“I want to make it clear that I use the right of veto only when the interests of citizens, the transparency of law and the stability of the state require it. Citizens entrusted me with this prerogative by electing me in general elections,” the president wrote in an entry on X. And he vetoed changes in the taxation of family foundations. The second bill vetoed is changes to the Electoral Code.
Read also: President Karol Nawrocki vetoed the amendment to the Electoral Code. It's too big a risk
How the president justified the veto on changes in the taxation of family foundations
Changes in the taxation of a family foundation were provided for in the amendment to the Corporate Income Tax Act. The president justified in a recording published on X that a veto is “opposition to abandoning the agreement the state concluded with Poles“.
— When this institution (family foundation – editor's note) was created, the legislator assured that the rules of their operation would not change for a period of three years, meanwhile the presented amendment introduced, after less than two years, unfavorable changes in the taxation of already established foundations to which families transferred their assets, said the president. — This is a violation of the principle of trust in the state, the only reason for which was and remains the terrible state of public finances – said Karol Nawrocki.
The president was probably talking about Art. 143 of the Act on Family Foundations. According to it, “the Council of Ministers will review the operation of the provisions of the Act and submit to the Sejm and Senate information on the effects of its application along with proposals for changes, after 3 years from the date of its entry into force.
Let us recall that the amendment provided, among others:
– introduction of the so-called three-year lock-up on assetsi.e. blockades. The amendment provided that: a family foundation will not be able to sell property contributed or transferred to it free of charge, or acquired from a related entity (e.g. the founder), if the sale took place before the expiry of 36 months from the end of the calendar year in which the contribution, transfer or acquisition took place. If it does so, it would have to pay 19 percent. income tax, but she was supposed to be able to deduct it later – from 15%. CIT, which will be collected when disbursing funds to beneficiaries.
– rental income was to be exempt from tax only for strictly residential, i.e. long-term, rental. It's about the situation when a family foundation rents properties directly to individuals for their own housing needs. Whereas any other forms of use of real estate – such as short-term rental, provision of accommodation services (e.g. as part of daily apartments or so-called condo hotels), rental for business or commercial purposes, as well as income from the rental of commercial premises intended for 24-hour accommodation – were to be subject to CIT.
The amendment also provided for other changes in the taxation of family foundations. We wrote about them in detail in the article: There will be a three-year block on sales in a family foundation. The Sejm passed the amendment.
However, the president agreed to another change in CIT, i.e. increasing the tax on banks. The government hopes that thanks to this change, more money will flow into the state budget. Read more about the details of the president's signature regarding CIT for banks: President Karol Nawrocki decided on a tax for banks. The government was counting on his move.
How did the president justify his veto on changes to the Electoral Code?
The president also vetoed the amendment to the Electoral Code. As he explained in the recording on X: “present in the Act unregistered sending of electoral packages abroad poses a serious risk because it makes this process dependent on the quality of services of postal operators from many countries“Hence the president's lack of consent to these changes.
Read more about this veto in the article: New voting rules in Poland. Karol Nawrocki decided.
Karol Nawrocki in his entry on X he also asked Prime Minister Donald Tusk to consult draft laws “at an early stage of work”. — Such action would streamline the legislative process, reduce the need to veto defective laws, and, above all, serve citizens, the president emphasized.
Author: Łukasz Zalewski, journalist of the Law section of Business Insider Polska
