EU: CJEU referral on tax free treatment of partial division under merger directive (Poland)

The District Administrative Court in Gliwice on June 2, 2025, referred preliminary questions to the Court of Justice of the European Union (CJEU) regarding the corporate income tax treatment of a partial division under Directive 2009/133/EC (the “Merger Directive”) (case C-434/25).

Summary

The taxpayer in March 2022 executed a partial division under Polish law, transferring part of its enterprise to another entity in exchange for new shares in the transferee entity. The taxpayer argued that no taxable income was generated under Polish law because the value of the shares received in the exchange was equal to the value of the assets transferred. The Polish tax authority disagreed on the grounds that tax-free treatment was not available under article 12(4)(12)(a) of the Polish Corporate Income Tax Act because the taxpayer had already acquired shares in the transferee entity through a merger.

The taxpayer contested the tax authority’s position, claiming the Polish law violated the Merger Directive and EU law. The District Administrative Court agreed with the taxpayer and overturned the tax authority’s decision, but the Supreme Administrative Court overturned the lower court because it failed to identify specific conflicts between EU and Polish law.

The lower court has now referred the following preliminary questions to the CJEU:

• Whether Article 8(2) of the Merger Directive precludes national provisions imposing additional conditions for tax-free treatment
• Whether Article 8(6) of the Merger Directive justifies limiting tax-free treatment to the first restructuring measure and taxing subsequent similar transactions

Read a September 2025 report prepared by KPMG’s EU Tax Centre