Sealing taxes and the Polish Order! What is the government preparing for taxpayers?


The Ministry of Finance announces another element of the Polish Order, which is to tighten taxes. The package is to include, among others: changing the limit of cash transactions in trade between entrepreneurs, solutions for the purchase of vehicles after the end of leasing from the company, counteracting attempts to avoid taxation, in particular when diverting income to tax havens. The changes are also intended to encourage undeclared workers to report such situations.

Cashless turnover and sealing taxes

Sealing taxes is to include, inter alia, promotion of cashless transactions. The deputy minister announces: "From July 1, 2022, we want to introduce the obligation to accept at least one of the forms of electronic payments, ie terminal, telephone payment or bank transfer. " The obligation is to apply to entrepreneurs who are obliged to use fiscal cash registers. This does not mean that customers will no longer be able to pay with cash, but it will allow them to choose a payment method that is convenient for them. He argues for the decision that “most of the shadow trading nowadays is carried out with cash". Moreover, the project would also cover the change of the permissible limit of cash transactions between entrepreneurs from the current 15,000. PLN up to 8 thousand. zloty.

Tax sealing and a way to get vehicles out of the company after leasing

The announced project is also intended to cover entrepreneurs who use operational leasing and then, after paying the leasing installments, purchase the vehicles privately. Currently, it gives them the opportunity to sell such a vehicle without income tax after 6 months. If the post-leasing car became the company's property, the sale would have to be waited for as much as 6 years (counting from the withdrawal of the vehicle from the company's records). The Ministry of Finance is to provide a solution thanks to which the entrepreneur will include revenues from the sale of a post-leasing vehicle as revenues from activity. The decision is argued by: "It cannot be that the company bought a car and then its owner buys it for the proverbial zloty. As a result, the cost of a private car is passed on to the company. This type of practice has no justification, it is a total exception in the EU. (...) This change will be particularly important for those entrepreneurs who frequently (e.g. every year) replace their cars with newer and newer ones”.

Sealing taxes and transferring assets to the company

Tax sealing is supposed to be about transferring private property to the company. So far, after bringing in, for example, a used passenger car, the entrepreneur could depreciate it, and thus - include the initial value of the car, which is the purchase price, in the tax deductible costs. The ministry plans to introduce such solutions so that depreciation is possible, but on the current market price, and not on the historical purchase price.

A way of diverting income to tax havens and sealing taxes

Another way to seal taxes is to hinder the transfer of untaxed profits to tax havens via the so-called shell companies. As the deputy minister explains: "Therefore, following the example of Italy, Spain and Denmark, we want to clarify the concept of "place of management" for tax purposes, so that the shell company registered by Polish owners in Cyprus can be taxed in Poland (...). If it is considered that a given payment, resulting in a reduction of the tax base of the Polish taxpayer, is incurred for the benefit of a shell company from Cyprus or Luxembourg, such a tax benefit will be "neutralized"”.

Sealing taxes by fighting illegal employment

The ministry also has an idea to fight illegal employment. The current system discourages illegally employed workers from reporting such incidents. They would have to be fined not only for overdue, unpaid taxes, but also for late payment interest. The solution would be not to punish employees, and the consequences would be borne only by the employers. If an employee reports that he is employed illegally, the employer would be obliged to pay the employee's income tax and interest. Moreover, such a paid tax would not constitute tax deductible costs neither in PIT nor in CIT. The Ministry of Finance hopes that after such a change, employees, guided by their own interests, will inform themselves about unfair practices.

The introduction of controlled companies is to facilitate the sealing of taxes

The government also wants to propose an extension of the current regulations on CFDs (Controlled Foreign Companies). The assumption is that the difference in taxation between Poland and another country is not to be 50%, but 25%, which is similar to Germany, the USA, Great Britain, France and Spain. Two new types of companies recognized as CFDs would be established, namely:

  • companies achieving "excess" income, not covered by their assets;

  • a shell company (the so-called letter box company), in which assets of a passive nature (real estate, shares in other companies) are located.

As part of sealing taxes, the catalog of intangible services is also to be expanded to include intellectual property rights and know-how. The deputy minister explains: "Currently, it is profitable for international corporations to set up companies with minimal capital and finance themselves with debt, so that instead of dividends, they pay themselves interest, which is a tax expense.”.

Exit tax and sealing taxes

Another solution proposed as part of sealing taxes would be to supplement the "Exit tax" regulations, i.e. the tax on the removal of assets from Poland, implemented in 2019. Sarnowski explains: “Exit tax is a standard in the EU. Polish regulations need to be supplemented, because they only apply to an ordinary move out of Poland, and not to other activities with the same effect, e.g. merging a Polish company (branch) with a foreign concern or contributing it in kind. That is why we want to increase the number of exit tax incidents, as is already the case in Germany, France and Belgium. "

As Deputy Minister of Finance Jan Sarnowski announces: "The purpose of these regulations is to level the playing field between honest entrepreneurs and those who operate outside or on the border of the law. It cannot be that companies using aggressive tax policy or abusing regulations are in a better competitive situation than those that do not know such tricks.”.

According to the government, sealing taxes is related to the costs of the Polish Governance and is to bring the budget PLN 6 billion next year and PLN 9 billion in 2023. The project is to be made public this week.