Month: May 2025

Changes in the economic market, deteriorating financial conditions or new investments often compel a limited liability company to seek additional financial resources. The Commercial Companies Code provides such an option in the form of shareholder contributions. This is a favourable instrument for the company if it does not wish to rely on external funding sources. The Code does not restrict the purposes for which the funds from such contributions may be used. However, in practice, companies most often resort to shareholder contributions when facing financial difficulties. The additional funds often enable the company to overcome a challenging financial situation and may be essential to avoid a prolonged financial crisis, including, ultimately, bankruptcy.

 

Contributions or Loan?

Contributions do not have a clearly defined character — this instrument lies somewhere between shareholder loans and capital injections into the share capital. Contributions may only be monetary and should be imposed and paid by shareholders proportionally to their shareholdings. They form part of the company’s assets; however, it is important to note that they neither increase the shareholdings nor the share capital. Similar to loans, their purpose is to recapitalise the company, thereby opening up various opportunities for its continued operation. While a loan is always repayable, contributions are also generally temporary and repayable, although under specific conditions, they may not be returned to the shareholders. Furthermore, interest is generally not charged on contributions. Another point of distinction is how these instruments are recognised and treated in the company’s balance sheet. A loan is reported under liabilities, which may restrict the company’s ability to incur additional debt, whereas contributions are reported as equity under reserve capital, which does not have such limiting consequences. If there is any uncertainty regarding the appropriate option for your company, it is advisable to consult a legal advisor.

How to Apply Contributions?

According to Article 177 §1 of the Commercial Companies Code, the obligation of shareholders to provide contributions must be included in the articles of association. This obligation may be included in the original articles or introduced through an amendment. It is important to note that an amendment introducing such an obligation requires the unanimous consent of all shareholders. Although there is some debate as to whether the obligation may be imposed only on certain shareholders, it is generally accepted that it must apply to all. Moreover, the articles of association must specify the numerical amount of the contribution per share. The obligation to make contributions arises upon a resolution passed by the shareholders’ meeting, unless the articles of association specify the amount and due date for the contributions. In most cases, however, the resolution will determine these elements. The deadline set in the resolution is crucial, as per Article 178 §2 of the Commercial Companies Code — if a shareholder fails to fulfil their obligation on time, the company is entitled to interest for the delay. The reason for the shareholder’s failure is irrelevant. Additionally, the company may seek damages resulting from the delay. The law allows for alternative provisions to be included in the articles of association, such as lower interest rates or waiving certain claims. When adopting a resolution on contributions, it is advisable to consult a legal advisor to achieve the most favourable arrangements.

Repayment of Contributions — How and When?

Repayment of contributions is also a crucial issue. Just as with their provision, repayment requires a specific resolution by the shareholders’ meeting. However, it is not always possible. According to the Commercial Companies Code, contributions may be repaid only if they are not required to cover balance sheet losses. Repayment may only take place after one month has passed since the announcement of the intention to repay the contributions in the Court and Commercial Gazette (*Monitor Sądowy i Gospodarczy*). The repayment procedure is relatively time-consuming and costly, as a fee is payable for each day of publication. The law requires repayments to be made proportionally to all shareholders. However, the articles of association may provide more favourable, flexible and faster conditions for repayment. It is worth seeking advice from a legal counsel to draft the most beneficial provisions in this regard.
 

Contributions and Tax Implications

Corporate Income Tax (CIT)

Under the Corporate Income Tax Act, shareholder contributions are not treated as income, provided they are made in accordance with the Commercial Companies Code. Therefore, making such contributions does not create a tax liability.

Personal Income Tax (PIT)

Shareholders who are natural persons are not required to pay income tax on the repayment of contributions, provided the amount returned is equal to the amount originally paid in, as measured in PLN on the date of contribution. However, interest earned on contributions (if agreed) is taxable.

Civil Law Transactions Tax (PCC)

According to the Civil Law Transactions Tax Act, contributions are treated as an amendment to a company’s articles of association. As such, they are taxed on the same basis as the formation or amendment of a company. The applicable tax rate is 0.5% of the contribution amount. The obligation to pay PCC falls on the limited liability company itself, which must file a PCC declaration, calculate the tax and remit it within 14 days of the resolution on contributions being adopted.

The Ministry of Finance prepared an amendment to the Tax Ordinance in June of this year, which aims to introduce changes concerning, among other things, tax interpretations. The new provisions are intended to come into force on 1 July 2024 and the draft legislation is currently undergoing consultations. The most significant changes will concern fees for applications, the validity period of tax interpretations, and the method of submitting applications by professional representatives and entrepreneurs. Tax interpretations are an important guarantee instrument from the point of view of business entities, so it is worth analysing the planned changes and assessing their impact on the situation of companies in Poland.

New fees for tax interpretations

Under the current legal framework, pursuant to Article 14f §1 of the Tax Ordinance, an application for the issuance of a tax interpretation is subject to a fee of PLN 40, which must be paid within 7 days of submitting the application. It should be clarified that the fee does not strictly apply to one application but to one factual situation or future event described in the application. In the draft prepared by the Ministry of Finance, Article 14f §1 is to be reworded as follows: “§1. An application for the issuance of an individual interpretation is subject to a fee, determined on the day of its submission, not exceeding 100% of the minimum wage, whereby for applicants who are natural persons not conducting business activity within the meaning of the Act of 6 March 2018 – the Entrepreneurs’ Law, the fee shall not exceed 1% of the minimum wage. The fee must be paid within 7 days of the date of submission of the application.” This means that the statutory amount of PLN 40 will be removed and the application fee will be linked to the amount of the minimum wage. The specific amounts will be set by a regulation of the Minister of Finance. Fees for tax interpretation applications will vary depending on the entity submitting the application. The planned fees for individual groups are as follows:

• for applicants whose cases are handled by the Head of the First Mazovian Tax Office in Warsaw – PLN 2,800
• for applicants whose cases are handled by a tax office head other than the locally competent one, excluding applicants mentioned in point 1 – PLN 1,400
• for applicants whose cases are handled by the locally competent tax office head and for all other applicants not listed in points 1, 2 and 4 – PLN 400
• for applicants who are natural persons not conducting business activity within the meaning of the Act of 6 March 2018 – the Entrepreneurs’ Law and for natural persons conducting business activity who apply for an individual interpretation in a matter unrelated to their business – PLN 40

It is advisable to consult a legal or tax adviser who can help determine the correct fee in case of doubt.

