Tax Blog

On July 23, 2024, the Constitutional Tribunal (case no. K 13/20) reviewed an application by the National Council of Tax Advisors regarding the constitutionality of certain provisions within the Tax Ordinance and the Act on Tax Advisory Services in relation to the Polish Constitution. The case concerned the obligations imposed on tax advisors to disclose information on tax schemes and the associated breaches of professional secrecy.

Prepared by the Ministry of Finance, the draft amendment to the Act on Local Taxes and Fees (UPOL), among others, introduces a number of significant changes scheduled to take effect on January 1, 2025, with a specific exception. Although, according to the legislature, the changes are intended solely to clarify existing provisions in light of national court rulings and aim merely to preserve the fiscal status quo, there is concern that they may, in fact, expand the current scope of taxation.

The case in question involved a natural person – a farmer, registered as an active VAT taxpayer, engaged in milk production. This taxpayer was acquiring land plots for the purpose of expanding his farm, with the acquisition not subject to VAT.

Estonian CIT, also known as a lump sum on corporate income, is an attractive taxation model, but not every entrepreneur can take advantage of it.One of the key requirements to qualify for Estonian CIT, is to meet certain employment conditions. The regulations require a company to have at least three full-time employees for at least 300 days in a tax year.

The Estonian CIT, or flat rate on corporate income, is a favorable form of taxation, but it comes with the concept of hidden profits, which can be problematic for entrepreneurs.Hidden profits are monetary or non-monetary benefits made to shareholders, partners or their affiliates. The regulations are designed to prevent the circumvention of dividend taxation thrugh various forms of transfers of value.

The Estonian CIT is an attractive form of taxation, but its use comes with certain restrictions on the company’s structure. Can a silent company benefit from this tax regime?

The introduction of the Estonian CIT and the family foundation under the “Polish Order” has opened up new tax optimization opportunities for entrepreneurs. Both of these forms have their unique advantages and disadvantages, which are worth considering before deciding on the right structure for your business.  

If the goods are supplied only between two VAT taxpayers, i.e. the seller and the buyer, and the goods are shipped or transported from one EU country to another EU country (or to a non-EU country), the rules for settling VAT are generally simple. As a rule, there is an intra-Community supply of goods (ICS) in the country of dispatch, and an intra-Community acquisition of goods (ICA) in the country of goods’ destination, respectively. And when the destination is an non-EU country there is an export of goods in the country of dispatch and import of goods in the country of the goods’ destination accordingly.