Tough market rules, high competition and often difficult conditions for the Contracting Authority are increasingly encouraging entrepreneurs to cooperate and perform tasks on a cooperative basis. This practice brings not only financial benefits, but also the possibility of exchanging know-how and a competitive advantage. Until recently, however, the way in which joint ventures were settled raised tax doubts.
The rules apply almost unchanged from above 15 years, in practice many entrepreneurs struggled with doubts about how to settle joint ventures.
The clearance of revenue and costs for the implementation of the Joint Undertaking shall determine Article 5 Corporate Income Tax Act (hereinafter CIT). According to him, the revenue from the joint venture is linked to the revenue of each shareholder in proportion to the right to participate in the profit (share). These rules shall also apply to the accounting of revenue costs, non-cost-achieving expenditure, exemptions and tax reductions and reductions in income, tax base or tax.
In the absence of evidence confirming certain rights to participate in the profit, those rights shall be deemed to be equal.
The overall cost and revenue accounting mechanism of the consortium presents this scheme:
Source: LEX ABC, K. Klimkiewicz-Deplano, K. Must - own development
Although the above provisions have been in force almost unchanged from above 15 years, in practice many entrepreneurs struggled with doubts about how to settle joint ventures. The most sensitive point on the fiscal line – the taxpayer was the issue of charging VAT on mutual settlements between syndicates. VAT, although neutral in substance, creates additional legal and administrative burdens and obligations on the part of the participants of the Joint Undertaking.
These doubts can be considered obsolete in relation to the single case-law line presented by courts in the last few months.
On first The plan is based on the NSA's ruling from day one. 10 October 2014, reference no. I FSK 1418/13, in which the Court of First Instance assessed that it was impossible to see the elements of the service as part of internal settlements between the members of the consortium.
This position was also confirmed in the NSA ruling of dn. 26 June 2014, reference no. I FSK 1108/13, in which the Court held that the Leader’s role of finally settling the costs of the consortium’s revenue and dividing them between the consortiums was not subject to tax on goods and services.
However, it is worth noting that in the same cases the tax authorities still issue contradictory interpretations.
For example, the Director of the Tax Chamber in Warsaw in the interpretation from dn. 3 December 2014 (IPPP3/443-1582/11/14-8/S/SM) the argument referred to in the case law of the NSA.
In its interpretation, the Authority points out that the elements ‘typical for the provision of services for remuneration cannot be seen as part of internal settlements between consortium members’.
In addition, as indicated by the Authority, ‘the applicable tax law and its interpretation by the WSA and the NSA must be found that within the meaning of Article 5(1)(1), Article 7(1) and Article 8(1) The laws dividing the revenue and costs of the Consortium by its Leader to the Partners according to their participation in the joint venture do not constitute either the supply of goods or the provision of services and are therefore not taxable.’
Regardless of the above, the Director of the same Tax Chamber in the interpretation of dn. On 2 December 2014 (IPPP3/443-875/14-2/KT) He pointed out that ‘the settlements made between the consortiums, which are taxable persons, as defined by the Applicant as a division of revenues and costs, are the amounts due in respect of activities carried out under the consortium contract concluded, subject to taxation according to Article 5(1)(1) ori dic Article 8(1) The laws and should be documented by VAT invoices.’
In conclusion, it appears that the Supreme Administrative Court's practice and the interpretative line presented by the tax authorities will be harmonised.
Nevertheless, it should be noted that the issue of VAT taxation between the parties to the Joint Undertaking is still linked to a certain risk to taxpayers.
It must be borne in mind that the taxation of such transactions involves not only the obligation to recognise VAT by the seller but also the possibility of deducting it on the buyer's side.
The dispute by the tax authorities with regard to the right to deduct VAT from invoices documenting the mutual settlement of the parties to the joint venture would entail significant tax arrears for participants in the joint ventures.