Tax law is one of the most complex departments of law, which are subject to constant change. Entrepreneurs must find themselves in this and make the right decisions on their own tax assessment. Otherwise, they can expose themselves not only to negative financial consequences, but also to the criminal-carb liability.
However, this can be avoided by submitting an application for an interpretation of individual tax law. If an entrepreneur (or a tax adviser acting on his behalf) describes precisely the facts and presents his own position on his assessment, he will receive a reply from the tax authority which shall bind him to his position as correct or incorrect. This ensures that action is not considered to be a breach of tax law and thus does not have any negative consequences.
The government felt that the protection provided by the individual interpretation is sometimes abused and that is why changes are needed.
However, the government felt that the protection provided by an individual interpretation can be abused and that therefore changes are needed.
According to the plans, some individual interpretation applications will have to take the form of a group request. This means that if an entity wishes to describe a transaction with a related entity (e.g. another company in which it has a stake), a request for interpretation will be made on behalf of all related entities.
Another novelty concerns transactions between related parties that exceed the statutory quota thresholds. In this case, additional requirements will arise for their descriptions.
According to the explanatory memorandum, ‘The proposed amendments will make it possible to seal the system of interpretation by limiting the abuse of individual tax rulings by taxpayers who participate in structures using aggressive tax planning within the framework of mutual links’.
However, the question arises as to whether such a change is certainly necessary and whether in practice it will create unnecessary burdens on the part of entrepreneurs.