Ending the flow of tax information between countries

More precise rules on the exchange of tax information between the Polish tax administration and similar institutions in the Member States of the European Union and in countries other than the EU will be provided.

Representatives of these bodies will be given additional powers, inter alia, in procedures for the provision of such information as takes place in the territories of individual countries.

Records will be modified not only for the exchange of such information at the request of the competent authority of the Member State but also in the automatic procedure.

According to the justification of the Law of 4 April 2019 amending the Tax Information Exchange Act with other countries and certain other laws[1] (hereinafter referred to as Law of 4 April 2019), Its provisions are intended to remove doubts about previous regulations and compliance with Council Directive2014 ♪ Oh, oh, oh, oh ♪107/UE from 9 December 2014, amending Directive 2011/16 on mandatory automatic exchange of information in the field of taxation[2], and in connection with Council Directive (EU) 2016/881z 25 May 2016, amending the DirectiveDirective 2011/16 for the mandatory automatic exchange of information in the field of taxation, developed by the OECD guidelines Common Reporting Standard (CRS)[3], BEPS standard (action 13) -Transfer Price Documentation and Country-by-Country Reporting, as well as a bill with 1 March 2018 combating money laundering and terrorist financing[4].

In the bill of 9 March 2017 specify, inter alia, the obligations of financial institutions to exchange tax information at the request of the competent authority and to automatically exchange tax information on reported accounts[5], where the reported account is defined as a financial account maintained by the reporting financial institution and held at least one a reporting or passive NFE (passive non-financial entity) controlled by at least one of the person in control who is the reported person[6]. The head of the National Tax Administration shall, ex officio, provide tax information to the competent authority of the Member State, if tax evasion or circumvention of the provisions of the tax law of the Member State is similar to that of the Member State; the use of tax exemptions by the taxpayer may give rise to a tax obligation or an increase in the tax obligation in the Member State; the determination of tax or control proceedings may be useful for the proper determination of the tax bases and the amount of the tax liability.

7.Exchange of tax information on request and ex officio

If information is exchanged on request, the scope of the amendment will be broader.

Under Article 19 of the Act of 9 March 2017, the Head of the National Tax Administration, in order to exchange tax information, will be able to enter into an agreement with the authority of the Member State on the presence of authorised representatives of the competent authority of the Member State at the premises of the tax authorities and their presence in the course of proceedings concerning the provision of tax information, tax proceedings and control activities, and these representatives will be able to ask questions to the witness and the party in the framework of the evidence of the witness or hearing of the party, as well as to review and preserve documents and other evidence relating to the case[8].

The justification for this law explains that it will also be possible to provide information by the Polish tax administration, namely that the taxpayer will be summoned and later questioned as a witness, and that the information will be sent to the administration which submitted the application[9].

In the Amending Act from 4 April 2019 a trust institution has been introduced, which, as indicated in the justification for this regulation, is important in the global standard of automatic exchange of information.

The definition of financial assets has been extended to real ownership rights in trust[10], the trust as a financial institution is resident: a participating country in which it is resident for tax purposes where that trust transmits information to that country in respect of trust-reported accounts; residence countries at least one from trustees of this trust in other cases[11].

Therefore, the trust may one to act as a reporting financial institution, and from second be an account holder held by a financial institution and be subject to automatic exchange of information.

Additional verification of accounts

As amended by 4 April 2019.if a new open account is held at the date of its entry into force during the period from 1 January 2016 to 30 April 2017, the reporting financial institution will be obliged to apply within the time limit 30 June 2019, to the holder of that account, with a request to make a tax residence declaration containing the actual opening date of that account[12]. If the reporting institution fails to obtain such a statement, it shall seek contact with the account holder in writing, telephone, personal or electronic communication.[13], by the date of receipt of this declaration, it shall treat the account holder or the person in charge as resident for tax purposes in accordance with the existing identification under the provisions of the Act of 9 March 2017

Statements of tax residence with criminal liability

In the amended law with 9 March 2017.It will also be recorded that tax residence statements will be filed under penalty for making false statements and contain a clause saying, ‘I am aware of the criminal liability for making a false statement’. This clause will replace a penalty instruction for making false statements[14].

Such a clause will also be introduced in the Act of 9 October 2015 on the implementation of the Agreement between the Government of the Republic of Poland and the Government of the United States of America on the Improvement of International Tax Obligations and the Implementation of FATCA legislation[15], the 4 April 2019 The requirement to provide instructions on criminal liability for making false claims will also be considered to be met in the case of claims of liability for making false claims made on forms W-8 and W-9, referred to in the FATCA Agreement and Annex I That's the deal.

In accordance with the above agreement between the US and the Polish governments, for the purposes of identifying financial accounts opened as U.S.

reported accounts, the reporting Polish financial institutions apply to account holders – natural persons, legal persons or organisational units without legal personality – with a request to make the required declarations[16].

New obligation of the applicant for a tax ruling

In the bill of 4 April 2019 also introduced provisions amending the Act of 29 August 1997 – Tax Ordinance[17], related to tax rulings.

Namely as amended, if the fact or future event presented in the request for an individual interpretation includes a transaction, a transaction team or other event: 1) with the participation of a natural person, a legal person or an entity not having legal personality: (a) which are domiciled, established or managed outside the territory of the Republic of Poland, or (b) which conduct business activities outside the territory of the Republic of Poland through a foreign establishment, and the transaction, transaction team or other events constitute part or all of the business activities of a foreign establishment, or (c) which are parties to a transaction, transaction team or participants in an event domiciled, established or managed in more than one the country or territory, or 2) having cross-border effects, the applicant shall also be obliged to indicate the country or territory of residence of that natural person, the data identifying that legal person or organisational unit without legal personality, including the State or territory of their registered office, management or location of that foreign establishment, or the country or territory in which those cross-border effects have occurred or may occur.[18].

The legislator stated that taxpayers would not have to comply with this obligation in the case of requests for interpretation relating solely to an individual case of a natural person, as well as in the area of excise duty and duty on goods and services.

The law aimed at further sealing the tax system – by facilitating the flow of information exchange between Member States' tax administrations – is intended to enter into force, except for third Articles, after 14 days after the announcement.

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