On 22 March 2018 The Director of National Tax Information issued an interpretation of the provisions of tax law, which all taxpayers awaiting a judicial judgment judging them for compensation or compensation should be familiar with.
The fact that court proceedings can last for years is known by all who have ever been forced to bring a dispute to justice. The length of proceedings is sometimes compensated by the amount of interest that the losing party has to pay after the judgment has passed. The amounts of such interest are sometimes high.
An example of cases in which large amounts of money are charged after years, and hence significant amounts of interest, are those relating to compensation for various types of accidents. Tax authorities aware of the consequences of long-term litigation, based on the principle of universality of taxation, demand a tribute on interest paid.
The taxable person who asked for an individual interpretation of the taxation of interest on the court’s judgment of compensation found this to be true.
Since the legislator has not included in the list of exemptions for interest on the defendant’s compensation and compensation, it must be stated that such interest is subject to tax on personal income, in accordance with the principle of universal taxation set out above.
Article 21(1)(3) The PIT Act provides that, inter alia, income tax-free damages or compensations are received if their amount or the rules for determining them arise directly from the provisions of separate laws or implementing provisions issued under those laws. This provision clearly states that compensation or compensation is tax-free. Is interest resulting from such compensation also eligible for this exemption? In the opinion of the Director of National Tax Information, unfortunately not.
In support of his thesis, the Director of KIS referred to a number of administrative court rulings. It is worth quoting the ruling of the Supreme Court quoted in the interpretation:
The interest claim is not a component of the main claim, as it is based on a separate factual condition and a separate substantive basis. Interest claim for late payment (Article 481 The Civil Code is therefore a claim other than a non-delict claim (cf. resolution of the SN dated 31 January 1994 III CZP 184/93, publ. OSNC Directive 1994/7-8/155).
The jurisprudence of the courts was not the only argument which, in the opinion of the Director of National Tax Information, spoke in favour of issuing a negative interpretation to the taxpayer. It was pointed out that the PIT Act contains exceptions which provide for tax exemptions also for interest (listed in Article 21(1)(52)(95)(119)(130)(130a)(130b)).
Therefore, since the legislator has not included in the list of interest exemptions from the claimant’s claim for compensation and compensation, it must be stated that those interest rates are subject to income tax on individuals, in accordance with the principle of universality of taxation set out in the above-mentioned Article 9(1)) Personal Income Tax Act.
0113-KDIPT3.4011.100.2018.1.SK
Author:
Mikołaj Stanisławski
From 2017 Associated with Russell Bedford Poland. In 2007 graduated from the Faculty of Law and Administration of the University of Warsaw. In years 2008-2011 he made an attorney's application. From 2011 entered on the list of lawyers at the District Bar Council in Warsaw. In 2016 He graduated from the Postgraduate Tax Studies and Tax Law of the University of Warsaw. Specializes in tax and tax matters.