Proceedings of evidence in cases relating to the taxation of non-coverage revenues in undisclosed sources or from sources not disclosed under the provisions of the Personal Income Tax Act

This Article sets out a model of the evidentiary proceedings carried out in the course of the procedure concerning the taxation of non-recovery revenues in disclosed sources or from undisclosed sources. The current tax rules for such revenues have been introduced through the amendment of the Act of 26 July 1991 on personal income tax[1].

Act with 16 January 2015 on the amendment of the Personal Income Tax Act and the Act - Tax Ordinance 2 The legislator decided to add Chapter 5a to the u.p.d.o.f., which intended to regulate the tax issues precisely.

The proposed amendment was a consequence of the two judgments of the Constitutional Court 3 , which concluded that the provisions governing the matter in question so far were unconstitutional.

1. Introduction – amendment u.p.d.o.f.

In Chapter 5a cited above, the legislator created a new, comprehensive system of taxation of non-coverable revenues in revealed sources or from undisclosed sources. In this chapter:

• • the non-disclosed revenue is defined;
• • the principle that First, Whereas the source of revenue and their taxation should be sought at a rate other than the penalty rate;
• • it is specified in which situations the tax authority may determine the amount of the tax liability for personal income tax and in which revenue tax which is not found to be covered in disclosed sources or from undisclosed sources;

• it was pointed out that a tax liability for non-discovery revenues in undisclosed sources or from undisclosed sources would not arise if the decision establishing that obligation was served after the expiry of the 5 years from the end of the year in which the tax obligation arose;
• the presumption that the revenue obtained by the taxpayer derives from activities which may be the subject of a legally effective contract is introduced; this presumption can be refuted by demonstrating that the revenue derives from activities which cannot be the subject of a legally effective contract[4].

It should be noted that the amendment did not make any modifications to the evidence by which the Authority can make the arrangements on which the case was decided.

Therefore, the application of the non-disclosed income tax procedure will continue to apply to Chapter 11 Division IV Act on 29 August 1997 - Tax Ordinance 5 in an unmodified form. An important novum in the rules on taxation of non-discovery revenues in undisclosed sources or sources is described under Article 25g(7) u.p.d.o.f.

a standard on the basis of which tax authorities will seek to tax certain revenues from certain sources of origin in accordance with the relevant legislation. This possibility will be the case if the source of the revenue (income) and its amount is established in the course of the procedure.

At the same time, such a finding will exclude the possibility of recognising such revenues (incomes) as non-recovery revenues in undisclosed sources or from undisclosed sources[6].

An important amendment introduced by the Amending Act is the new provision contained under Article 2(6) u.p.d.o.f.

This was motivated by the fact that, in the current practice of tax authorities, tax authorities were met with the tax payers' anti-payment income tax, which was to explain that the revenues intended to cover the expenditure incurred came from criminal activity.

Such presentation of the source of revenue put the tax authorities in a difficult situation, making it necessary to prove that the source of revenue was actually different. In accordance with the wording of u.p.d.o.f.

applicable from 1 January 2016 it is assumed that the taxable person's income comes from activities which may be the subject of a legally effective contract, unless evidence submitted by the taxable person can demonstrate the existence of an opposite factual situation (i.e., that revenue comes from criminal activity or from other activities which cannot be the subject of a legally effective contract)[7].

The amendment in question has also introduced changes to Mr Added Article 68(4a) o.p.

states that the tax liability for the taxation of non-discovery revenues in undisclosed sources or from undisclosed sources does not arise if the decision establishing that undertaking has been served after the expiry of the 5 years from the end of the calendar year in which the tax obligation in this respect arose.

The scope of cases where the checking procedure can be applied has also been extended by introducing point 4 under Article 272 o.p., on the basis of which it will be possible to verify the expenditure incurred by the taxable person and the revenue generated (non-taxable income) to the extent necessary to disclose the tax base on non-disclosure revenues from undisclosed or undisclosed sources.

