Ministry of Finance is working on a draft of changes in Tax Ordinance, which may be relevant to taxpayers operating in capital groups. The amendments concern the introduction of a new form of information by tax authorities in the form of an individual interpretation at group request.
This solution is intended to be dedicated to related parties who ask questions about the tax consequences of transactions between national or foreign entities in the group.
The project also provides for an adverse consequence for taxpayers who have already received an individual interpretation of transactions with related parties. The authors of the amendment want to oblige these taxpayers to have 6 months after the entry into force of the amendments, they supplemented their earlier request for an individual interpretation with the above information provided for group applications.
MF points out that the need for such a solution is dictated by the fact that there is an increasing interest in tax rulings concerning the tax consequences of such intragroup transactions, and in the submission of inquiries only by one party, the fact is often presented unilaterally from the perspective of the applicant.
This particularly applies to transactions where taxpayers ask for tax consequences of various types of restructuring operations, business transfers, parts of enterprises, assets.
The MF argues that the Interpretative Authority receives an application where the facts or future events are presented only by one party, the entity is not able to assess the entire transaction sequence and the role of the individual entities in the group.
The group request interpretation is to be issued within the time limit 6 months after receipt of the request. The draft amendment provides for what additional information should be included in the request for group interpretation, including:
- • an indication of the benefits obtained and expected (tax and other) related to the transaction;
- • an indication of transactions and other activities on which an advantage is directly or indirectly dependent;
- • indication of the value of the undertaking, the organised part, the property rights (if the value exceeds 10,000,000 PLN);
- • a description of existing or planned links;
- • an indication of whether the transactions or activities covered by the group request have already been the subject of an individual interpretation obtained.
Importantly, in the context of the above elements, the protection of the taxable person envisaged for interpretation is to be excluded if the taxable persons in the group application would not indicate the intended transactions or activities or the values indicated in the application deviate from the actual values by 25%.
The project also provides for an adverse consequence for taxpayers who have already received an individual interpretation of transactions with related parties.
The authors of the amendment want to oblige these taxpayers to have 6 months after the entry into force of the amendments, they supplemented their earlier request for an individual interpretation with the above information provided for group applications.
Where taxpayers would not have done so, the individual interpretations they had received would have expired with effect on the date of entry into force of the amendments.
The project is at the stage of public consultation, where numerous comments have already been made.
Author:
Leszek Dutkiewicz
Partner At Russell Bedford. From 2011 related to Russell Bedford Poland.
In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services. He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices.
Author of a publication on tax, civil and international law issues. Lecturer in tax law training.
He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.