The Polish Development Fund (PFR) does not forgive and sends letters, among other things, to entrepreneurs operating in the cantor industry, demanding explanations on how they determine their revenues for granting them subsidies under the so-called PFR Financial Shield.
We are seeing more and more cases concerning the dispute between the cantors and the PFR, which is taking action to challenge the subsidies granted to the cantors.
Letters from the PFR with a call for clarification
Usually it starts innocently, i.e. entrepreneurs receive letters calling for an indication of whether, when they filled in requests for subsidies, they reported as revenue the entire amount obtained from the sale of currencies or merely spreads, i.e. the difference between the purchase price and the sale price of the foreign currency.
We would point out that often such seemingly routine questions may in fact aim to demonstrate that an entrepreneur conducting a cantor overstated the amount of his income by mistaking the concept of income.
This is important, since at the time of submitting applications for subsidies, it was the amount of revenue that determined the amount of subsidies.
Clarification of revenue
It might seem that the case is simple, for whoever pointed out the wrong data and received the money unduly or more than due should return it.
However, where, at the time of submitting the applications and signing the PFR agreement at all, it did not specify how the definition of income should be understood and, what is significant, did not indicate that the cantor industry should state the amount of revenue calculated according to the specific rules, i.e. as a spread?
Can the PFR change such key "game" rules during this situation? And what about the entrepreneurs who have already settled with the PFR from the subsidy granted and have therefore concluded the agreement?
The atmosphere is further heated by the fact that reading calls sent to our customers gives the impression that today the PFR is trying to put them in a position of weaker side, and preferably in a guilty position, which made a mistake and best to return the money quickly.
PFR status and litigation
In our view, the matter is more complex and the demands of the PFR often do not have a legitimate legal basis. First, It is worth noting that PFR S.A. is not a public administration body. It is a Polish joint-stock company owned by the State Treasury based on the Code of Commercial Companies.
This was confirmed by the administrative courts, including in particular the NSA in the order of 5 October 2021, reference no. IGSK 1154/21 indicating that the legal relationship between the PFR and the entrepreneur is of a civil nature.
This information, seemingly prosaic, is of great importance from the point of view of the procedural situation of the entrepreneurs to whom PFR makes a request. After first, indicates to them the right path to resolve any dispute – civil process and after second makes the parties to any dispute equal. There must be no power.
one of the parties, the authority, as is the case in the course of administrative proceedings, where the authority takes decisions and has extensive enforcement tools, including the possibility of securing the assets of the party before judicial review of the legality of the decision.
PFR Financial Shield as the determining document
Since we already know that business rights should be treated on an equal footing with the rights of the PFR, we can assume that the documents concerning the so-called PFR Financial Shield programme will be conclusive, including in particular the rules of the programme and the agreement setting out the mutual rights and obligations of the parties.
And here it can be said that we are beginning to touch on the heart of the matter, because the subvention programme started in April 2020, Not until June 2020 The PFR concluded that the cantor industry is receiving substantial amounts of subsidies by providing its revenues (understanded by any other entrepreneur).
Consequently, 17 June 2020 The PFR updated the Communication on the interpretation of economic turnover (sales revenue) from 17 May 2020, indicating that cantor revenues should be calculated as spread, i.e. de facto income rather than revenue (spread, i.e. income from the sale of currencies – purchase of currencies = income).
The law cannot go backwards
The problem is that the PFR considers that the above update (amendment) is retroactive and applies also to contracts concluded by traders and accepted by the PFR before 17 June 2020 At that time, the cantors claimed the amount of revenue calculated in the same way as for other traders, and the PFR verified these applications, considered them correct and ordered subsidies.
It should be added that there is no bad will of the cantors, because all documents created by the PFR, valid before the change of 17 June 2020, allowed them to believe that in the absence of a different definition of income should be understood in accordance with the provisions of the Income Tax Act (PIT and CIT).
For example, in the PFR's rules of procedure, it is possible to verify data provided by the entrepreneur through cooperation with the Social Security Office and tax offices, where the revenue of the cantor industry is understood as revenue from the sale of currency rather than spread.
It is also surprising that the confusion described with the method of calculating the revenue of the cantors for the purposes of the PFR is borne by even those entrepreneurs who (i) applied for the subsidy before the PFR changed the method of calculating the revenue, (ii) after the PFR had verified the amounts presented by them, received the subsidy, (iii) spent funds in accordance with the rules of the scheme and met all the other requirements, (iv) had already received the final PFR decision to decommission the grant in 100% to meet all the conditions and have concluded the agreement.
Under the law, in view of the conclusion of the contract, the civil law relationship between the parties has expired and, nevertheless, the PFR also refers to such entrepreneurs citing the provisions of the agreement.
Such action may be devoid of legal grounds, since the contract which gave the PFR the right to address calls to the entrepreneur and imposed an obligation on it to send data to the PFR.
Undoubtedly, this whole situation does not build the confidence of entrepreneurs in the PFR. The programme was intended to help them mitigate the effects of the pandemic, but it creates disputes and puts entrepreneurs in a position of guilt, which often has no legal justification.
There has been great uncertainty among the companies in the cantor industry, as some of them have already spent the funds received in accordance with the rules of the programme and are afraid that they will have to return them with interest.
We are looking at cases where the PFR directs demands to entrepreneurs. At the same time, we take care of the interests of our customers and strive to obtain positive solutions for them.
You are interested in this topic – please contact us.
M: +48,533,339,701
@ rafal.dabrowski@russellbedford.pl
Author: Rafał Dąbrowski, attorney, tax advisor, restructuring advisor.