1. Persons who may have non-disclosed sources or non-disclosed sources of income

In view of the nature of the proceedings in relation to revenue which is not covered in the disclosed sources or from undisclosed sources, quite specific groups of persons remain in the area of interest of tax authorities. A list of such persons can be found in the guidelines of the Minister of Finance for tax control offices and tax offices concerning the procedure for revenue not found to be covered in revealed sources or from sources not disclosed from December 2010 8 . These are persons “acquired of considerable value, persons of expressive wealth, or persons who are presumed to be able to obtain income other than declared income, including:

• • buyers of real estate of significant value throughout the country, as well as abroad,
• • buyers of movable goods of considerable value and luxury services (e.g. foreign trips),
• • people buying luxury goods: yachts, motor boats, expensive cars, aircraft, expensive electronic equipment, antiques, works of art, jewellery products, interior fittings, etc.,
• • stock investors,
• • persons with significant bank deposits and accounts in many banks,
• • purchasers of significant quantities of shares in commercial law companies,
• • owners of newly created companies, with particular emphasis on young people, should include those who liquidate companies after a short period of their activities and then start new entities operating in the same or related industries,
• • an undertaking permanently suffering a loss from its business activity or showing very low income and at the same time acquiring significant value,
• • persons not declaring any income and bearing significant expenditure,
• • young people, acquiring real estate and other movable goods of significant value,
• • donors and lenders of significant values,
• • participants in fictitious transactions (the so-called poles) and persons engaged in other economic activities,
• • representatives of specific professional groups, so-called free profession (e.g. doctors, lawyers, economists, engineers, architects, surveyors, patent attorneys, translators, accountants),
• • persons making substantial bail, • public and local government officials suspected of corruption and/or perceived as disproportionately wealthy compared to their official remuneration,
• • persons with access to financial information that may be of interest to other entities (member of the board of directors of companies with the participation of the Treasury and municipal companies, managers, business directors),
• • Presidents of housing cooperatives, members of tendering committees or other persons having direct influence on the results of tenders,
• • members of the boards and supervisory boards of commercial companies registered in tax havens and persons associated with them,
• • persons subduing business income without fiscal cash, including in particular those operating in the markets and those providing services to the population, i.e. construction, catering, transport, physical culture, etc.’ 9 .

The disclosure of the Finance Minister's instructions met with a wide response in the press 10 , and among parliamentarians.

The fact that such an extensive list of persons to whom proceedings could potentially be initiated is explained in the reply given by the Ministry of Finance to a parliamentary hearing, ‘that these are only examples of the interest of tax authorities where, on the basis of experience to date, the risk of undisclosed revenue may arise’ 11 .

It was also stated that the most numerous group of persons concealing income were those engaged in economic activities, and that cases involving such persons constituted 61.8% all cases under investigation.

A high-risk group may also include persons entering organised criminal groups and members of their families, or more broadly, persons benefiting from criminal activities.[12]. Given the content Article 2(6) u.p.d.o.f., the possibility of a decision on such persons is as real as possible.

It is also stated that an institution for taxation of undisclosed revenue may be used not only to combat the black economy. It can also be used against taxpayers who "distribute their assets at the expense of the tax creditor – the Treasury, or transfer funds from a crime which should be forfeited under criminal law" 13 .

1. Verification of the implementation of tax obligations by means of checking operations

Where tax authorities establish that there is an excess of expenditure in the tax year on taxed or non-taxed incomes or incomes, an investigation should be carried out to clarify this situation. This verification is carried out by carrying out a tax check or a tax proceeding.

They may be preceded by the verification activities described in Section V.p. Introduction to the regulations o.p. point 4 under Article 272 has concluded the dispute in practice so far as to be applied Division V O.p. also to undisclosed revenue[14].

Expanding the scope of activities that can be carried out on the basis of Article 272 O.P., however, met with criticism. Allegations concerning point 4 Article 272 o.p.

boils down to questioning the appropriateness of carrying out verification activities in relation to cases relating to non-disclosed revenue, as the main purpose of the verification activities is to correct the declarations made by the taxpayer.

