Dear Readers,
We are happy to present to you the summer holiday edition of WBW Weremczuk Bobeł & Wspólnicy law firm newsletter.
We would like to invite you to read our article on Polish preparations to implement the EU Regulation on electronic identification and trust services for electronic transactions in the internal market (eIDAS)
The next text discusses the overall considerations of an amendment to the Law on Associations that came into force in May 2016.
Then, we present information on the plans to introduce rules connected with business succession for businesses based on the entry to the Central Registry and Information about Business Activities (CEIDG) into Polish legal order.
In the last article, we describe the lowered corporate tax (CIT) rate for small taxpayers from 2017.

We wish you a pleasant read!
The WBW Law Firm Team


Sejm adopts Law on lower tax from small business entities

On 22 July Sejm accepted the lowering of the corporate tax (CIT) for small taxpayers from 19% to 15%. The decision was almost unanimous. The new rate will apply to entities who are CIT payers and whose revenue from sales (together with the value added tax- VAT) has not exceeded EUR 1.2 million per year. This solution will also involve taxpayers who start their business activity. However, tax capital groups will not be subject to the altered tax rate.  
The notion of small taxpayer involves a VAT payer who: a) has not exceeded the sales revenue (together with VAT) of EUR 1 200 000, b) owns a  brokerage business that manages investment funds or is an agent, a contractor or a person offering services of  similar character, except for consignment if the commission fee or other remuneration for rendered services (including tax) did not exceed in the previous tax year the amount in PLN being an equivalent of EUR 45 000. It is estimated that there are currently 393 000 small taxpayers in Poland.
This amendment contains regulations that make it impossible to use the lowered tax rate for entrepreneurs who divide the company only in order to use the new CIT rate. Current regulations will be rendered more precise in order to fully eliminate the doubts of interpretation that could result in tax evasion for some revenues.
According to the government, in the long term, the amendment should contribute to enhancing the pace of Polish economic development as well as to creating conditions that will promote Polish entrepreneurship, especially among the young and well educated citizens.
The Law should come into force on 1 January 2017.

Marta Szurek

Poland prepares for implementing the EU Regulation eIDAS 

On 12 June 2016 the Council of Ministers accepted the draft of the Trust Service and Electronic Identification Act. The purpose of the draft is to unify trust services and rules of supervision.
The project is the first stage of works connected with preparing Poland to comply with the EU Regulation on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation, No. 910/2014).
Trust services play a significant role in digitalisation of the legal field as they support creation and delivery of e-documents. Implementing the eIDAS Regulation requires a new Act that will cause e.g. repealing the current Act on e-signature. Full implementation of the eIDAS instruments will take time so the authors of the project emphasise that this is just the first stage of works and full implementation will be completed in a couple of years. Among others, the adjustments of current computer systems will be necessary. 
The catalogue of trust services as of the Regulation is much wider than the one in the Act on e-signature because, apart from e-signatures,  it involves e-deliveries, e-seal, signature and seal maintenance and validation. It also obliges to control qualified and unqualified trust services.
The draft assumes that the Minster of Digitization will overtake supervision over implementation of the provisions on trust services. Its control will involve both qualified and unqualified trust services. The minister is also to ensure the functioning of national identification eIDAS junction that will join the electronic identification system with the infrastructures of other Member States.
The eIDAS Regulation introduces new terms to the legal domain. These will include e.g.: qualified electronic signature (replacing secure electronic signature verified by means of a qualified certificate) and qualified electronic time stamp (replacing time mark). The Act introduces a mechanism of notification for 'electronic identification' for online services. The holder of a means of electronic identification issued in the EU will be able to use public online services in another Member State. This will certainly constitute facilitation for the EU citizens.
Moreover, eIDAS proposes new rules for reciprocal recognition of  notified electronic identification systems for whom security levels are determined and a responsible party for security breach is designated. The EU countries will also be obliged to cooperate in this area.

Marta Szurek

Changes in Law on  Associations

The last year's amendment of the Law on Associations Act came into force at the end of May 2016 and introduced some essential changes to the rules of formation and structure creation of associations.
One of the key changes is the Art. 9 amendment and the reduction of the requirement relating to the number of people that can form an association. The required number was changed from 15 to 7 people, which brought it closer to the European average. Public consultations had shown that the requirement to gather at least 15 people was too demanding and made the whole process much more difficult compared to the example of France, where as few as 2 people are enough to form an association.
The amendment also affected the content of an association's statutes. From now on, the statutes needs to contain provisions on e.g. the possibility of remuneration for the board members, the rules of branch formation and dissolution, the association's structure and its bodies as well as  possibilities for creating internal regulations and rules for obtaining legal personality.
Also, the requirement of designation of  an association representative in agreements with board members has been introduced.
The association registration requirements have also been changed by the amendment. Previous regulations required  registration within three months. Derogation of Art. 13- 15 of the Act and extension of Art.16 changed these provisions to the following statement: 'after having determined that the statutes is according to the provisions of law'. This enhances working flexibility of courts but introduces some uncertainty in citizen-state relations.
Many of the changes involve unincorporated associations. The biggest change is giving them the status of  'a legal entity without corporate status'. These associations did not have any legal personality before. Now, they will be able to acquire rights, assume obligations and act as a party to court proceedings.
These changes will certainly affect the efficiency of unincorporated associations and therefore may contribute to the raise in their popularity.


Amendment project on business succession for sole proprietorships registered in the Central Registry and Information about Business Activities (CEIDG)

According to the present legal position, the simplest manner of undertaking business activity by natural persons that is least encumbered with requirements is self-employment or civil partnership based on registration as an entrepreneur in the Central Registry and Information about Business Activities (CEIDG). 
 Due to the relative simplicity of beginning and performing business activity in this way, the system now includes over two million registered entrepreneurs, as of CEIDG statistics. However, 80000 of them have already reached the age of 65. It is estimated that around 1-1,2 million of these companies are family businesses that generate 40% of  the GDP and hire 50% of all employees on the market.
These numbers become particularly significant when considering the problem of  the succession of businesses based on the CEIDG. In case of the decease of a business owner, only their assets can be inherited. Neither the company (name) of the deceased nor their tax identification number or administrative decisions including  concessions and licences do not qualify as inheritable and the company is not legally separated from the testator's assets. It also signifies that all employment agreements and commercial contracts concluded by the deceased get terminated. Furthermore, apart from the contracts being terminated, all of the testator's loans are immediately in foreclosure and companies that have been operating as family businesses fail. In the current state of affairs, the successors are not able to continue the testator's business. Considering the above numbers as well as the research of the Polish Agency for Enterprise Development  in which 94% of respondents declared to be affected by the lack of regulations on the matter, it seems apparent that the problem has reached a critical level.
The issue has been noticed by the current government and the Ministry of Development begun its works on the new rules for business succession. According to the proposed amendments, a person being an inheritance proxy will be temporarily eligible to use the testator's tax  identification number (NIP) and statistical identification number (REGON). The proxy will not necessarily be one of the successors as experience suggests that the successors might have opposing ideas on continuing business activity of the deceased.   The ministry proposes the requirement for the proxy to report their actions to the successors.
The proposed solutions are to be introduced from 1 January 2018. Currently, they are subject to non-department consultations. At least 20 legal acts will be affected by the new regulations, which may delay the planned introduction date.

Aleksander Kamiński
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.

Previous issues