Entrepreneurs submitting an application will have to reckon with much higher costs than currently. The increase in rates may lead some entities to refrain from submitting applications for financial reasons, which in turn may limit access to the guarantee instrument that tax interpretations constitute.

Validity periods of tax interpretations

The draft legislation also introduces a completely new concept concerning interpretations, which will now have a set validity period. Under the current legal framework, such a solution does not apply. Interpretations are issued indefinitely, and to end their validity, a declaration of expiry or revocation must be made on the basis of conditions set out in the regulations. The planned amendments propose a 5-year expiry period. After this time, each interpretation will lose its validity, and in order to extend its effect, a new fee will need to be paid. The validity date will not be affected by whether the legal provisions remain unchanged – even then, the interpretation will become invalid after five years. All interpretations issued before 2019 will expire on 1 January 2024. The explanatory note states that the imposition of a time limit will help to standardise and ensure the consistent application of tax law. However, this solution also appears to create negative consequences for businesses, as even in the case of no changes to the legal framework, they will be forced to incur additional costs to extend the validity of an individual interpretation.

Method of submitting applications by entrepreneurs and professional representatives

Further changes provided for in the draft legislation relate to the method of submitting applications for interpretations by the above-mentioned entities. The amendment provides that entrepreneurs and professional representatives will only be able to submit applications electronically. These entities will be able to use either an electronic delivery address or, upon consenting to electronic delivery, an account in the IT system of the tax authority competent to issue the interpretation – the e-Urząd system.
This change, from the perspective of professional market participants, should be viewed positively. Digitisation of application submissions and communication with public administration significantly accelerates the entire procedure.

Summary

The changes planned by the Ministry of Finance for 2024 in the field of tax interpretations will have a significant impact on professional entities operating in the economic sphere. The most serious change for entrepreneurs will be the significantly increased fees. Currently, the application fees for issuing an interpretation are relatively affordable, but this will change when the amendment comes into effect. Additionally, interpretations will now be subject to a five-year time limit, after which further costs will need to be incurred. These changes are not yet final, as the draft legislation is still in the consultation phase.

On 1 July of this year, a major amendment to the Code of Civil Procedure came into force. The reform primarily aims to correct and supplement the changes introduced by the legislature in 2019. It is indicated that the changes are intended to simplify existing procedures, expedite proceedings, facilitate communication between parties and the court, and fill the gaps identified in the current regulations. Among other things, the amendment introduces a completely new type of proceedings involving consumers and business entities. The main purpose of this procedure is to improve the situation of consumers in court disputes and facilitate the enforcement of their claims. It will apply to cases brought by consumers against business entities as well as by business entities against consumers. It is worth adding that even if a business ceases trading during the course of proceedings — for instance, by liquidating the company — the proceedings will still be conducted under these regulations. What matters most is whether the dispute arose during the time the entity was conducting business activity and is related to that activity. This means that a matter which originates from a business activity remains permanently connected to it. This procedure introduces new principles and rules that will apply to the parties both during and outside court proceedings. 

In the article below, we will take a closer look at the most important changes that have been introduced and attempt to assess their usefulness and relevance for the affected parties.

New consumer-related proceedings – what will they look like?

The new consumer-related proceedings have been regulated in the Code of Civil Procedure in Articles 458¹⁴ to 458¹⁶. The new provisions will apply to all cases where a consumer is a party, although they will not apply if the consumer is represented by an organisation specialising in consumer rights protection. One important change introduced by the amendment concerns the territorial jurisdiction of the court. According to Article 458¹⁴ §4 of the Code of Civil Procedure, the consumer will be entitled to bring an action before the court in their place of residence, rather than the place of business of the entrepreneur, as was previously the case. However, this mechanism will not apply in instances of exclusive jurisdiction.

Another key issue is the new rule concerning the submission of facts and evidence by the business entity. These must be submitted in full at the stage of filing the claim or in the statement of defence, if the business is the defendant. Failure to comply will result in adverse procedural consequences for the business. Pursuant to Article 458¹⁵ §4 of the Code of Civil Procedure, any facts and evidence that are not submitted in accordance with the regulations will be disregarded at a later stage of the proceedings. The only exception is where the business can show that it was not reasonably possible to submit them earlier, or there was no prior need to do so. In such cases, further statements and evidence must be presented within two weeks of when it became possible or necessary to submit them.

The legislature has somewhat relaxed the rules on evidence for parties not represented by professional legal counsel. According to §2 of the same article, the party must be informed about their obligations under Article 458¹⁴ §§1 and 4 of the Code of Civil Procedure. Following such notice, the business may submit all relevant evidence and statements within two weeks.

In addition to procedural obligations, the new provisions also impose certain pre-litigation duties on business entities. Under Article 458¹⁶ of the Code of Civil Procedure, a business may face significant financial sanctions if it fails to attempt an out-of-court settlement. In such cases, the court may order the business to bear all or part of the legal costs, and in justified circumstances, even double them. The same penalty may be imposed if the business did attempt to resolve the dispute amicably but acted in bad faith during the process, leading to the failure of the settlement and the unnecessary filing of a claim.

Consequences of the new separate procedure – what outcomes can be expected?

The new provisions introduce consumer-friendly solutions, placing them in a more advantageous position relative to businesses. Primarily, they facilitate access to the courts by allowing consumers to file claims in their local jurisdiction. The regulations impose both procedural and pre-litigation obligations on businesses, which are not mirrored for consumers. These provisions demand a high level of accuracy and thoroughness from businesses when preparing claims or defences, based on the assumption that as professionals, they should be able to adequately protect their interests in court.

The procedural requirements relating to evidence and factual claims, which must be submitted in the early stages of the proceedings, and the associated penalties for non-compliance, may lead to faster and more efficient resolution of disputes between consumers and businesses. However, it should be noted that for smaller enterprises without legal expertise or ongoing support from law firms, and with limited court involvement, these requirements could pose a challenge and result in negative procedural consequences. Therefore, when in doubt about the construction or content of a claim or defence, it is advisable to consult a legal professional for proper preparation of court documents.

When analysing the new provisions, it is also worth noting the emphasis placed on alternative, amicable, and out-of-court methods of resolving disputes between consumers and businesses. The regulations impose a duty on professional entities to attempt such resolutions under the threat of being penalised through court costs. They also seek to prevent superficial or bad-faith attempts at settlement by stipulating penalties in such situations as well. The changes brought about by this new procedure may increase the rate of conflicts being resolved through alternative, amicable methods. It is worth seeking the assistance of professional mediators when attempting an out-of-court resolution. Such solutions can be beneficial for both parties, as they are often quicker, less stressful, and less costly than litigation.