The introduction of the possibility of carrying out verification activities also in relation to revenue not covered in disclosed sources or from undisclosed sources may result in the elimination of the distinguishing characteristics of tax proceedings from the verification activities[15].

Due to the current wording of the provisions, the problem arising from the extension of the scope of the activities envisaged is apparent. Article 272 Name Division V o.p.

does not include any further powers that could be conferred on the tax authorities in connection with the verification of the expenditure incurred by the taxpayer and the revenue generated.

Thus, at present, it can only be presumed by which activities will carry out the checking operations to the extent necessary to disclose the tax base on non-discovery revenues in undisclosed sources or from undisclosed sources.

The catalogue of these activities is clearly defined in the legislation Article 272-280 In view of the specificity of the non-disclosed revenues, the substance of which is that the taxpayer has not previously filed for taxation in the relevant tax returns, it appears that the body carrying out the verification activities after the fact that the taxpayer has received an excess of expenditure on taxed or non-taxed incomes (income) could, on the basis of Article 274a(2) o.p.

only call on the taxpayer to provide appropriate explanations as to the correctness of the declarations made.

In order to be able to carry out such an activity, the Authority would have to indicate the reasons for doubting the reliability of the data contained in the declaration and would have to have previously had knowledge that would allow it to assume that the declarations made by the taxable person were not reliable.

This method of application Article 274a(2) o.p. in the case of proceedings relating to undisclosed income occurred in the legal state applicable to 31 December 2015 and met with criticism as illegal. Introduction point 4 to Article 272 o.p. will only result in sanctioning the current tax authorities' trend of pre-tax control or tax investigation by carrying out verifications.

1. Initiation of a tax investigation or review in cases concerning revenue not covered in disclosed sources or from undisclosed sources

The basis for the initiation of a tax investigation or control by the tax authorities is to have knowledge of the existence of an excess of expenditure on taxable income in a given tax year or in previous years.

An important issue that arises at this stage is to resolve whether the tax proceedings carried out in connection with the possible existence of revenue which is not covered in revealed sources or from undisclosed sources should be preceded by a tax audit.

No provision of the General Court requires a tax check to be carried out directly before a tax investigation is initiated.

It seems that the failure to carry out a tax audit would deprive the tax authorities of the possibility of carrying out a number of activities which, given the nature of the proceedings in relation to revenue not found to be covered in disclosed sources or from undisclosed sources, could be useful.

In the course of tax checks, the taxpayer may be required to provide written explanations on the basis of Article 287(3)(4) o.p. Article 288 o.p.

also gives the possibility that an authorised employee of the tax inspection authority may enter the area, the building or the premises controlled to inspect and search the dwellings, other premises or items. To do this, according to Article 288(2) o.p.

it is necessary to obtain the approval of the prosecutor, which is issued at the request of the tax authority. Article 288 s.p. may apply in particular to cases relating to undisclosed revenue.

According to Article 282b(1) The tax authority is, in principle, obliged to notify the controller of its intention to initiate a tax audit.

Exceptions to this principle are defined under Article 282c according to section 1 point 1 point (c) that provision, the tax authority shall not notify the controlled person when the case concerns the taxation of revenue not found to be covered in disclosed sources or from undisclosed sources.

The purpose of this regulation Article 282c There is no doubt about it. An unannounced search may provide the tax authority with the relevant information and evidence necessary to correctly determine the amount of expenditure incurred by the taxable person. The search with the selected taxpayer should be conducted after prior examination.

In addition, such a search should be carried out with an expert[16]. Such actions are absolutely understandable. The complexity of the facts in such cases makes the participation of an expert seem necessary for the correct assessment of, for example, the mobility of taxable persons.

It is essential to recognise the fact that the taxable person holds movable property which may be of high value, to include it in the minutes drawn up from the checks carried out and then to assess them at a further stage of the proceedings in order to correctly determine the amount of expenditure incurred by the taxable person in the tax year.

It should be pointed out that, in the past practice, tax authorities often referred to such proceedings as a right resulting from Article 285a(3)(4) O.P., on the basis of which it was possible to require a controlled declaration of assets. The tax authority could have requested such a statement when there was a reasonable presumption that the controlled one did not disclose all turnover or revenue relevant to the determination or determination of the amount of the tax liability.

