POLISH TAX AUTHORITIES CHANGED THEIR APPROACH WITH RESPECT TO FREE OF CHARGE MANAGEMENT?
It is a frequent practice among capital groups to have a management board remunerated only from one company from the group (usually the parent company), while the remaining companies within that group do not bear the costs of management. Applying such a scheme could have negative tax consequences for companies benefitting from such free of charge management. In particular, pursuant to the standpoint expressed by the Head of the Tax Chamber in Poznań in the ruling dated 6th August 2013 (file Ref. No. ILPB3/423-229/13-4/KS) or by the Regional Administrative Court in Gdańsk dated 16th April 2013 (file Ref. No. I SA/Gd 307/13), a free of charge use by a company of services provided by members of the management board or supervisory board is deemed as a source of income for the company, as a so called free of charge benefit. That meant that the company was obliged to report taxable income equal to the market value of the remuneration of the board member.
Following the ruling of the Supreme Administrative Court dated 4th April 2015 (Ref. No. II FSK 1094/12), the approach of the tax authorities started to change. The example of such changed approach, not requiring the companies to pay the tax on the free of charge management, is the recent tax ruling of the Head of the Tax Chamber in Katowice issued on 14th August 2015 (Ref. No IBPB-1-3/4510-91/15/APO).
In case the new approach of the tax authorities becomes the settled practice, it will be possible to resign from arrangements with the members of the management board or/and the parent companies generating additional costs, formalities and paperwork. However, for the time being, it is recommendable to precede the decision to stop paying for the management, by obtaining of the individual tax ruling.
GLOBAL LEGAL INSIGHTS TO: MERGERS & ACQUISITIONS IN SWEDEN AND NORDIC COUNTRIES 2019
We encourage you to read our publication on The Global Mergers & Acquisitions market in Sweden and Nordic countries in the eighth edition of The Global Legal Insights.read more
PROGRAM POLAND PRIZE
Polski rząd włączył się w walkę o przyciągnięcie zagranicznych talentów technologicznych, proponując program Poland Prize adresowany do start-upów z zagranicznymi korzeniami.read more
POLAND PRIZE PROGRAMME
The government has joined the battle to attract foreign tech talent to Poland, launching a programme called Poland Prize, which is aimed at start-ups with foreign roots.read more
SHORT-TERM LEGAL CONSEQUENCES OF A 'NO-DEAL' BREXIT
Judged on the current political situation in the UK, where the parliament is split between various Brexit models and apparently unable to form a political majority for one specific ‘soft’ Brexit model as well as on the announcements from the EU that the EU is not willing to renegotiate the draft Brexit deal, which was turned down by the Houses of Parliament, the likelihood of a hard Brexit has become higher than ever.read more