New limit for cash transaction between entrepreneurs

With the January 1, 2017 the changes were introduced in the law on freedom of economic activity and income taxes (both of individuals and legal entities) in Poland. They implement exemption from tax deductible costs of those purchases that have not been dealt with cashless way. The limit for cash transactions between entrepreneurs has been fixed at 15 000 PLN, but the amount is not applicable to a single payment or invoice, but to a transaction, that may consist of multiple payments or invoices. In case of violation of this provision expense paid with violation of the law, i.e. in cash, will not be tax deductible.

Author: Tomasz Wikliñski, THOMAS Sp. z o.o.


Implementation of the electronic tax inspections in Poland

Last year significant changes were implemented to the Polish Tax Ordinance. One of the changes is implementations of electronic tax inspections. Starting July 2016 the companies will be obliged to provide the data to the tax authorities in electronic form, called unified control file. Its format was published in March on the web site of the Ministry of Finance. In fact the control file will consist of several XML files covering various areas of the company activity:

  • accounting books
  • bank statements
  • stock operations
  • VAT evidence of sales and purchases
  • VAT invoices
  • tax revenue and expense ledger (for simplified evidence in small entities)
  • registry of revenues (for simplified evidence in small entities)

In the beginning the obligation to generate such files will refer to the biggest entities, i.e. employing over 250 people and having net sales exceeding 50 million euro or net assets above 43 million euro. The smaller companies will have more time to prepare – by June 30, 2018.
Full implementation of electronic inspections will shift the inspections to a new level, by making them faster and more efficient. Processing large quantities of data will allow their multidimensional analyses and finding various correlations between the documents and activities. The assumptions are very good – the new system should help in better detection of tax offenses. Whether it will be used this way, we will see in practice.

Author: Tomasz Wikliñski, THOMAS Sp. z o.o.


Changes in taxation of the private use of company cars since January 1, 2015

The taxation of private use of company cars by the employees was a subject of many disputes between companies and tax authorities. There were no detailed regulations, so the general principles applied. The companies were in the position to calculate the value of this benefit for their employees by themselves. Whatever the method was it was often questioned by the tax authorities that had his own opinion about the proper solution. Due to the lack of regulations many companies didn’t calculate this benefit at all, what made their situation in relation with the tax officers very weak – in fact they had to accept the position of the tax authorities. It seems over now.
 
On November 27, 2014 the Act of November 7, 2014 on facilitating execution of the economic activity was published in The Journal of Laws. The Act contains a change in the law on income tax from individuals and introduces taxation of private use of company cars. Starting January 1, 2015, employees will pay a flat tax the additional benefit they have got in respect of it in the amount of the 250 PLN per month – for cars with engine capacity up to 1600 cm3 or 400 PLN per month – for cars with engine capacity of over 1600 cm3.
 
This solution creates an issue in corporate income tax – part of the costs of the car related to personal use of the employee is not deductible, because it is neither related to gaining of the revenues nor protecting them.
 
The act shows indirectly a possibility to avoid the problem by making the above amounts payable by the employee that was a solution used my many companies also before and is free from risks described in the preceding paragraph.

 

Author: Tomasz Wiklinski, THOMAS sp. z o.o., Warzawa


Poland – country and company profile THOMAS sp. z o.o.

Presentation at General Meeting of IAPA, May 26, 2012

Republic of Poland is a European country located in the center of the continent and borders with Germany, Czech Republic, Slovakia, Ukraine, Belarus, Lithuania and Russia. Its area exceeds 312 thousand square kilometers where lives over 38 million residents.

The Polish currency is PLN (Polish Zloty). The GDP reached in the year 2011 the level of 14 thousand USD per capita (over 20 thousand USD when the purchase power is considered).

One of the most important facts in the history of the country was adoption of the constitution in 1791. It was the second modern constitution in the world (after United States of America) and the first one in Europe.

The economic situation of Poland is one of the best in Europe. This month German press published comparison of the Polish economy and EU-27 countries. In general Poland has got higher GDP growth since 2004, similar unemployment rate and lower much public debt.

Our company, THOMAS sp. z o.o., operates since 1993, i.e. from the beginning of the free economy in Poland. Recently it is a family company owned and managed by Bożena Wiklińska and Tomasz Wikliński. In our practice we use modern tools helping us act according to the ISO 9001:2008 based quality system we developed. Recently we added to the portfolio of our products BAC (Budget Assistant Concept), a system that helps in budgeting and controlling.

Our company provides wide range of services required by entrepreneurs in every day activity – starting from accounting, through staff and payroll service, finance management that slowly becomes our key product, to tax advisory.

During the last year we had an internal discussion how to select people, how to behave in relation to the clients that have got difficult, not to say illegal proposals. We found out that there is something that makes the company either consistent or inconsistent – its values. In the beginning we referred to our strategy developed a couple of years ago and values we formulated that time. We formulated them, but without any deeper meaning, i.e. what it means in practice. One of the values we defined was professionalism. Now we added sample behaviors that show acting according to this value, for example improving professional skills, finding the best way to help the client reach his strategic goals, communicates with him efficiently.

