, preparatory proceedings for a fiscal offense were initiated, or a fiscal offense was revealed in the course of the pending preparatory proceedings.

Bernard Łukomski
attorney at law
tax advisor
tel. +48 608 093 541