Such a statement was made under penalty for false testimony. This possibility existed in all cases in connection with the proceedings concerning undisclosed income. However, there was a clear difference between making a statement based on Article 285a(3)(4) O.P.

and the statements made by the party in the course of the tax proceedings on the basis of Article 180(2) o.p. or the testimony of the party, based on Article 199 In the course of the tax proceedings, however, the party was allowed to comment only after its consent. Provisions from Article 285a(3)(4) o.p.

were, however, repealed by law from 10 September 2015 on amending the Act - Tax Ordinance and some other laws 17 , so from 1 January 2016 the situation of the taxpayer in respect of which the tax control will be carried out on the basis of the wording of the current legislation has been strengthened Division VI The clear difference in tax treatment from tax control in the context of the powers conferred on the tax authorities makes it possible to conclude that the advance of the tax procedure by tax control will be a mere practice of tax authorities in cases relating to revenue which is not covered in disclosed sources or from undisclosed sources.

5 Procedural proceedings in proceedings concerning revenue not covered by uncovered sources or from undisclosed sources

5.1 General issues

It is also necessary to mention the general principles of tax proceedings when examining the various elements of evidence in cases relating to undisclosed income. These principles, given the specific nature of the tax procedure in question, are of particular importance.

Described under Article 120-129 The general principles of tax proceedings are intended to ensure the protection of the rights of the parties in the course of tax proceedings. These rules, with some exceptions, repeat the general rules of procedure contained in the Act of 14 June 1960 – Code of Administrative Procedure[18].

There is no transfer of the principle of taking account of the social interest and of the legitimate interest of the party. The principle of information has been substantially modified.

Article 9 (a) imposes an obligation on the investigating authority to be duly and exhaustive inform the parties of the factual and legal circumstances which may affect the determination of their rights and obligations under administrative procedure.

sentence second that provision requires the authorities to ensure that the parties and other persons involved in the proceedings are not harmed by the lack of knowledge of the law and to that end they provide them with the necessary clarifications and guidance.

The equivalent of this principle, contained under Article 121(2) o.p., imposes much less stringent obligations on tax authorities, as it only requires the provision of the necessary information and clarifications on the tax legislation in connection with that procedure.

The specificity of the tax procedure justifies such a reduction in the obligations of the tax authority, in particular in the course of the procedure concerning undisclosed income. However, the taxpayer will be able to seek protection in other general principles.

The principles of material truth and of the party's active participation in the proceedings, described above, appear to be the most important in the context of proceedings concerning undisclosed income conducted under Chapter 5a. Under Article 122 and 123 It becomes reasonable to ask how the rules described in these provisions have been modified by regulation. Under Article 25g U.P.D.F.?

Included under Article 25g(1) u.p.d.o.f. the principle that it is for the party to bear the burden of proof in the field of showing taxed incomes or incomes (non-taxed incomes) which cover the expenditure, results in a kind of extortion of active participation in the proceedings on that party, which so far constituted only its right.

Binding this principle to the standard contained under Article 25g(3) u.p.d.o.f., which entitles the party to produce similar income (income) taxed or non-taxed revenue (income) to cover the expenditure, modification of the general rule contained under Article 123 The o.p. becomes clearly visible.

In turn, the introduction of a presumption (in the case of failure to prove or to believe revenue (income) referred to in the sentence first Article 25g(3) U.p.d.o.f., that revenue (income) is considered to be revenue from undisclosed sources) clearly modifies the principle of Article 122 The tax authorities shall take all necessary steps to clarify the facts precisely.

Since proceedings concerning undisclosed income and its termination in the form of a decision setting out significant interference with the taxpayer's property sphere, the tax authorities are required to take particular care of the application of the tax procedure.

The tax authority in this proceeding shall have the possibility to examine in detail the expenditure incurred by the taxpayer in the year and to compare it with the values declared for tax or exempt from taxation.

