From 1 January 2019 The government introduces a new tax for legal and natural persons. It is obliged by the EU Council Directive on Anti-Tax Avoidance Directive (ATAD). Experts have doubts as to how the Polish government intends to implement its commitment.
Unrealised profit tax, emigration tax, "exit tax" or simply "exit tax". All these names include a newly introduced regulation that will be included in the tax system from 1 January 2019. Work on this tax was announced in August this year by deputy finance minister Paweł Gruza.
Blockage for tax tourism
According to Eurostat surveys, 2015 rod 45% Foreign profits made by international corporations have been transferred to so-called "tax havens" in various parts of the world. It's a bagatela. 627,000,000,000 EUR, What scientists have calculated as a corporate tax inheritance 200,000,000,000 per year (12% the world's tax profits).
EU council bodies have also noted this problem and it should not be surprising that they have attempted to seal the tax system. The Polish legislature also decided to take appropriate steps in this direction, inter alia, because the abovementioned directive obliges it to do so.
The law does not mention when the tax residence changes, so there are doubts as to when the tax obligation arises
However, already during the legislative process, there have been opinions that – which seems quite ironic – exit tax may violate EU principles of freedom of settlement and movement of capital. This was particularly highlighted by the Tax Council Polish Confederation Lewiatan.
They claimed that the tax introduced in such a form would cover not only entrepreneurs, which was intended to introduce this directive, but also natural persons who want to move abroad, or workers whose companies are posting to another country, and thus those who do not necessarily flee with wealth.
This was stressed, recalling that similar regulations in other EU countries were faced with strong opposition to the case law of the EU Court of Justice before the ATAD was issued. This was the case for Spain (C-64/11), Portugal (C-38/10), Netherlands (C-371/10) or Germany (C-164/12).
Currently, the exit tax for individuals, after adapting to the case law of the TEU, exists only in Spain, the Netherlands and France, the latter of which is considering withdrawing from its application, as President Emmanuel Macron has already announced.
Poland more restrictive than Brussels
According to the justification, the new tax is to apply to legal persons who decide to transfer part or all of their business abroad and to individuals who inhabit Poland from at least 5 years and plans to change the tax residence. In this case, the tax will include: revenue related to the business conducted, shares in companies, shares, securities, derivatives and investment funds.
The ATAD regulation indicates that the obligation to pay is to take place in four, specified cases:
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- when the assets are transferred from their head office to a permanent establishment in another Member State or country third;
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- at the time of the transfer of assets from a permanent establishment in a Member State to its head office, another permanent establishment in a Member State, or to a State third;
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- at the time of transfer of the taxpayer's tax residence to another Member State or country third, the omission of assets that remain linked to the permanent establishment of the previous tax residence;
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- when the taxable person moves the business of the permanent establishment from one Member State to another Member State or to a Member State third.
The CIT rate will be 19% the tax base. A similar rate will apply to individuals, but there is also a possibility to apply a rate 3% the tax base when the tax value of the asset is not determined. For enterprises, their value is to be taxed, and for individuals the assets are to be more than 4,000,000 PLN. Here too they appear first Doubts about the bill. 1
After first, The ATAD provides for the obligation to pay tax on tax emigration only to operators, while the amendment also imposes it on individuals. After second, Directive provides for the implementation of its guidelines to 1 January 2020 It is therefore all the more surprising to see the speed with which the Ministry of Finance makes these changes. The unclear provisions of the Act and the lack of interpretation of them raise considerable concerns.
Unprecise provisions of the Act
As for Polish regulations, the biggest doubts concern two lines.
In the course of the amendments introduced in the Sejm, the limit on the value of assets on which the tax will be charged was increased (from 2 to 4,000,000 PLN), but other records have also been deleted, which may lead to a situation where this limit is not taken into account.
Experts point out that, following the analysis of the new articles, it can be concluded that the four million limit will not apply even to private savings in securities at the time of the change of tax residence. This gives a field of disparaging to the taxpayer.
In addition, the Act does not mention when the tax residence changes, so there are doubts as to when the tax obligation arises.
Ministry of Finance has already announced that to all introduced from 1 January 2019 tax solutions will be explained. This will undoubtedly be useful because taxpayers are currently insecure about the actual tax burden they may face in the coming year. However, it would be better if clarifications were unnecessary and the provisions of the precise law, established during calm and careful legislative work.
1 New Article 30da. Personal Income Tax Act (Journal of Laws of 2018, item 1509 i.e. of 8 August 2018) and new Article 24f Corporate Income Tax Act (Journal of Laws of 2018, item 1036 i.e. of 30 May 2018)