Confusion with transaction grouping – MF corrects the position: the taxpayer can add up the value of transactions within their types

The question of the correct grouping of transactions for the purposes of referring their values to the documentation thresholds does not cease to raise doubt on taxpayers.

The general interpretation given by MF significantly reduced uncertainty dated 24 January 2018, which, on the issue of grouping, has given taxable persons the opportunity to refer the thresholds to a particular type of transaction.

This means that when the thresholds are exceeded only for a given one the type of transaction, this documentation obligation will apply only to such transactions[1].

This document is undoubtedly relevant to taxpayers attempting to properly identify their own documentation obligations, but leaves a certain impression of a lack of clear answer.

The general interpretation stated that transactions one the type should be assessed on a case-by-case basis, taking into account the characteristics of the taxable person's activities, taking into account the transaction parameters (functions, risks, assets, method of price calculation, relevant payment conditions), but it has also been pointed out that correct determination one the type of transaction is the duty of the taxable person.

In view of the very general conditions and indications, the full responsibility for the correct grouping remains with the taxpayer.

We have written about this general interpretation in detail before, but today I would like to draw attention to the probably final settlement of the taxpayer's discussion with the interpretative body. The course of this discussion was as follows:

In 2016 The applicant asked whether, in the context of new regulations, in the case of transactions with related entities in 2017, where it has identified the following categories of benefits, it should, for the purpose of assessing the materiality of the impact of transactions, sum up the value of all these events:

• 1) acquisition of office equipment (computer equipment) — expected amount of the contract in the tax year 2017 is the equivalent ok. 4,000 EUR,
• 2) acquisition of fixed assets — expected amount resulting from the contract in the tax year 2017 is the equivalent ok. 30,000 EUR,
• 3) Real estate leasing services — expected amount resulting from the contract during the tax year 2017 is the equivalent ok. 5,000 EUR,
• 4) provision of tax advisory services — expected amount resulting from the contract in the tax year 2017 is the equivalent ok. 47,000 EUR,
• 5) acquisition of accounting services — expected amount resulting from the contract in the tax year 2017 is the equivalent ok. 12,000 EUR,
• 6) acquisition of IT services – expected amount of the contract during the tax year 2017 is the equivalent ok. 15,000 EUR,
• 7) acquisition of market research services — expected amount of the contract in the tax year 2017 is the equivalent ok. 55,000 EUR,
• 8) acquisition of a trade mark licence — expected amount resulting from the contract in the tax year 2017 is the equivalent ok. 20,000 EUR,
• 9) granting the loan — expected amount of the contract during the tax year 2017 is the equivalent ok. 28,000 EUR.

The company provided that the condition of revenue exceeding the equivalent would be fulfilled 2,000,000 EUR.

According to the taxpayer, none of the above transactions should be considered transactions one of a kind.

On the grounds of its position, the applicant argued similar arguments which appeared in the above-mentioned general interpretation at the outset 2018, it indicated that the nature of the transactions concerned, the functions performed, the assets involved, the risks incurred and the costs incurred, the price calculation mechanism should be assessed.

Since these elements are different in the case of these transactions, the applicant considers that each of them should constitute a separate type of transaction.

Half 2016 The Director of the Tax Chamber in Katowice, in an individual interpretation, considered the above to be incorrect, explaining that it is unacceptable to apply the breakdown by type for transactions because such a breakdown can only be applied to ‘other events’ 2 .

The taxpayer disagreed with such a narrow interpretation of the norm Article 9a(1d) the Corporate Income Tax Act and brought an action before the WSA, but the Provincial Administrative Court in Krakow maintained the position of the interpretative body, limiting itself to verifying the grammatical design of the contested provision and literal interpretation, and dismissing the applicant’s complaint[3].

The taxpayer brought an action before the Supreme Administrative Court and obtained on 20 February 2018 the decision in which the NSA annulled both the judgment of the WSA and the contested individual interpretation[4].

NSA found that the interpretation used by both the interpretative authority and the court first The instances were too superficial.

NSA carried out a detailed analysis of the standard resulting from Article 9a(1d) the Corporate Income Tax Act and concluded that in this specific provision the statement "one the type" refers to both "other events" and "transaction".

Thus, the NSA acknowledged to the taxpayer, emphasizing that in the situation presented by the taxpayer, the value of transactions or other events in the framework of the one of a kind.

As a result of this decision of the NSA is the individual interpretation issued by BKIP dated 4 June 2018 5 , in which it was concluded that the applicant’s position as requested by 2016 is entitled. Such a decision shall be in accordance with the formation at the beginning 2018 an interpretation line on the possibility of summing up the value of transactions within their respective types.

Source:

Author:

Leszek Dutkiewicz

Partner At Russell Bedford. From 2011 related to Russell Bedford Poland.

In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services. He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices.

Author of a publication on tax, civil and international law issues. Lecturer in tax law training.

He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.