tax advisor, Junior Tax Manager at RSM Poland
The question of collecting civil law transactions tax (hereinafter: CLTT) on the share capital increase transactions in limited joint-stock partnerships (Polish: SKA) was long open to doubt. In the case of contributions made to SKA for the share capital and simultaneously creating an agio, the problem was to determine the tax base, in other words to answer the question if this was the amount of contribution to the company’s assets or the amount by which the share capital was increased.
A change of Articles of Association versus CLTT
In accordance with Art. 1(1) (1)(k) of the Act on Tax on Civil Law Transactions (hereinafter referred to as „Act on CLTT” ), the change of Articles of Association is an activity subject to this tax. It should be noted that, according to the Act on CLTT, Articles of Association are any deeds of settlement, so both the Articles of Association of a partnership and the Articles of Association of a limited liability company, as well as a statute of a joint-stock company or a statute of a limited joint-stock partnership.
Articles of Association of partnerships are changed in the event of new contribution or an increase in contribution made to a partnership, when the amount of this contribution causes an increase of the assets or the share capital of the partnership, as well as in the situation of granting a loan to the partnership by a partner, making additional contributions or granting rights of usufruct.
As for corporations, the changes of the Articles occur when the share capital is increased by contributions, company’s assets or shareholder’s additional contributions.
SKA – more a partnership or a corporation?
The nature of SKA is quite specific because from the point of view of the Polish commercial law it is a partnership; however, it has some features of a corporation (i.e. share capital). As mentioned above, in the case of partnerships, the amount of contribution is subject to CLTT, whereas in the case of corporations, the taxable amount is only the amount by which the share capital has increased. The surplus amount, which is transferred to the reserve capital, is excluded from the tax base.
So far, the view of tax authorities has been that notaries are doing right when including in the tax base, in the case of SKA, also the amount of contributions transferred to the reserve capital.
An example of such approach is the individual tax ruling by the Director of the Fiscal Chamber in Katowice of 30 April 2014, ref. no. IBPBII/1/436-48/14/MZ. Administrative courts have also upheld the position of tax authorities – see the judgement of the Voivodeship Administrative Court in Szczecin of 12 February 2014, file ref. no. I SA/Sz 1166/13.
Nevertheless, the Voidvoideship Administrative Court in Kraków, in resolving a dispute between a taxpayer and the Minister of Finance, upon the decision of 12 April 2013 (file ref. no. I SA/Kr 188/13), made a reference for a preliminary ruling to the Court of Justice of the European Union (hereinafter the „CJEU”) - whether SKA can be considered a corporation in the meaning of Art. 2 (1) (b) and (c) of the Directive 2008/7 of 12 February 2008, regarding indirect taxes on the raising of capital if, due to the legal nature of the entity, only a part of its capital and partners can satisfy the conditions provided in the above regulation (Case C-357/13 Drukarnia Multipress Sp. z o.o. in Kraków against the Minister of Finance). The dispute itself is rooted in the regulations of the Council Directive 2008/7/EU that implemented the Polish legal system. The CJEU requested an opinion from the Advocacte General (M. Niil Jaaskinen), who, on 18 December 2014, issued an opinion according to which Art. 2 (1) (b) and (c) of this Directive shall be interpreted so that a limited joint-stock partnership in the Polish law, as the one at issue in the main proceedings, which can satisfy the conditions of the said regulations only partially, is treated as a corporation in the meaning of the Directive 2008/7. Experience shows that the judgment of the CJEU is rarely different from the opinion issued by the Advocate General.
Real chances for a refund of overpaid CLTT
In consideration of the above, the favourable judgement by the CJEU may be a chance for taxpayers to get a refund of overpaid CLTT in the amount equal to the difference between the amount of contribution and the amount by which the share capital was increased.
Favourable decisions have been already delivered by Polish administrative courts in similar cases, e.g. the judgement of the Voivodeship Administrative Court in Łódź of 11 February 2015, file ref. no. I SA/Łd 1265/14, in which the Court concluded that „for the purposes of the tax on civil law transactions, a stock-limited company, in the light of Directive 2008/7/UE, shall be treated as a corporation and the argument can be accepted that the amount of contribution made to limited joint-stock partnership is subject to tax on civil law transactions only in the amount allocated to the share capital”.
I hope the opinion issued by the Advocate General and the latest judgements by administrative courts will result in changing the pro-fiscal approach of the Minister of Finance and, in consequence, in getting a chance for a refund of the overpaid tax.
It is possible to claim the refund of the overpaid tax even today but it should be considered whether a better option is to wait for a judgement of the CJEU. After a judgement by the CJEU that the national regulations are incompatible with Union law, the taxpayers are entitled interests on the overpayment for the period in which the national budget had their money (so since the date of paying the tax). Whereas, if a taxpayer claims for the refund before the judgement by the CJEU and wins it, the interests will be due only if the tax authority does not reimburse the overpaid tax in the period provided by the regulations. But even then, the interests are calculated since the day of the claim for the refund to this tax authority.