Sławomir Boruc and Mirosław Barszcz of Baker & McKenzie Doradztwo Podatkowe Sp. z o.o. talk with Beata Gołębiewska.

■ It has been a year since Poland’s accession to the European Union. How well have Polish regulations been adjusted to EU requirements?
In terms of tax regulations, let us stress that in the EU only some personal and corporate taxation principles are subject to harmonization. Unlike individual states in the United States, the EU settles common rules for all its member countries only in the area of indirect taxes. As far as income taxes in individual EU member countries are concerned, various rates and calculation rules are in force. One might even say that the income tax level is treated by individual member countries as a competition instrument in the rivalry for investors and foreign capital.

In the wake of Poland’s integration, the Polish legislator had to change some elements of Polish law concerning VAT and CIT. Regulations were implemented concerning mergers, splits, contribution of property and exchange of shares as well as taxation of subsidiaries and parent companies. In regulations concerning taxation of licensed receivables and interest calculation, we obtained an extension of the transition period, hence a complete elimination of the tax collected at the source of those payments will only take place as of July 1, 2013.

Naturally, due to the considerable pace of amendment work, mistakes could not be totally avoided. Some implementations go too far, others lack precision. One serious area of doubt is the legality of levying the VAT tax on used imported automobiles. There is significant evidence that the regulation violates the fundamental EU principle of the free movement of goods. If that is also the opinion of the European Court of Justice, the Polish budget may pay dearly.

We also have a number of reservations with respect to regulations governing VAT deductions on car purchases. The new rules prohibiting VAT deductions are too restrictive. There are also reservations about a prohibition concerning VAT deductions on expenses other than revenue generating costs and another concerning services obtained in tax-haven countries.

Excise tax is a less controversial issue. According to EU directives, only regulations on alcohol, cigarettes and fuels are harmonized.

■ Baker & McKenzie has drafted a complaint to the European Commission in conjunction with the Lewiatan Confederation of Polish Private Employers. What is the nature of the complaint?
There are two complaints. One concerns the grounds for new restrictions on VAT deductions on passenger car purchases—due to enter into force Aug. 22 this year. Following the amendment, a number of automobile types will no longer be VAT-deductible. Moreover, the taxpayers who decided to buy this kind of car during the past year will be unable to deduct VAT for fuel purchases. The other complaint addresses the VAT deduction prohibition that is burdensome for entrepreneurs and concerns expenses that are not incurred in connection with turnover. No rule to this effect is in force in other EU countries, and we believe that this interpretation of the 6th Directive is too wide. Meanwhile, decisions handed down by the European Court of Justice to date have clearly indicated that the implementation of EU regulations on questions of this kind must be precise and well formulated.

■ International Tax Review has awarded Baker & McKenzie the title of European Tax Advisor of the Year. Why was the firm granted this distinction?
In selecting a winner, the International Tax Review distributed a questionnaire among 2,000 tax managers in reputable European firms and in fact this decision was theirs.

I believe that, without false modesty and on the basis of an evaluation by our clients, we can say that the award is a result of the high-standard services our firm offers.

Baker & McKenzie has many years of experience in tax consulting in Western Europe and the United States. European newspapers once came up with the slogan Baker & McKenzie—“an office with a tax face.”

■ The award was granted to the European practice. What is the award’s significance for the firm in Poland?
This is also very important. Especially if you consider the moment it was presented.

Tax consulting has formed an integral element of the service package provided by our Warsaw office from its very inception. However, an independent legal entity for this sector was only established at the beginning of this year. In April 2005, our small practice was expanded to 13 employees, which is probably Poland’s largest legal team for tax consulting. Over the past six months, our task load has increased, so we feel that the path taken by the office has been the right one. The award confirms this.

Auditing firms are limited by certain regulations and cannot provide consulting services to the clients they audit. Therefore companies frequently seek the relevant advise from lawyers who have experience in tax consulting.