Dear Readers, 
We are happy to present you the June issue of the WBW Weremczuk Bobeł & Partners newsletter. 
First of all, we wish to recommend you the article discussing a decision of the Constitutional Tribunal regarding the possibility to form and join trade unions by people who perform paid work. The Tribunal stated that the right to form a trade union should not be limited to those employed under a contract of employment but it should be vested in everyone performing a paid work regardless of its legal form. As a consequence, the Polish regulations limiting the right to form and join trade unions are deemed unconstitutional. 
Other articles analyse a decision by the Supreme Administrative Court on the cope of justification of individual tax interpretations, as well as planned changes in the financing of local government units.  
We also included an article on general rules of enforcement proceedings in the light of the Polish Code of Civil Procedure. 
We wish you a pleasant read.
WBW team

The Constitutional Tribunal took a stance on regulations regarding trade union association. 

On 2 June 2015, the Constitutional Tribunal examined the case of the National Alliance of Trade Unions regarding the matter of trade union affiliation. It has been proven that the freedom of establishing and joining trade unions has not been guaranteed to all people who perform paid work as such freedom was not ensured to people who perform paid work on any other basis than employment relationship. The Tribunal ruled that the Polish regulations which concern trade union affiliation are unconstitutional (Case No.: K 1/13).

The Tribunal stated that the Polish regulations under which a possibility to join trade unions is determined by the legal form of the provision of work are unconstitutional. The reporting judge of the adjudicating panel pointed out that the Constitution clearly defines the freedom to form trade unions, so that the legislator cannot narrow its scope in an ordinary act by determining who can join them. The concept of freedom of association is defined by joint actions within a specific organizational structure, depending on the goals set by individuals who get affiliated in the union. The Tribunal also pointed out that it is a part of wider freedom - freedom of association. Importantly, the subjects of freedom of association in a trade union are employees- in the constitutional sense of the term which refers to the criterion of performing paid work. Therefore, adopting the constitutional view, it must be held that the concept of an employee is broader and includes any person who is gainfully employed, remains in a legal relationship with the entity for which he performs work and has any professional interests associated with the work which can be collectively protected.

To conclude, in the present case the Tribunal did not deal with the assessment of the definition of an employee formulated in art. 2 of the Labour Code, however, it emphasized the fact that the definition adopted in the Labour Code cannot apply to the Law on Trade Unions, since it is necessary to take the constitutional meaning of the term "employee" into account.

It is the duty of the legislator to ensure that each employee covered by the guarantees in the Constitution has an opportunity to exercise freedom of association in trade unions. Therefore, any persons employed under civil law contracts, including self-employed persons and other persons gainfully employed and who are not employers, should not be exempted from opportunities to enjoy the freedom to form and join trade unions.
Aleksandra Andrzejczak, lawyer 

Basic rules governing enforcement proceedings in Poland.

Carrying out enforcement proceedings is sometimes the only opportunity to recover one’s dues from a debtor. This is not an easy way - on the contrary - it is a highly formalized process. Without the knowledge of the basic rules it is extremely difficult to understand it, let alone actively participate in it so that asserting one’s rights is effective.
The following information applies to enforcement proceedings in the most common form. One should bear in mind that enforcement proceedings governed by the Polish regulations also provide for deviations from the rules presented below e.g. in terms of the authority conducting the enforcement proceedings.

The first step to initiate an enforcement proceeding for the execution of civil duties is to obtain a writ of execution. A writ of execution is, for instance, a final and binding court decision or a settlement concluded before the court.

A writ of execution itself does not entitle the creditor to initiate enforcement proceedings. The basis for enforcement is, in fact, an enforcement order, i.e. a writ of enforcement appended with an enforcement clause (as provided by art. 776 of the Polish Code of Civil Procedure). To obtain this title you should file a petition with a competent court, i.e. the court which previously issued the writ of execution, and pay the fee.

After passing through the first two stages described above, the creditor may file a petition for initiating enforcement proceedings with a court enforcement officer. According to art. 8, paragraph 5 of the Act of 29 August 1997 on court enforcement officers and enforcement (consolidated text. Dz. U. of 2006., No. 167, item. 1191, as amended), the creditor has the right to choose any court enforcement officer on the territory of Poland. The exception is the execution of real estate - in this case, the execution must be conducted by the court enforcement officer in the district where the property is located.

It should be also noted that enforcement proceedings can be initiated ex officio and at the request of an authorized body (by a prosecutor or a social organization acting on behalf of the creditor). These cases, however, are extremely rare.
The application must precisely indicate the creditor and the debtor, the provision to be enforced and the manner of execution. In addition, the application must be accompanied by the original writ of execution (art. 797 of the Polish Code of Civil Procedure).

If the application does not contain any formal defects or if these defects have been completed in due time by the creditor, the court enforcement officer initiates the execution. An enforcement authority is bound by the content of the enforcement petition, which means that it cannot enforce a sum greater than the one indicated in the execution petition, nor can it carry out executions of assets that have not been applied for by the creditor. It is significant that the creditor - in the absence of knowledge of the debtor's assets - may instruct a court enforcement officer to search for this property against payment.