Therefore, the taxpayer must have a full spectrum of possibilities to explain the sources of origin of the financial measures in question, which are ‘suspected’ in the assessment of the tax authority.

For this reason, there is a clear position in the case law of the NSA that calls for tax proceedings to be carried out in such cases with careful compliance with the provisions of the General Court. 19 .

The principle of Article 2a o.p. that the irrefutable doubts as to the content of tax legislation are settled in favour of the taxpayer. This provision was introduced to the General Court under Article 1 Act on 5 August 2015 on amending the Act - Tax Ordinance and some other laws[20]. Article 2a o.p.

therefore orders to settle doubts as to the content of tax legislation[21], However, given that the specific issues relating to the treatment of taxation of undisclosed income are laid down in the Personal Income Tax Act, there is no doubt that it can be applied.

The introduction of the principle in dubio pro tributario to the provisions of the O.P. ends the dispute as to the possibility of actual application during the tax proceedings. Directly from the wording of this provision, it follows that only doubts as to the content of tax legislation (defined) can be settled in favour of the taxpayer.

Under Article 3(2) o.p.. This principle will therefore not apply to any doubts as to the facts of the case. For this matter, the principle of the free assessment of evidence, detailed, remains valid. Under Article 191 o.p.

1. 2 Measures of evidence in the proceeding concerning revenue not covered by the disclosed sources or from undisclosed sources

Tax authorities should act to clarify the facts in detail after proceeding on undisclosed income (Article 122 o.p.). The Authority will explain this fact by means of evidence which can be anything that can help explain the case and at the same time is not illegal (Article 180 o.p.).

The standard contained in this Article is particularly important in matters relating to undisclosed income. In the course of the proceedings, the taxpayer will be able to use a wide range of evidence to demonstrate the origin of the financial resources by which he made the specific expenditure which the tax authorities have contested.

An open catalogue of evidence is necessary to protect the rights of the taxpayer in such proceedings, as sometimes proceedings concern the expenditure of the taxpayer incurred in previous years, and proving the source of the financial resources, precisely in view of the passage of years, may cause significant difficulties in providing adequate evidence from documents.

Once again, the specificity of this procedure makes it possible to specify the means of evidence which will be particularly important in the course of the procedure concerning undisclosed income.

Such evidence will certainly be evidence from the hearing of the party based on Article 199 This is a natural consequence of the introduction to u.p.d.o.f. of the rules contained under Article 25g(1) and (3).

The transfer of the burden of proof to the taxable person forces him to take active part in the proceedings, which may be reflected in the submission of evidence in the course of the proceedings.

The taxpayer has no obligation to testify, but in his broad interest it is to exercise the right he gives him Article 199 The specificity of the testimony given by the taxpayer in the course of the tax proceedings is to obtain prior consent for their submission, which must be clearly and categorically expressed, which should be reflected in the relevant statement made to the minutes drawn up in connection with that act.

On the basis of the wording of the regulations applicable before 1 January 2016 there was a view denying the usefulness of the evidence from the hearing of the party, in particular in the course of the proceedings concerning undisclosed income[22].

This was due to the fact that there was a presumption that the taxpayer would give evidence of the content intended to deny the fact that there were undisclosed sources of income (income) or the presentation of sources of origin of funds in such a way as to impede or prevent verification by the tax authorities, for example, that the expenditure in the tax year was financed from the fornication which the taxpayer had authorized.

There was also the view that such evidence could not bring any new information to the proceedings, since the taxpayer, being best informed about the sources of origin of the funds spent by him, is also directly interested in establishing the most favourable facts for the taxpayer in the course of the proceedings.[23].

The adoption of such tactics by taxpayers has often caused tax authorities to treat this evidence skeptically. Such views have ceased to be valid due to the transfer of the burden of proof to the taxpayer, as well as to the described under Article 191 o.p.

a rule imposing an obligation on tax authorities to assess whether a given circumstance has been proven only on the basis of the entire evidence collected on the case.

The rights and obligations thus formulated by the entities involved in the non-disclosed revenue proceedings are such that evidence from the hearing of the party can be defined as the most important evidence to be carried out in the course of the proceedings.

