After entering into force amendments to the Tax Ordinance, the tax authorities will be able to determine tax consequences of substance-over-form transactions.
On March 30, 2016 the governmental draft of amendments to the Tax ordinance Act was sent to the first reading in the Parliament. The changes introduce in particular the anti-tax avoidance clause.
According to the draft, the tax authorities will be able to challenge those substance-over-form transactions which mainly intend to obtain tax benefits contradictory to the spirit of tax law.
Substance-over-form transactions are considered as those ones which would not be applied by a reasonable entity, having a business rationale other than pure tax benefit.
In such a case tax authorities will determine tax consequences disregarding substance-over-form transactions.
Anti-tax avoidance clause will not be applied in the following cases:
- The tax benefit is lower than 100 thousands złoty;
- A taxpayer will upfront achieve a special kind of ruling from the tax authorities;
- Benefit concerns the VAT (for VAT there will be separate regulations);
- The tax law provides other anti-tax avoidance instruments.
The new rules are to enter into force after 30 days from their announcement.
The anti-tax avoidance clause may affect in particular real estate structures.
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