International experience in taxation of income from legal activities

The relevance of the study of foreign experience in taxation of income from legal activities stems from the fact that it is dynamically developing and the relevant scientific knowledge requires constant deepening and updating. Moreover, the best international experience is a fundamental source for legislative proposals aimed at improving approaches to taxation of income from legal activities. The main methods that the author relies on in this study are the formal-legal method, the comparative method and the method of generalization. The study resulted in a number of outcomes. For instance, it was found that in some states there is a special taxation regime for income of lawyers, which may provide for the recognition of half of their total (gross) income as general taxable income (India) or the right of a lawyer to opt for a simplified system of taxation of their income with the application of a reduced rate (Poland). Moreover, special rules for determining the amount of total opposition income from advocacy provide for: (1) the possibility of deducting from the total income received by a lawyer during the tax period the amount of expenses incurred by him or her in connection with the legal practice (for the purchase of office supplies, for the rental of premises for the legal practice, for banking, utility bills for workplaces, for business trips, for tax software and a tax consultant, etc.), depreciation deductions during the tax period (in the amount of part of the value of property used in legal practice, including computer equipment, safes, etc.), the amount of remuneration for assistants and other employees, as well as incentive deductions in connection with the performance of socially useful activities under the circumstances established by law, as well as some other amounts subject to their proper documentary confirmation (Kazakhstan, United Kingdom, Croatia); (2) payment of tax in advance monthly with the possibility of reducing the amount of these advance payments by tax authorities in special cases (Croatia), quarterly (Moldova, Germany) based on the indicators of taxable income of previous tax year broken down by the relevant months/quarters (with a refund of excessively paid amounts) or annually on the day of submission of the tax reporting document (Kazakhstan, Kyrgyzstan); (3) taxation of income from legal practice at a fixed rate (10 % in Kazakhstan and Kyrgyzstan, 18 % in Moldova and India, 20 % in the United Kingdom) or a progressive (differentiated) rate ranging from 9.5-20% to 45% depending on the amount exceeding certain threshold values for the rate by a particular amount (France, Germany, Norway, Poland, Sweden) along with the determined non-taxable annual income threshold.