Tax optimisation is a very important concept, but also one that is controversial. Many people have doubts as to whether this is a step towards exceeding the legal barrier to tax avoidance. That's not right. It is worth realizing one thing - tax optimization is fully legal. After all, taxpayers have the right to make decisions that are favourable to their companies. But if there are any doubts, this article will try to dispel them. What exactly is tax optimization and what is its purpose? What is the difference between avoidance and tax evasion?

The concept and activities of tax optimisation

The concept of tax optimisation consists of a number of factors. These are lawful activities aimed at minimising tax burdens, e.g. with regard to income tax or even tax avoidance, provided that such a possibility is permitted by law. The concept itself does not have its own definition specified in the tax law regulations, however, each tax advisor he's very familiar with it. Tax optimization consists primarily in the planning and implementation of tax measures. These activities must be optimal and beneficial for the company concerned, and their essence must be to respect the applicable law.

Legal tax optimization in its scope includes such activities as

• tax planning - it depends to a large extent on the personal expectations of a given taxpayer. Most often these are activities aimed at minimizing taxes, eliminating risk and stabilizing or even increasing tax burdens, e.g. for credit purposes,
• tax saving - natural behaviour from the point of view of tax law (cash accounting method - VAT), which is to be reduced in the long run,
• tax avoidance - with the use of legal possibilities, i.e.: taking advantage of reliefs and exemptions, restructuring transactions, deductions, legal forms of conducting business activity or taking advantage of legal loopholes, which, however, require knowledge of the law.

Objectives and doubts about tax optimisation

The objective of tax optimisation is primarily to reduce tax liabilities, i.e. to take steps to reduce the amount of fiscal burdens to the most favourable level for the taxpayer. A tax advisor can explain the concepts and doubts related to effective optimization, which covers all areas of the company's activity.

According to the amended Tax Ordinance, tax avoidance is an activity aiming at a tax benefit, and the activity in question may be contrary to the purpose and subject matter of the Tax Ordinance. On the other hand, a taxpayer's conduct may be regarded as artificial. Tax evasion, e.g. in the case of income tax, can be equated with tax fraud aimed at misleading the State. In order to avoid this, it is therefore best to use the services of professional tax advice.