Even though the provisions of the General Court do not contain a record ordering this proof. It should be preceded by a thorough preparation and knowledge of a particular case by the person carrying out the activity.

This is necessary because, depending on the source of the financial resources presented by the taxpayer, further examination of the circumstances presented by the taxpayer will take place. According to the Finance Minister's guidelines, 2010.

where the party to the proceedings is entitled to rely "on acts and events which he is unable to document in writing (no documents due to the passage of too long time, no written form for specific legal acts, etc.) it will be essential to collect material which will allow to contest a declaration made at a further stage of the proceedings, due to inaccuracies or contradictions" 24 .

In view of the current wording of the rules governing the procedure concerning undisclosed revenues, it appears that the guidelines of the Minister of Finance have lost some time to date.

The reasons for this can be seen in the transfer of the burden of proof to the taxable person who has to demonstrate that taxed income (income) or revenue (revenue) not taxed were to cover the expenditure.

In relation to the taxed income or non-taxed income under Article 25b(4)(3) u.p.d.o.f., which covered the expenditure and was subject to the limitation of this tax obligation, is solely the obligation of the taxpayer to compare them.

There is therefore a clear distinction between two „the types’ of revenue (revenues) that are required to be shown to cover expenditure in order to avoid the taxpayer’s revenue (revenues) being treated on the basis of content Article 25b(1)(1)(2) u.p.d.o.f.

A list of evidence relating to the active participation of the party to the proceedings should also be included in the list of evidence of criminal liability, which is received in order to confirm certain facts or legal facts envisaged Article 180(2) o.p.

Receipt of such declaration shall be admissible where no provision of law requires official confirmation of certain facts or legal status by means of a certificate. Receipt of the declaration as provided for Article 180(2) There are significant problems.

On the one hand, must be treated as an ordinary means of evidence which is assessed by the investigating authority. However, there is a problem which allows for the conclusion that the submission of statements in the course of the procedure on undisclosed income may be considered as without object[25].

The practice applied by the tax authorities in the course of proceedings concerning undisclosed revenue, relating to the right to meals resulting from Article 155 On the basis of this provision, the taxable person was called upon to give an explanation, since it was considered necessary to establish the facts or to decide.

The tax authority's request for clarification is characterised by the fact that, in the absence of a response to such a request, there is a possibility of imposing a judicial penalty on it. Furthermore, a party may not waive such explanations by refusing to accept them, as such entitlement shall be granted only if the party is heard.

In practice, there was a substitute for the conduct of evidence from the hearing of the party requesting an explanation. In view of the problem with the classification of such explanations as evidence that may form the basis for the ruling, criticism of the tax authorities can be heard, which reaches for the power of Article 155 o.p.26.

These doubts arose due to the tax authorities' practice of calling on the taxpayer to provide clarifications on the records of fixed assets held by telecommunications companies.

As indicated, a detailed analysis of such records (in the case described, telecommunications cable records) would be difficult and time consuming for tax authorities.

Therefore, using the powers resulting from Article 155 It was decided to ‘transfer’ to the taxpayer the need to provide information on the basis of which the tax could be imposed. Any explanations of the taxpayer would therefore form the basis for the actual findings of the tax authority in a given case.

It was alleged that such information should be obtained by hearing the party on the basis of Article 199 o.p. However, to obtain them, the consent of the party is required. Such power shall not be exercised by the taxable person if he is asked to explain.

For this reason, it was requested that the taxpayer treat such a call for clarification as a need to testify. Then, based on Article 199 o.p. could refuse to accept such “explainations”.

Alternatively, the taxpayer could consider that he was effectively called upon to provide an explanation, but that their specific scope could cover matter which should be obtained by the tax authority li only by means of a hearing, and would therefore be entitled to refuse to submit it.

However, case law allows such practice based on content 180 o.p., recognising the submitted explanations as evidence, since according to that provision the proof may be anything that can contribute to the clarification of the case and is not contrary to the law.