In the course of enforcement a court enforcement officer seizes individual assets of the debtor, e.g. bank accounts, wages for the work  seized up to the amount specified by law, movable which is then disposed  of at auction.
The amount obtained in the aforesaid manner is in the first place earmarked by the court enforcement officer to cover the costs of enforcement proceedings. The remaining part will be used to pay the debts of the creditor.

It should be remembered that the activity of a court enforcement officer may be appealed against to the court, unless the law provides otherwise. This also applies to the situations where a court enforcement officer, among others, fails to undertake specific actions.  A court competent to consider an appeal against the activities of a court enforcement officer is the court represented by the very same enforcement officer.

Paulina Szymańska, lawyer 

The Ministry of Finance to take a step towards balancing the system of financing local government units.

Under current legislation, the financial status of local government units is equalised by means of the so-called Robin Hood tax. It is a corrective and equalising system of subventions in which more affluent local governments transfer part of their revenue to the poorer ones. If a given local government unit exceeds the revenue threshold stipulated in the local government finance act it is obliged to make a payment to the special-purpose reserve fund from which subventions for less affluent units are paid out. The biggest contributor of the “Robin Hood tax” is the Mazovia Province. In the spring last year, in order to fulfil its obligations, the local government of the Mazovia Province decided to take a loan from the state budget. The need to take out the loan was due to lower tax revenues as the amount of the “Robin Hood tax” due is calculated on the basis of revenue from two years earlier and does not take into account an annual, temporary fall in budgetary revenue of the province.  

On 15 June, during his meeting with representatives of local government organisations, representatives of the World Bank and experts in the area of local government finances, the Minister of Finance proposed new solutions for the subvention system. The plan is to implement diversification of sources of revenue. An increase in VAT revenues is supposed to make up for lower CIT revenues. At present, the share in the personal income tax is 37.53% and corporate income tax 6.71%. Furthermore, this solution will facilitate maintaining revenue stability during market fluctuations.     
The Robin Hood tax itself will also be changed. The amendment is supposed to introduce the system of weights corresponding to the requirements of a given entity as e.g. communes with greater population density require higher expenditures on public transport. Therefore, subventions will be paid out per each “conversion citizen”, i.e. the actual population and the product of the said system of weights.     
The minister also anticipates the implementation of an integrated balancing financed from the state budget and the Robin Hood tax contributions. This will eliminate situations in which a given entity, after making a payment, has less revenue than the one benefiting from the system.   
Daniel Baś, lawyer

The scope of justification of tax law interpretation.


On 17 April 2015 the Supreme Administrative Court in Warsaw ruled in the case no. II FSK 731/13 in which it clarified the scope of duties of a tax authority issuing individual interpretation of tax law. In response to a petition for individual interpretation of tax law, the competent authority is required under Art. 14c § 1 of the Tax Ordinance Act to issue individual interpretation of tax law which specifically includes "an assessment of the position of the applicant together with the legal justification for this assessment."
In the present case, the assessment of the applicant's position was negative, however, in the opinion of the applicant, this assessment was not sufficiently justified. The court of first instance, i.e. the Provincial Administrative Court in Warsaw, acceded to that opinion. The case concerned the question whether VAT declared by the Company on the invoice documenting the contribution of industrial property rights, and paid by bank transfer by the entity receiving the in-kind contribution, constitutes tax income for this Company, in accordance with the principle of tax neutrality. The tax authority, which in its justification of negative interpretation did not refer to specific arguments put forward by the applicant, stated that "the overview of the circumstances of the case presented in the application gives grounds to conclude that it is only the equivalent of a tax resulting from the invoice confirming the provision of in-kind contribution rather than the  tax itself," and referred to the provision of art. 6 of Tax Ordinance Act which defines the concept of tax. The court of first instance decided that such justification was insufficient and annulled the individual interpretation issued. As a result of the appeal filed by the representative of the Minister of Finance, the case was presented to the Supreme Administrative Court.
That court revoked the judgment of the Administrative Court issued in the first instance, and by making this decision it specified in the statement of reasons, the exact scope of duties concerning the justification of the legal position of the tax authority towards the position of the applicant within the individual interpretation of tax law. The Supreme Administrative Court stated that "the justification of the contested interpretation is not particularly extensive, however (...) it expresses a clear and precise legal view of the authority in this matter. It should be emphasized that the interpretive authority is not obliged to respond to all the arguments of the applicant (...). The power of the authority is to choose the arguments which it believes will be sufficient for the assessment of the merits of the tax issue (...) ". The Court also stressed that the authority issuing the interpretation is not obliged to refer to, or assess individual interpretations or judgments of administrative courts which the applicant invokes in a petition for issuing interpretation in order to strengthen its argument. It is due to the fact that such judgments and interpretations are not sources of law, so they are not taken into account when issuing the appropriate interpretation.
Two important conclusions for tax practice of entrepreneurs can be drawn from the above judgment. First of all, petitions for issuing tax interpretations should be as concise and specific as possible, as the tax authorities are not obliged to refer to any side issues raised by the applicant in such a petition. Secondly, which is nothing new, but which was once again emphatically confirmed in this judgment, it is important to critically approach individual interpretations of tax law issued earlier in “similar” cases of other taxpayers, since tax authorities are not obliged to take them into account when performing their duties, whether these concern interpretation or control.
Rafał Sałata, legal trainee 
This Newsletter is for general informational purposes only. It is not intended and shall not be treated as professional advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

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