Polish Parliament passes 70% tax on severance packages

Poland’s Sejm lower house of parliament has approved a new 70 percent tax on severance packages for CEOs of treasury-owned companies.

This measure is designed to reduce the size of these packages as well as to raise additional income, the Law and Justice (PiS) government has said. The tax, originally proposed at 65 percent, was amended to 70 percent by a Sejm financial committee before being submitted for debate.

The threshold after which the tax will apply will be the equivalent to three months’ severance payment, apart from cases where the package includes compensation for a non-compete agreement, in which case the threshold will be six months’ pay.

The tax only applies to State Treasury firms, and will not be levied on private sector CEOs. “There is no widespread trend [in the private sector] for these contracts, which guarantee huge multi-million severance packages and compensation to persons who are largely associated with the political situation,” explained Gabriela Masłowska of PiS, the co-author of the legislation. Representatives from both PO and Modern Poland expressed mixed feelings about the legislation, with one Modern Poland MP claiming that the measure might be eventually found unconstitutional.

The tax will now move to the Senate where PiS also have a majority. It needs to be passed by 30 November, which is the deadline for making changes to tax for next year, and is expected to be in place from 1 January 2016. (sl/rg/rk)




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