The use of international income avoidance mechanisms by the taxpayer of a given State leads to a change in the form of harmful tax competition applied by another State (territory) from passive to active. In this case, harmful tax competition in an action which constitutes a real and not a potential threat to the tax receipts of the budget of the State of residence or the place of residence of the taxpayer taking the above measures should be mentioned.
The change of residence is rarely used as a planned way of optimizing personal incomes of individuals.
All methods of international avoidance of income taxation from the perspective of axiology attributed to the legislature bear the characteristics of circumvention of the tax law of the home country of the tax residence of the person using the above possibilities. In tax law, anything that is not prohibited is allowed and cannot entail additional fiscal burdens that do not flow directly from the letter of law.
In the light of the current regulations, Polish law has no legal basis for the prosecution and punishment of these actions, which is due to the fact that in the case of the use by the taxpayer of any of the so-called international tax optimization methods, it is often impossible to indicate the legal standard in question.
The lack of a definition of the legal "circumvention of tax law" and the lack of the prohibition of circumvention of that law explicitly stated in the law are also of paramount importance, so that the "circumvention of tax law" can be referred to in principle only in doctrinal-axial rather than normative terms.
Apart from the case of the so-called CFC regulations, i.e.
the tax rules for controlled foreign companies, Polish legislation does not counter the various methods of international avoidance of taxation, providing for only general regulations relating to transactions between related parties and introducing certain legal tax restrictions on trade with entities established in (territory) countries considered to be applying harmful competition for the purposes of the tax in question.
An analysis of the practice of international trade makes it possible to distinguish four basic methods of international tax avoidance which directly reduce the tax burden in the taxpayer's home tax residence:
- • transfer of capital to a subsidiary established in a country (territory) applying harmful tax competition,
- • acquisition of contractual advantages (also known as treaty-shopping),
- • transfer of profits,
- • the change of place of residence. Any specific method of international tax optimization constitutes the development of these basic methods or their various combinations.
The change of residence is rarely used as a planned way of optimizing personal incomes of individuals.
Undoubtedly, one of the most common methods of international income avoidance is the transfer of profits in conjunction with the use of a subsidiary located in a country (territory) with significantly lower fiscal burdens, as a rule with a full trust structure.
They are often used at least 2 subsidiaries of which first, having a direct commercial relationship with the Polish company, has a full trust structure, and second it accumulates capital in a tax oasis or serves to redistribute profits to the State of the tax residence of its actual beneficiary.