Poland: Recent tax-related developments (court decisions)
Summaries of recent tax developments
The KPMG member firm in Poland prepared a report that includes summaries of the following recent tax developments:
Clearance opinion on merger through acquisition denied
The tax authority refused to issue a clearance opinion on a merger through acquisition of a related special purpose entity enjoying an exemption for conducting business activity in a special economic zone (ref no. DKP2.8082.1.2022). The taxpayer claimed that the goal of the merger was to cut the costs of business currently conducted by the special purpose company and increase profitability. However, the tax authority found that the taxpayer’s non-tax objectives did not prevail over the new entity’s desire to take advantage of the zone exemption and thus refused to issue a clearance opinion.
Distribution of profits earned before transforming a sole proprietorship into an LLC was not subject to individual (personal) income tax
The Regional Administrative Court in Warsaw held (case file III SA/Wa 1296/22) that a distribution of cash by a Polish limited liability company (LLC) to its shareholder, following the transformation by such shareholder from a sole proprietorship to such LLC—representing profits earned by such shareholder before such transformation and taxed to such shareholder as individual (personal) income—was not subject to individual (personal) income tax or otherwise subject to additional tax.
Establishing transmission easement under contract without renumeration did not result in income for corporate income tax purposes
The Regional Administrative Court in Lublin held (case file I SA/Lu 591/22) that a company acting as a power grid operator that entered into free-of-charge real estate contracts for establishing transmission easement did not recognize income as a result. According to the court, "acquired gratuitously or for a partial payment” used in Article 12(1)(2) of the corporate income tax law does not apply to a situation in which a legal transaction is by its nature always free-of-charge.
Read a January 2023 report prepared by the KPMG member firm in Poland
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