However, it is noted that this cannot be done with the intention of circumventing the law, which gives the party the opportunity to refuse to accept its message[27]. Equally important and often appearing evidence in the course of proceedings concerning undisclosed revenue will be evidence from the hearing of witnesses.

According to Article 196(1) The principle is that anyone who has knowledge of the subject matter of tax proceedings may be a witness, and such a person has no right to refuse to give testimony (except for the spouse of the party, preliminary, descending and siblings of the party and of the related persons).

first the degree, as well as the persons remaining with the party in relation to adoption, care or guardianship. As in proceedings involving other branches of law, Fr.

According to Article 195 These will be persons unable to perceive and communicate their observations, persons obliged to keep classified information secret on the circumstances covered by the secrecy, if they are not, under the applicable law, exempted from the obligation of secrecy, as well as clergymen of legally recognized confessions, as regards facts covered by the secrecy of confession.

The current rules governing the taxation of undisclosed income make it more common for parties to submit witness hearing requests. This is a consequence of the changes introduced by the legislature in u.p.d.o.f., which entered into force 1 January 2016, under which taxpayers will be able to indicate, as a source of expenditure, revenue which has not yet been declared for tax.

It can therefore be assumed that taxpayers will submit requests for the hearing of witnesses on the level of income generated in previous periods preceding those contested by the tax authorities, on the fact that they are gaining income abroad, etc.

It is also possible that taxpayers, in order to avoid the application of the rules on personal income tax to their incomes (incomes), will apply for a hearing of witnesses to the fact that their assets or the amount of funds spent in the tax year come from activities which cannot be the subject of a legally effective contract.

Accepted under Article 2(6) u.p.d.o.f. the presumption requires that, in the absence of contrary evidence, these revenues should be regarded as coming from activities which may be the subject of a legally effective contract. Therefore, if the taxpayer seeks to demonstrate the opposite, he will be forced to take an initiative to prove it.

A means to achieve this objective First, there will be evidence from the witness' testimony by which the taxpayer will be able to prove that the proceeds come from a crime or other activity which cannot be considered legally effective. Included under Article 2(6) u.p.d.o.f.

"in the absence of opposing evidence" offers taxpayers quite wide opportunities. Such a provision in the Act does not preclude that only one proof that revenue is derived from an activity which may be the subject of a legally effective contract.

Hypothetically, it can be assumed that the taxpayer will provide evidence in the form of witness testimony by which he will show that the source of the financing of the expenditure is revenue from prohibited acts. Thus, the condition of Article 2(6) u.p.d.o.f.

the existence of the opposite evidence, which would close the way for the tax authorities to make decisions in connection with ongoing proceedings concerning undisclosed income.

However, a detailed examination of this provision should be expected in the decisions of the administrative courts which will examine the decisions which the taxable persons have contested.

An important aspect of the evidence process in the course of the case concerning undisclosed income will be the examination of evidence from documents. Evidence from documents in the course of the proceedings will cover a wide range of evidence measures.

First, These will be the taxpayer's tax books and declarations, as well as other documents collected in the course of the checks or tax checks, as well as materials collected in the course of criminal proceedings or in cases of fiscal criminal offence or fiscal misdemeanour (Article 181 o.p.).

Documents from banks and other financial institutions may also be used (Article 182-185 o.p.). Included under Article 181 However, the wording ‘in particular’ allows taxable persons to present in the course of proceedings other documents, whether official or private, by which they will have beneficial legal effects.

The wealth of facts in cases relating to undisclosed income shows that this document may be both an air ticket and a passport with seals[28].

An interesting issue is also the possibility of using undisclosed evidence from the expert's opinion in the course of the proceedings. The possibility of such proof allows Article 197(1) o.p., which provides that, where special messages are required on a case, the tax authority may appoint an expert with such messages to give an opinion.

Note that Article 197(2) o.p. provides for the possibility of mandatory proof from an expert opinion when required by tax law. The provisions of Chapter 5a do not explicitly specify the need for evidence from an expert opinion. However, it is important to include under Article 25g(6) u.p.d.o.f. referral to her Article 19.