The same operation we made with the other value that were important for us as the company and our clients, and finally visualized them in graphics with the help of a graphic designer we co-operate with.

The entire task required some time and involvement of all people, but now is a great tools that helps us to hire better people, better assess their skills and attitude and what is the most important – even the most difficult decision we need to make, like staff changes, are much better perceived by other people when referred to the core values of the company.


Doing business in Poland: Taxation

The system of taxation in Poland is similar to other EU countries.
There are three main taxes: value added tax, corporate income tax, personal income tax.

Value added tax

The basic rate is 22% (an increase to 23% is planned in 2011). The regulations are based on EU directives, so main principles are similar to those existing in other EU countries. Generally the tax shall be transparent for entrepreneurs, but there are some limitations in deduction of VAT paid – personal cars (partial deduction up to 60%, no more than 6,000 PLN is allowed), fuel used to power them, hotels, and restaurants.

Corporate income tax

The basic rate of the tax is 19%. It is the only income tax related to the economic activity. It is payable to the state budget. It is shared with local authorities based on other regulations. Poland implemented regulations that eliminate double taxation in case of dividend payments from one company to the other one – when certain conditions have been fulfilled the revenues from dividends are free from income tax.

Personal income tax

The basic rates are 18/32%. Personal income tax is applicable also for individuals running economic activity as sole entrepreneurs or partners of partnerships. They have got an additional possibility to pay flat 19% rate tax, similarly to bigger companies.

The income tax rate on interests and capital gains is 19%.

Other taxes and charges

There is a number of other taxes that may be applicable depending on the activity of the entrepreneur – the most important are excise duty, real estate tax, transportation means tax, civil law transaction tax as well as social security contribution, charges on using the environment, recycling of electronic and electric products, contribution for the fund of supporting disabled people and others.

It is always worth  considering  consultancy with a tax advisor to review the taxes and charges that may be applicable and how to pay them in the best way.

Author: Tomasz Wikliński, THOMAS sp. z o.o., www.thomas.pl


Doing business in Poland: Country profile

Official name: Republic of Poland
Population: 38,463,689
Area: 322,575 km²
Official language: Polish
Currency: Polish Zloty (PLN)
Capital city: Warsaw
GDP Per Capita – purchasing power parity : 18,072 USD

Poland is located in Central Europe at the Baltic Sea. It borders on Germany (in the West), Czech Republic, Slovakia (in the South), Ukraine, Belarus (in the East), Lithuania (in the North-East) and Russia (Kaliningrad district – in the North). By area it is the 68th country in the world and 9th in Europe. Poland is divided in 16 voivodships. The main river is Vistula that flows from the mountains in the South to the Baltic Sea.

Poland is a homeland for many persons known worldwide : Nicolaus Copernicus – an astronomer that “stopped the Earth and made Sun moving”, John Paul II – the Pope, Lech Walesa – that played an important role in changing the political system of the countries in Eastern Europe, Frederic Chopin – a composer, many scientists, travelers, soldiers fighting for independency of Poland and other countries.

The history of Poland reaches the year 966 when Mieszko I, the first ruler, accepted Christianity. Poland became a kingdom in 1025 and entered into a Commonwealth with Lithuania.  During the majority of its history Poland was independent, multiethnic and multireligious.  

In 1795 Poland was divided between three invaders: Kingdom of Prussia, Russia and Austria. It regained the independency in 1918 after the First World War. During the Second World War it was occupied by The Third Reich and Soviet Union. After the war Poland became a socialist republic, politically and economically dependent on the Soviet Union. In 1989 the political system was changed and it became a parliamentary democracy. After very difficult reforms in the early nineties it returned to a market economy. Poland is a member of the European Union since 2004.
Poland is a fast developing country. The GDP in 2009 reached the level of 1,7% and it was the only positive number in the EU (average – minus 4,1%). The economy is mixed in terms of ownership. 25% of GDP is generated by state-owned-companies, what is a level similar to France and Norway. It is an attractive place for investments – good geographical location, internal stability, participation in the EU. It is however not ideal – unclear law, significant bureaucracy, high administration charges, not enough developed infrastructure and high unemployment are the most important problems for the entire society.

Author: Tomasz Wikliński, THOMAS sp. z o.o., www.thomas.pl


The first post

This is the first post from IAPA. In the future there will be blog-like information in this section. Everything around our claim „Audit, Tax and Accounting in Europe. And worldwide.“

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The information comes from dozens of Chartered Accountants and Tax Advisers from numerous European IAPA members. Have fun with their posts. Comments are deactivated but, please, feel free to contact any individual author or other member of IAPA for questions or further assistance.