Despite the fact that the regulations tightening the posting regime for workers to EU countries came into force in 2020, most entrepreneurs still fail to comply with EU and host country requirements when sending employees abroad. Unaware of the relevant rules, employers often only learn of the posting obligations during inspections by foreign authorities. Unfortunately, by then it is usually too late, and the employer faces severe penalties.

Who is a posted worker?

A posted worker is considered to be an employee who is temporarily sent by their employer (or contracting party) to provide a service in another EU Member State. Importantly, from the perspective of EU law, it does not matter whether the employee is posted (receives an annex to their employment contract temporarily changing their place of work) or sent on a business trip (by employer instruction). In both cases, the individual qualifies as a posted worker.

Posting workers abroad – legal framework

Let us recall that the issues related to posting are governed by Directive 96/71/EC of the European Parliament and of the Council (as amended after 28 June 2018), as well as national implementing laws of the EU Member States. Many Polish employers still mistakenly believe that it is sufficient to provide employees with A1 certificates and pay the host country’s minimum wage. This is an error that can expose not only the business, but in some cases also its employees, to negative consequences. The situation is further complicated by the fact that consultants from Polish social security institutions (e.g. ZUS), in confirming compliance with domestic obligations, sometimes mislead employers about the requirements in the host country.

Posting workers abroad – the basics

Regardless of whether the employer needs to send employees abroad to provide services to a client, or to work in their own foreign subsidiary, they will need to comply with local employment conditions. The same applies when a foreign company uses a temporary employment agency to hire a worker from Poland.

The conditions referred to include:

• minimum rest periods
• maximum working hours
• minimum paid annual leave
• remuneration (including all mandatory components) as stipulated by national law or universally applicable collective agreements
• health and safety at work
• protective measures for pregnant women, women who have recently given birth, and young people (under 18)
• equal treatment of men and women
• conditions of accommodation in the host country, if provided by the employer
• allowances or reimbursement of travel, board and lodging expenses, where required during the posting period

Meeting local employment conditions alone is not sufficient to ensure full legal compliance when posting workers. This is due to additional administrative obligations imposed on employers in connection with customs authority controls, as well as the so-called “more favourable treatment” rule.

Posting workers abroad – additional requirements

Countries to which workers are posted impose additional obligations depending on, among other things, the company’s sector (or the sector in which the posted employees work), remuneration level, or form of employment. These obligations most often include notifying the competent authorities before the posting begins and ensuring the availability and translation of relevant documentation. It is worth noting that the type and scope of these obligations vary from country to country.

Posting foreign nationals (citizens of non-EU countries) or through employment intermediaries (temporary employment agencies) is particularly formalised. In such cases, most countries require Polish employers to register with foreign commercial registers, obtain appropriate licences, and secure residence permits for their workers.

Local employment conditions – what are they?

Under the Posting of Workers Directive, a posted worker may not have less favourable employment conditions during the posting period than local workers employed in the same or similar sector. On the other hand, the posted worker must be provided with the most favourable employment terms taking into account both the legal system of the sending country (Poland) and the host country (abroad). Matters are further complicated by the fact that in most Western European countries, employment conditions are not only defined by statute, but also by dozens of collective agreements, which may also apply to posted workers. A shortcut in the form of providing only the host country’s minimum wage and leave entitlement will therefore not suffice.

Posting workers abroad – ignorance of the law is no excuse

Below is an overview of the penalties provided for non-compliance with posting regulations in selected EU countries where Polish employers most frequently post workers:

Germany

Fines of up to €30,000. In the case of violations related to temporary agency work – fines of up to €500,000.

France

Fines of up to €500,000 (depending on the number of posted workers).

Netherlands

Administrative fines ranging from €750 to €8,000, which may be increased by 75% depending on the nature of the breach.

Belgium

Administrative fines: €50 to €6,000; in extreme cases, criminal liability involving 6 months to 3 years of imprisonment.

Failure to comply with regulations concerning the stay of posted non-EU workers may result in their deportation by the customs authorities of the host country.

Social security

Social security is only one of many employer obligations when posting workers, but it should not be neglected. To take advantage of the option to pay social security contributions in Poland during the posting period, the employer must apply for an A1 certificate. The A1 document confirms that the posted worker is registered in the sending country’s social security system and is exempt from paying contributions in the host country.

When applying for an A1 certificate, it is necessary to provide the start and end dates of the posting period in another EU country. The maximum duration of posting that can be declared is 24 months.

Posting workers abroad – risks

Posting workers abroad carries risks not only related to failure to meet the basic posting conditions. There are also many traps used by foreign inspection authorities, including in the areas of tax regulations or broad definitions of employment intermediation. For instance – in Germany, certain sectors in which workers are posted are automatically classified as employment intermediation, requiring Polish companies to obtain an appropriate licence before posting begins. Failure to do so may result in fines of up to €500,000. Moreover, employment intermediation-based posting to Germany is in principle allowed only for EU citizens, thereby excluding, for example, Ukrainian or Belarusian nationals. Another example is the so-called permanent establishment, which requires companies sending employees abroad to pay taxes on a portion of their profits in the host country. The popular 183-day rule is not always applicable.

Unfortunately, as with posting regulations in general, most entrepreneurs become aware of the above risks only when inspected by foreign customs, labour or tax authorities – and by then, defending the company’s interests is already highly limited.

Don’t delay – trust the experts

ATL Law advises businesses on international employee mobility, including tax and social security issues. We support companies in completing formalities related to posting workers abroad – both within and outside the EU – as well as relocations and employing posted workers within Poland. We approach each posting process individually, identifying obligations and procedures tailored to the client’s industry and business scale. We help determine applicable collective agreements, show how and where to register postings, and minimise risks in case of inspection.