It will apply where the taxpayer does not have evidence of the value of the assets collected in the tax year. The value of this property will be determined on the basis of an expert opinion drawn up for the purposes of the tax procedure.

The possibility of an expert’s opinion will also arise when the taxpayer’s assets are identified, the value of which may suggest that the taxpayer obtains income in excess of the taxed income. Such situations may occur if the taxpayer discloses unusual moving, antiques or works of art.

The perception of this type of property by a person who does not have expertise is often difficult because a person who has no directional education and experience is unable to properly assess not only the value of a particular move, but also the fact that a given object can present a high value.

In view of the fact that the vast majority of tax proceedings carried out in this respect concern persons engaged in an economic activity which conceal the actual amount of revenue from that source and the number of facts concerning this type of property will certainly be small, they cannot be completely excluded.

Although taxpayers with such assets will be primarily interested in law enforcement, it cannot be excluded that the provisions of Chapter 5a of the General Tax Code will also apply to them.

Therefore, the possibility of carrying out evidence from an expert’s opinion in the course of the investigation on revenue not found to be covered in the disclosed sources or from undisclosed sources is as real as possible.

In view of the above, it appears appropriate to conduct a detailed examination of the movements belonging to the taxable person in the course of the proceedings. This possibility is allowed Article 198 The tax authority may, if necessary, carry out an inspection.

The need to carry out an inspection appears justified when the tax authority has information that the taxable person may be subject to proceedings in the field of undisclosed income and that taxable person is in possession of high-value movable property.

In such a situation, an examination of the chosen movement may result in the actual assets of the taxable person being disclosed, which will then be examined by the relevant experts with the expertise to determine the value of the items.

It can also be assumed that the tax authorities, having information that the taxpayer is in possession of assets, the valuation of which will require evidence from an expert opinion, will recognise the need for the relevant expert to participate already in the first proceedings.

This will allow the taxpayer's assets to be correctly identified. Taking into account the characteristics of the proceedings, the evidence to be provided in its course can be classified as follows.

To first groups of evidence should be credited with the taxpayer's testimony, which should be taken broadly – as any information and explanation from him.

second the group will produce any evidence collected by the tax authority which confirms the appropriateness of the tax investigation and the decision to determine revenue not found in the disclosed sources or from undisclosed sources.

third A group of evidence will be evidence requested by the taxpayer to show that the expenditure incurred and the collected property was covered by tax revenues or non-tax revenues within the meaning of Article 25b(3)(4) u.p.d.o.f.

This classification may also include evidence which will be carried out by the tax authority in order to undermine the circumstances which the taxable person wishes to prove by means of the evidence submitted by him.

The above discussion of the evidence which may be carried out in the course of the procedure concerning the taxation of non-disclosed revenues or sources of undisclosed sources is the basis for a decision establishing the taxable person's income(s).

Summary

The purpose of this Article is to approximate the model of evidence in the course of the procedure concerning the taxation of non-recovery revenues in undisclosed sources or from sources not disclosed on the basis of the provisions of u.p.d.o.f. applicable from 1 January 2016, after the entry into force of the Amending Act.

It should be noted that a clear definition of the scope of the obligations of both the party and the tax authority will eliminate the pre-existing problems on which the obligation to command is imposed in the course of the tax proceedings. It should also be stressed that the legislator has foreseen under Article 25g(7) u.p.d.o.f.

the possibility of taxation on the basis of the general revenue on which their source of origin will be shown during the tax investigation. This will affect the evidence procedure, as taxpayers will be able to demonstrate, through means of proof, that their income came from specific sources as defined in u.p.d.o.f.

This will avoid taxing revenue at a rate 75%, which was not possible under previous regulations.

This change should be assessed positively. The provisions of Chapter 5a u.p.d.o.f. regulate the issue in a much more precise way compared to the previous rules. This suggests that practice and jurisprudence in matters relating to this source of income will not cause so much controversy.

This has also significantly reduced the risk of creating a practice of application that does not comply with the standards of a democratic rule of law. This thesis is confirmed by the fact that the rules apply from above three years and so far there are no opinions demanding their change.

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