The State-Owned Company as a withholding agent of a flat-rate personal income tax – interpretation problems

Abstract

This article aims at analysing Article 30(1) points 15) and 16) of the Personal Income Tax Act to indicate the conditions for recognizing a company, which is for the purposes of this article referred to as a State-Owned company, as a withholding agent of a flat-rate personal income tax. In the light of the aforementioned regulation, the withholding agent responsible for the settlement of personal income tax is a company in which the State Treasury and other public entities – indicated in this provision – hold directly or indirectly a majority of votes at a meeting of shareholders or general meeting of shareholders. The key element of this definition is the legislator’s concept of “a majority of votes at a meeting of shareholders or general meeting of shareholders”, which has become the subject of a dispute between withholding agents and tax authorities as to whether the said majority of votes means “more than half of all votes”, or “a simple majority”. This study attempts to define the disputed issue by analyzing the position of the tax authorities expressed in individual interpretations of tax law provisions, the doctrine, and judicial as well as administrative decisions.