Also read:

Posting non-EU workers to Germany – what should you remember? | ATL Law (atl-law.pl)

Zollamt – what employers forget when posting workers to Germany | ATL Law (atl-law.pl)

Zollamt Part II – customs inspections and penalties for non-compliance | ATL Law (atl-law.pl)

Zollamt Part III – documentation, local representation and expert support | ATL Law (atl-law.pl)

On 10 July of the current year, the Council of Ministers adopted a draft Act amending certain acts to improve the legal and institutional environment for entrepreneurs. The amendment was prepared by the Ministry of Development and Technology. The proposed amendment will now be submitted for legislative work in the Sejm. According to the plan, most of the new provisions are expected to come into force on 1 January 2024. The main aim of the new regulations is to introduce another package of simplifications and facilitations for entrepreneurs. It can be said that the new package prepared by the Ministry is a continuation of previously introduced pro-business acts aimed at creating a favourable and developmental environment for companies in Poland. The new regulation primarily concerns simpler rules for running a business, improvements related to succession, and greater transparency in economic law for entities operating in business. The changes under discussion are expected to cover several dozen acts, including civil law, commercial companies law, public economic law, banking law, and administrative regulations. In total, the draft encompasses amendments intended to be introduced to over 50 acts. In this article, we will outline some of the proposed solutions that may prove to be the most crucial from the perspective of entrepreneurs and their business activities.

Continuation of the Business Constitution

In 2018, the so-called Business Constitution was introduced in Poland, comprising a set of five acts. These regulations were intended as a package aimed at developing and improving the business environment. Above all, their purpose was to establish a new, simpler and more beneficial relationship between entrepreneurs and public administration. The draft Act proposed by the Ministry of Development and Technology is a continuation of the regulations introduced in 2018. The amendment largely concerns the simplification and acceleration of administrative procedures. Entrepreneurs will no longer be required to present a proxy document in offices if authorisation can be established through appropriate registers such as the National Court Register (KRS). The amendment also further removes the possibility for offices to require entrepreneurs to use a company stamp. The draft places significant emphasis on how regulations concerning the commencement, operation and termination of business activities are to be prepared. Normative acts in this regard should be drafted based on the principles of proportionality, adequacy and balance of administrative obligations, and in a manner transparent to entities operating in economic turnover. The amendment also provides for an appropriate vacatio legis for economic law acts, which should, as a rule, not be shorter than one month.

Simplified Administrative Procedures – Specific Solutions

The draft Act includes a package of various solutions concerning administrative procedures. These are primarily intended to facilitate and speed up proceedings for entrepreneurs before public administration authorities. The amendment will introduce so-called hybrid decisions, meaning that the authority will serve the decision to the entrepreneur in the traditional paper form, while attachments may be delivered in another form, for example, electronically. The new provisions will introduce another novelty – so-called soft service. The authority will be able to ask the entrepreneur to present their position without the need to immediately initiate formal proceedings. The amendment will oblige public administration authorities to provide justification in cases where a particular activity must be carried out personally by the entrepreneur or by a proxy. Changes will also cover issues related to inspections carried out at company premises. Under the new provisions, the authority will be obliged, prior to a planned inspection, to deliver to the inspected entity – along with the notice of inspection – a list of documents and information to be prepared. Significant changes will also be made concerning appeals. When an appeal is lodged against a decision to a higher instance, the first-instance authority will be required to consider all the circumstances indicated by the second-instance authority. A breach of this obligation will be subject to specific disciplinary and procedural sanctions for the authority and the employee. The regulations will also introduce changes regarding administrative penalties. The amendment allows public administration authorities to remit such penalties ex officio.

Succession Management – Key Changes

The new provisions will also introduce significant changes to the Succession Management Act. The draft provides that succession management will be automatically extended until the court issues an appropriate ruling, unless circumstances arise that cause it to expire. The amendment also assumes simpler procedures for establishing succession management. Currently, an entrepreneur has no right to appoint subsequent managers – they may only appoint the first one who will act after their death. After the amendment comes into force, this will change. During their lifetime, the entrepreneur will be authorised to indicate successive managers, and if they fail to do so, this right will pass to the heirs. The draft Act also reduces the number of heirs required to appoint a succession manager. Following the amendment, 75% of shares will be sufficient to carry out the appointment procedure, instead of the current 85%. The draft Act also clarifies remuneration issues, explicitly allowing the succession manager to receive remuneration – a matter not clearly regulated under current provisions. Significant changes will also be introduced in the field of banking law. The draft Act provides that the deceased entrepreneur’s bank account will continue to operate under existing terms. This means that if the deceased used online banking services, the succession manager will also have full access to them.

Other Innovations for Entrepreneurs

Changes will also affect leasing contract regulations. According to the amendment, these agreements will be able to be concluded in documentary form, without the need for an electronic signature verified by a qualified certificate. The draft Act also emphasises amicable dispute resolution in commercial matters. The changes stipulate that courts should initially direct parties to mediation. The new regulation will also amend the Tax Ordinance Act. The draft introduces the possibility of waiving an appeal against a first-instance decision. Additionally, it will be possible for a proxy to sign the MDR-3 form “Information of the user on the application of a tax scheme,” and the closed list of information that the taxpayer must include in their tax strategy will be clarified. The amendment also foresees the creation of a single place where information on local tax rates on property taxation will be collected.

Summary

In summary, the draft Act amending certain acts to improve the legal and institutional environment for entrepreneurs provides for a large number of changes across various areas of law. These changes aim to create a business-friendly environment and encourage different entities to undertake economic activity in Poland. The reforms clearly move towards simpler, more transparent and favourable solutions for entrepreneurs. It is expected that this adopted direction will, to some extent, encourage companies to invest in Poland and that the new regulations will be positively received by business entities. However, not all of the proposed innovations may prove beneficial for companies in practice. Furthermore, given the number of changes to be introduced at the same time, the amendment may initially cause a degree of confusion. To avoid this, we encourage you to familiarise yourself with the draft Act: Draft (rcl.gov.pl)

On 18 January 2017, Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters entered into force. The provisions are intended to make it easier to recover cross-border claims in civil and commercial cases. The said Regulation provides creditors with an alternative to national protective measures. It introduces a procedure that allows the creditor to obtain a European Account Preservation Order (EAPO). This measure is intended to safeguard subsequent enforcement of claims by preventing their disposal, transfer or withdrawal through the preservation of a specified amount of money. Given the current prevalence of transactions with entities holding accounts in various parts of the European Union, the aforementioned preservation order may prove to be a useful and advantageous tool for creditors, making the recovery of claims easier. Let us therefore discuss the situations in which Regulation 655/2014 applies and how to apply for the preservation order.

Scope of Application

Regulation (EU) 655/2014 applies to monetary claims in cross-border civil and commercial matters. A cross-border case, as defined in Article 3, is one where the bank account or accounts to be preserved are located in a Member State other than:

1. the Member State of the court where the application for the preservation order is submitted; or
2. the Member State in which the creditor is domiciled.

