May 10, 2018
In a test case regarding the tax on civil-law transactions (TCLT), the Supreme Administrative Court shared the view of the company acting as the applicant, represented by Dorota Szubielska, and stated in the judgment that there is no obligation to pay the TCLT in the situation where a joint-stock company is transformed into a registered partnership as regards contributions made to the joint-stock company on which the TCLT had not been charged (Case II FSK 242/16).
According to the Supreme Administrative Court, the dispute over the tax base in the case of transformation of a company into a partnership (change of the entity’s articles of association in the meaning of the TCLT) should be resolved on the basis of literal interpretation of Article 9(11)(a) of the TCLT Act.
When making a literal interpretation of Article 9(11)(a) of the TCLT Act, one should assume that this provision governs two situations: first – where the value of the contribution was previously taxed, and second – where no tax was charged in accordance with the laws of a Member State (in-kind contribution premium). The analysed ground for exemption regarding the object of taxation refers, after the word “or”, to the term “Member State” and uses the term “tax”. Therefore, in light of literal interpretation there are no grounds to limit these terms to “a Member State other than the Republic of Poland” and to “tax on capital contributions charged in accordance with the laws of another Member State”.
A view to the contrary, taken by the court of 1st instance, regarding the understanding of Article 9(11)(a) in fine of the TCLT Act, would lead, according to the Supreme Administrative Court, to discrimination of taxable persons who are liable to tax in respect of the transaction concerned under Polish law – compared to taxable persons whose analogous restructuring transactions are not subject to taxation according to the laws of a Member State. Such an imbalance between solutions applicable in EU Member States would be unacceptable from the perspective of the legal principles mentioned above, and it would affect the free movement of capital in the EU single market.
For statement of reasons for the judgment, please refer to http://orzeczenia.nsa.gov.pl/doc/32F3629A84