The relevant date for determining whether a case is cross-border is the date on which the application for the preservation order is lodged with the court. According to Article 2, the procedure does not apply to revenue, customs or administrative matters, or to state liability for acts and omissions in the exercise of state authority. Furthermore, the Regulation does not apply to matters listed in paragraph 2 of that article. Therefore, before filing an application for a preservation order, it is worth checking whether any of these exclusions apply to your case. Additionally, it should be remembered that under the Regulation, a creditor may not file parallel applications, i.e., against the same debtor for the same claim.

How to Obtain a European Account Preservation Order?

Let us now discuss how to obtain a European Account Preservation Order against a debtor. According to Article 5 of Regulation 655/2014, a creditor may apply for a preservation order before initiating proceedings in a Member State, as well as at any stage during the proceedings until judgment is given or a court settlement is approved or concluded. Moreover, it may also be obtained after the conclusion of proceedings where the creditor has obtained in a Member State a judgment, court settlement or authentic instrument requiring the debtor to pay the creditor’s claim. In accordance with Article 8 of Regulation 655/2014, the application for a preservation order must be submitted using the official form. This should include, inter alia, the designation and address of the court, details of the creditor and the debtor, and information about the bank where the debtor holds at least one bank account. Other requirements are specified in detail in Article 8(2).
The provisions state that a complete application should be submitted together with all relevant documents proving the existence of a judgment, settlement or authentic instrument, along with a copy of the judgment, court settlement or authentic instrument that meets the necessary conditions for establishing authenticity. The application and annexes may be submitted using any means of communication, including electronic means, provided these are accepted under the procedural rules of the Member State in which the application is lodged. As regards jurisdiction, all documents should be submitted in accordance with the rule laid down in

Article 6, which provides that:

“1. Where the creditor has not yet obtained a judgment, court settlement or authentic instrument, jurisdiction to issue the preservation order lies with the courts of the Member State which has jurisdiction to rule on the substance of the matter in accordance with the applicable rules on jurisdiction.

2. By way of derogation from paragraph 1, where the debtor is a consumer who has concluded a contract with the creditor for a purpose which can be regarded as being outside the debtor’s trade or profession, jurisdiction to issue a preservation order to secure a claim relating to that contract shall lie exclusively with the courts of the Member State in which the debtor is domiciled.
3. Where the creditor has already obtained a judgment or court settlement, jurisdiction to issue a preservation order in respect of the claim determined in the judgment or court settlement shall lie with the courts of the Member State in which the judgment was given or the court settlement was approved or concluded.
4. Where the creditor has obtained an authentic instrument, jurisdiction to issue a preservation order in respect of the claim determined in that instrument shall lie with the courts designated for that purpose in the Member State in which the authentic instrument was drawn up.”

In order for the court to issue a European Account Preservation Order, the creditor must demonstrate that there is an urgent need for such a protective measure, as the enforcement of the claim would otherwise be impeded or impossible. Where no judgment, authentic instrument or court settlement has yet been issued, the order may still be granted provided the creditor submits appropriate documents indicating that they are likely to succeed in the main proceedings. If you are unsure whether your situation meets the necessary requirements or do not know what documents to present, it is advisable to seek legal advice from a law firm.
The court makes its decision in written proceedings based on the evidence and documents submitted by the creditor. In accordance with Article 18 of Regulation 655/2014, the proceedings should be concluded without delay, and no later than within the deadline laid down in the Regulation.

Where the application is made before the main proceedings are initiated, the creditor is subject to additional obligations. They must initiate the proceedings within 30 days from the date of submitting the application or 14 days from the issuance of the preservation order. Furthermore, they must provide an appropriate security deposit to safeguard against misuse of the procedure. A similar obligation may also be imposed on the creditor by the court even after obtaining the relevant judgment or document, if certain circumstances so warrant.

If the court grants the application, a preservation order will be issued using the relevant form, which in accordance with Article 20 shall remain in force:

1. a) until the order is revoked;
2. b) until the enforcement of the order is concluded; or
3. c) until a measure to enforce the judgment, court settlement or authentic instrument obtained by the creditor in connection with the claim secured by the order becomes effective with regard to the funds preserved by the order.

Under Article 21 of Regulation 655/2014, an order issued in one Member State will be recognised in other Member States without the need for further proceedings and will also be enforceable in other Member States without the need for a declaration of enforceability.
In the case of a negative decision, an appeal may be lodged within 30 days from the date the decision is served on the creditor. If your application is rejected, it is worth seeking the assistance of a legal adviser to prepare an effective appeal.

Request for Bank Account Information

In addition to the procedure for obtaining a preservation order, Regulation 655/2014 also provides for a supplementary application. Under Article 14, if the creditor has obtained an enforceable judgment, court settlement or authentic instrument and does not know the debtor’s bank account details, but has reasonable grounds to believe that the debtor holds at least one account in a Member State, they may request the court to which the application for the preservation order is submitted to request that the information authority of the Member State obtain the necessary information to identify the bank or banks and the account or accounts of the debtor. The application may also be submitted if the judgment, settlement or document is not yet enforceable. The application should be lodged together with the application for the preservation order. The creditor is required to justify their assumptions before the court, indicate the relevant circumstances and meet all formal requirements.

President Andrzej Duda signed the Act of 16 June 2023 amending the Act on Value Added Tax and certain other acts on 4 August this year. An analysis of the changes introduced by the amendment clearly shows that a systemic revolution is approaching. The Act will introduce a requirement for taxpayers to use the National e-Invoicing System (KSeF), which has been available on a voluntary basis since 1 February 2022. The new e-invoicing system will be implemented in two stages. From 1 July 2024, it will become mandatory for active VAT taxpayers, both domestic and foreign, who are registered for VAT in Poland and have their registered office or a fixed place of business here. The second stage will come into force on 1 January 2025, from which point the system will also be mandatory for taxpayers exempt from VAT either subjectively or objectively. It is worth noting that the system will remain optional for foreign taxpayers who do not have a registered office or fixed place of business in Poland, as well as for taxpayers issuing consumer invoices.

In addition, taxpayers must prepare for issuing invoices outside of the KSeF system, meaning two systems will effectively operate in parallel, with the ministerial system forming the basis. Consequently, due to the upcoming changes, invoices will once again become a point of focus for taxpayers. The amendment will require adaptation of financial and accounting systems to the new reality through the purchase of new software and training in its use. Taxpayers will also need to learn how to issue invoices and what can be included on them. The amendment will also introduce severe penalties for failure to comply with the upcoming changes.

What will the new invoices look like?

Currently, invoices can be issued in paper form, electronically (e.g. PDF), or as structured documents via the voluntary National e-Invoicing System. Once the amendment comes into effect, the structured invoice will become the standard, which in practice will operate in a single format, known as a schema — an XML file. The unified invoice format is intended for all VAT taxpayers, including public entities such as municipalities involved in economic activities. The final schema format has already been prepared by the Ministry of Finance and is available in the Central Repository of Electronic Document Templates. The e-invoice will open as a PDF or in a web browser. Each visualisation will contain a unique QR code, allowing taxpayers to quickly and easily verify that the invoice data matches the original data stored in the National e-Invoicing System.
Regarding the data required on the e-invoice, there will be no fundamental changes. The invoice will still contain information such as: the name or company name of the taxpayer and purchaser of goods or services, their addresses, taxpayer’s VAT ID (NIP), buyer’s VAT ID (NIP), the date of delivery or completion of the service, the name (type) of goods or services, and the total amount due. The new rules will also allow for the inclusion of optional elements. It is worth noting that, once the Act comes into force, it will no longer be possible to attach additional documents to the invoice, which is currently allowed.

The procedure for issuing and receiving e-invoices

Currently, the procedure for issuing invoices is regulated by Article 106g of the VAT Act. This provision will be repealed and replaced with new regulations under Articles 106ga to 106gd. According to the amendment, the taxpayer will first generate the invoice as an XML file in their financial and accounting system. Next, the entity will need access to the KSeF system. They must authenticate themselves in the system, e.g. using an e-signature, to transmit the e-invoice. Following successful verification, individual invoices or batches of invoices will be recorded in the system. The KSeF system will then verify the invoices and assign them an appropriate number.
The amendment also provides for the issuance of corrective invoices and offers specific solutions for when the system is unavailable or access is disrupted on the taxpayer’s side. In such cases, the new regulations allow for offline mode — the taxpayer can generate the e-invoice in their system/application and, after regaining access to KSeF or resolving the issue, submit the invoice to the system without penalty.

What are the penalties for failing to comply with the new procedures?

The amendment introduces severe penalties for non-compliance with the new regulations. Penalties may apply for not issuing invoices via the system, issuing invoices in an incorrect format, or failing to submit invoices on time in the event of system downtime or access issues. In such cases, fines may amount to up to 100% of the VAT shown on the invoice or 18.7% of the total amount due. However, the tax office will have the discretion to mitigate penalties depending on the circumstances of each case, including the severity and context of the breach, whether the taxpayer has previously failed to comply, whether they were previously penalised for the same conduct, the extent of their contribution to the non-compliance, and whether steps were taken to avoid the breach. If the breach resulted from force majeure, the tax authority will refrain from imposing a penalty.

Advantages and disadvantages of the new regulations

The Ministry of Finance, in its communication regarding the amendment, highlights several tax and business advantages resulting from the changes. E-invoicing is expected to streamline and expedite economic transactions by introducing a single standardised invoice format, replacing paper and PDF documents with digital data, and promoting the digitisation and automation of invoice exchange and accounting between taxpayers. This solution will not only allow businesses to document transactions more quickly and efficiently but also speed up payment processing.
Furthermore, the change is expected to support accounting automation, reducing the number of errors. Paper or graphic invoices will no longer need to be scanned or manually entered, as XML data can be directly imported into systems. The changes will also accelerate data exchange between contractors, as issued invoices will be made available to recipients in near real-time by the administration. It is expected that the changes will support fair competition by ensuring that buyers can verify that invoices are issued by authorised entities. Likewise, invoice issuers can be sure that recipients have received their invoices.

From a tax perspective, taxpayers using the KSeF system who apply for a VAT refund will receive it in a shorter period — 40 days. There will no longer be a need to issue duplicate invoices, as e-invoices in the KSeF system cannot be lost or destroyed. Both the issuer and the recipient will always have access to them. Another benefit introduced by the amendment is the elimination of the requirement to submit the Standard Audit File for Invoices (JPK_FA) upon request by tax authorities. The new regulations are also expected to enable faster correction of invoices.

Despite the numerous advantages, potential negative consequences for taxpayers must also be considered. The new regulations will inevitably lead to additional costs for businesses, including purchasing new software and training employees. Initially, this may create confusion and anxiety among taxpayers due to the threat of strict penalties. To avoid such outcomes, everyone affected by the changes should familiarise themselves thoroughly with the new regulations and prepare accordingly. The Ministry of Finance assures that it will provide appropriate tools to ensure that all parties can properly adapt to the upcoming changes.

The Act of 28 July 2023 on the Posting of Drivers in Road Transport is already in force. It aligns national legislation with EU regulations and introduces provisions concerning the posting of drivers in road transport within the country. The main objectives of the new rules are to improve working conditions for drivers and to facilitate the operation of transport businesses. Additionally, the Act sets out the rules for roadside inspections and the cooperation of public administration bodies in this area. It is indicated that the regulation is intended to protect the domestic transport market against unfair competition from carriers from other Member States and third countries. The legal act entered into force on 19 August, and is therefore already binding. It is thus worth familiarising oneself with the key changes introduced by this new legislation. This article aims to present the essential principles arising from the Act that may be of significance for entrepreneurs operating in the transport sector and the drivers they employ.

Who is affected by the new regulations?

According to Article 1(1) of the Act on the Posting of Drivers in Road Transport, it sets out the rules for:

• posting of drivers in road transport within the territory of the Republic of Poland;
• monitoring compliance with provisions on the posting of drivers in road transport within the territory of the Republic of Poland and the fulfilment of information obligations related to such posting;
• roadside inspections of the posting of drivers in road transport within the territory of the Republic of Poland;
• cooperation between the Road Transport Inspectorate and the National Labour Inspectorate in the exchange of information relating to the posting of drivers in road transport within the territory of the Republic of Poland;
• cooperation with competent authorities of other Member States regarding the posting of drivers in road transport to and from the territory of the Republic of Poland;
• proceedings related to the submission or receipt of notifications regarding decisions imposing administrative fines or penalties on a road carrier posting a driver to or from the territory of the Republic of Poland, and the enforcement of such penalties or fines.

The regulations apply to carriers established in another country who temporarily post a driver (employee) to Poland in connection with the provision of road transport services.
In addition, the Act contains a number of personal and material exceptions to the application of the introduced rules. As for personal exclusions, Article 2(1) of the Act lists the entities to which the provisions do not apply, namely:

a) Drivers posted to the territory of the Republic of Poland:

1. to work in a branch or undertaking belonging to the group of undertakings to which the posting employer belongs,
2. by an entity being a temporary work agency or a personnel-leasing agency that has posted the driver to a user employer,
3. from the Swiss Confederation, until such time as an agreement is concluded with the European Union committing to the implementation into national law of the provisions of Directive (EU) 2020/1057 of the European Parliament and of the Council of 15 July 2020 laying down specific rules with respect to Directive 96/71/EC and Directive 2014/67/EU for the posting of drivers in the road transport sector and amending Directive 2006/22/EC as regards enforcement requirements and Regulation (EU) No 1024/2012 (OJ EU L 249, 31.07.2020, p. 49), hereinafter referred to as “Directive 2020/1057”;

b) Drivers posted from the territory of the Republic of Poland:

1. to work in a branch or undertaking belonging to the group of undertakings to which the posting employer belongs,
2. by a temporary work agency,
3. to the territory of the Swiss Confederation, until such time as an agreement is concluded with the European Union committing to the implementation of the provisions of Directive 2020/1057 into national law.

Further exemptions from the Act are set out in Articles 4 and 5. These exclusions are based on the nature of the transport activity. The legislator lists certain types of road transport that are not covered by the Act, such as: transit journeys, bilateral transport of goods, road transport of goods as part of a combined transport operation when the road leg itself consists of bilateral carriage of goods, and other cases as specified in detail in the mentioned provisions.

Obligations of the carrier posting a worker to the territory of the Republic of Poland and of the posted driver

The Act provides for a number of obligations that must be fulfilled by carriers, as defined in Article 6 and Articles 9 to 11. Additionally, the provisions also apply to carriers from third countries. The primary obligation of a carrier posting a driver is to submit a notification of posting no later than at the time of posting, using the public interface connected to the Internal Market Information System (IMI). According to Article 9(2) of the Act, the notification must include a range of information. Furthermore, the posting carrier must ensure that the driver carries the documents specified in the regulations. The driver is required to have these documents in the vehicle while operating in Poland and to present them during any roadside checks. Moreover, the carrier is obliged to provide the worker with appropriate working conditions and, in accordance with Article 6 of the Act, to fulfil information obligations — that is, to inform them of their rights and obligations related to the posting.
As regards carriers from third countries, the legislator has taken into account differing technical conditions and the lack of access to the public interface linked to the IMI system. Therefore, a road carrier from a third country posting a driver to Poland must submit a notification of posting to the National Labour Inspectorate each time, no later than at the start of the posting. A suitable form for such notifications will be made available on the relevant website. Additionally, before the start of each road transport operation, the carrier must issue a certificate of posting for the driver. The content of this certificate will be determined by the minister responsible for transport.

Rules for inspecting posted drivers

The Act establishes a two-track inspection system, namely: roadside checks carried out by the Road Transport Inspectorate and checks on the correctness of posting and the employment conditions of posted drivers carried out by the National Labour Inspectorate. Furthermore, the regulations specify the procedures for cooperation with competent authorities in other Member States. In this regard, the National Labour Inspectorate is the body authorised to receive requests for mutual assistance concerning checks on the working conditions of posted drivers. The provisions also define the rules for imposing fines and penalties related to non-compliance with the obligations arising from the Act. Carriers and drivers may be subject to financial penalties imposed by the authorised bodies if they fail to meet the stipulated requirements.

Conclusion

To conclude, the Act of 28 July 2023 on the Posting of Drivers in Road Transport, which entered into force on 19 August, introduced a number of significant changes that are bound to impact businesses in the transport sector. It is essential to become familiar with the provisions of the Act, which are already binding, to avoid misinformation within one’s company and financial penalties for non-compliance with the regulations. Furthermore, carriers intending to post workers to the Republic of Poland should seek legal advice in the event of any doubts to ensure proper compliance with the posting requirements set out in the Act.

For a long period, courts commonly adopted, based on the judgment of the Constitutional Tribunal (case ref. K 7/13) of 8 July 2014, a favourable interpretation whereby benefits provided by employers posting employees—such as accommodation, meals or transport—did not give rise to taxable income for the employee. This interpretation was explained by the fact that such benefits primarily served the employer’s interests. However, the resolution of the Supreme Court of 10 December 2015 (III UZP 14/15) changed the jurisprudential stance on the taxation of accommodation and transport, to the detriment of employers. Common and administrative courts held that where an employee is provided with accommodation, transport or meals, he or she receives income within the meaning of Article 12(1) of the Personal Income Tax Act. Consequently, the posting employer is obliged, as the tax remitter, to calculate, collect and remit an income tax advance. However, following the recent landmark judgment of the Supreme Administrative Court (NSA) of 1 August 2023 (case ref. II FSK 270/21), a breakthrough and a complete change in the current jurisprudential line may be on the horizon. This ruling is highly significant from the perspective of posting employers. Considering its importance, it is worth reviewing the key conclusions drawn and examining the potential implications for posting employers in the near future. This article seeks to present the main elements of the judgment and explain its potential consequences.

Landmark Judgment of the Supreme Administrative Court of 1 August 2023 (case ref. II FSK 270/21)

In the case under discussion, the Director of the National Tax Information issued an individual interpretation in March 2020, in which he stated that the position of the company R Sp. z o.o. on income tax obligations concerning the provision of accommodation to employees was incorrect. The company (the claimant) argued that the provision of lodging did not constitute income within the meaning of Article 12(1) of the Personal Income Tax Act. The company appealed this decision to the Voivodeship Administrative Court (WSA) in Kraków, which dismissed the complaint, maintaining the previous line of jurisprudence. The court justified its position by stating that providing an employee with accommodation does not relate to the work process, as it is not a tool through which the employee performs his or her duties, but rather meets personal, non-work-related needs. Furthermore, the WSA held that the mere fact that an employee resides away from home does not imply that he or she remains at the employer’s disposal or uses the premises solely for business purposes. As a result, the court classified expenses incurred by the employer to provide accommodation to the employee at the place of work—excluding business travel—as income within the meaning of Article 12(1) of the PIT Act, subject to income tax, from which the tax remitter must deduct an advance pursuant to Article 32 of the PIT Act.

Following this decision, the company lodged a cassation complaint with the Supreme Administrative Court, which resulted in the annulment of both the WSA’s judgment and the aforementioned individual interpretation. The ruling emphasised that in matters concerning benefits provided to posted workers, not only national legislation must be considered, but also EU law, including Directive 96/71 (the Posting of Workers Directive) and Directive 2014/67 (the Enforcement Directive). The Court held that domestic courts may not disregard these instruments when interpreting the relevant provisions, as has unfortunately often been the case in recent years.

The Supreme Administrative Court held that, according to the above-mentioned EU regulations, the remuneration of posted workers generally does not include the cost of transport or accommodation, and that such expenses should be borne fully by the employer, as they are inherent to the concept of posting. Furthermore, it stated that providing or reimbursing such costs to an employee cannot, under any circumstances, be considered as remuneration, since the benefits are incurred in the interest of the employer. The employee does not use or dispose of such benefits freely, but rather uses them for a specific, limited purpose. Therefore, the court concluded that even under national tax law, one cannot assume that such obligations should fall on the employee, thus burdening the employer with personal income tax responsibilities. The Court thus unequivocally applied the principle of the primacy of EU law. This judgment may mark a turning point in the negative jurisprudential trend in recent years concerning the taxation of such benefits. Moreover, it not only signals a return to earlier interpretations, but also enhances domestic case law by emphasising the relevance of EU law.

A Shift in Jurisprudence – What Benefits for Employers?

Having discussed the key elements of the Supreme Administrative Court’s ruling, the next question is what consequences this may have for employers going forward, and how it may impact future case law and individual tax interpretations. The ruling is certain to compel courts to place greater focus on the analysis of EU legislation, and will also increase and give real effect to the application of fundamental EU legal principles. Additionally, the ruling breaks away from the recent trends upheld by courts and authorities. From the employers’ perspective, the judgment may have the greatest influence on individual interpretations issued by the Director of the National Tax Information, as well as on potential complaints reviewed by administrative courts.

Employers seeking tax rulings after the date of this judgment may expect a more favourable approach from the National Tax Information. In cases of unfavourable rulings, they can also appeal to administrative courts, where jurisprudence may now lean more favourably based on the new judgment. Even employers already bound by negative rulings have instruments at their disposal. Polish tax law does not prohibit requesting a second interpretation. Accordingly, employers may attempt to obtain a new individual interpretation. The Tax Ordinance also provides for procedures to amend or revoke an existing tax ruling.

Furthermore, employers should be aware of upcoming changes in the rules governing individual tax interpretations, which will enter into force on 1 January 2024. The amendment introduces a five-year validity period for interpretations, meaning that all interpretations issued before 2019 will expire. Employers should therefore consider taking advantage of this change as well.

Summary

To summarise, the Supreme Administrative Court’s ruling of 1 August 2023 has given hope to employers posting their workers abroad for a return to a positive and more rational line of case law. It undoubtedly constitutes a break from the previous negative trend in taxing benefits such as accommodation, meals or transport in the context of posting. The ruling also offers hope that state authorities and courts will apply EU law in a more adequate and complete manner. Following the ruling, employers can expect more favourable decisions from the public administration and the judiciary. They also have several instruments at their disposal to pursue favourable interpretations. In the event of doubts or a desire to obtain a favourable decision or to challenge a previously issued negative one, it is advisable to seek the assistance of a law firm, which can advise on the most effective course of action in a given situation.

Work is currently underway to determine the new minimum wage rate for 2024. The government aims to introduce changes and increase the current wage amount by means of a regulation of the Council of Ministers, authored by the Ministry of Family and Social Policy. The draft regulation has now been submitted for public consultation and interdepartmental arrangements. The Council of Ministers wants the minimum monthly and hourly wage rates to be increased twice in the coming year. The first increase is planned from 1 January 2024, and the second six months later, i.e. from 1 July. As a result, employers must prepare for two wage increases in the coming year for employees earning the statutory minimum wage. All ministries now have 7 days from receipt of the draft to submit their comments and amendments. In addition, the draft will be subject to public consultation. It will be reviewed by the Social Dialogue Council, employer organisations, trade unions, and the Joint Commission of Government and Local Government, all of which will have 21 days from receipt to provide their opinions.

How much will the minimum wage be from 2024?

The government plans that from 1 January 2024, the minimum wage will be PLN 4,242, and the minimum hourly rate PLN 27.70. From 1 July, another increase is planned, after which the minimum monthly wage will rise to PLN 4,300 and the hourly rate to PLN 28.10. It is worth recalling that the current statutory minimum wage stands at PLN 3,600 and the hourly rate at PLN 23.50. Within the statutory timeframe, the Social Dialogue Council did not reach an agreement on the amount of the minimum wage and hourly rate for certain civil law contracts in 2024. As a result, pursuant to Article 2(5) of the Act, the Council of Ministers is obliged to determine the above-mentioned rates by way of regulation. The proposals presented by the government cannot be lower than those proposed by the Social Dialogue Council. The Council of Ministers must determine the final amounts by 15 September of the current year.

Wage indexation – what are the consequences?

At a meeting of the Social Dialogue Council, Minister Marlena Maląg indicated that the proposed changes will benefit more than 3.6 million people. However, it is anticipated that employers will bear total costs of around PLN 35 billion. For employees earning the lowest wages, the proposed rates may appear very attractive. Yet already, considering the wage levels in 2023, it can be stated that the planned increases will pose a considerable burden for employers, especially smaller entities. The project’s impact assessment found that increasing the minimum wage will help maintain the purchasing power of the incomes of workers who earn the lowest wages. The Ministry of Family and Social Policy anticipates that the proposed changes will lead to an increase in state budget expenditure in 2024. It is estimated that the costs due to the wage increases will rise by approximately PLN 2,025.0 million per year. The state will finance certain wages, contributions, and benefits from the budget, where their amounts are linked to the minimum wage. These subsidies will be the main reason for the increase in expenditure.

Summary

To summarise, such a significant increase in the minimum wage and hourly rate may at first glance appear highly beneficial, particularly from the perspective of employees. However, the changes could prove to be an excessive burden for employers. To manage costs, they may be forced to reduce staffing levels or limit wage increases for other employees. The proposed changes may also be disadvantageous for employees with higher qualifications who earn more than the minimum wage.