For our client, a renowned public university, we have obtained a landmark, favorable judgment of the Voivodship Administrative Court with regard to the absence ties, within the meaning of the Corporate Income Tax Act, between the University and entities established by it. The judgment of the Voivodship Administrative Court is a turning point in the proper assessment of relations between affiliated entities.
In the case in question, the Director of National Treasury Information issued an unfavourable individual interpretation for the University, in which he stated that the University, in relation to the provisions of the Corporate Income Tax Act in force until 31 December 2018 as well as those in force since 1 January 2019, participates in the management and control of the created entities and exerts significant influence on them. The above conditions are sufficient to consider them as affiliated entities. Thus, the tax authority assumed that the relations between and the transactions carried out by public entities are subject to the same restrictions as those of capital companies.
It should be pointed out that as a consequence of the existence of ties between entities, there is an obligation to draw up transfer pricing documentation to confirm that the entities apply market conditions to transactions and do not use ties to change the level of taxation.
In the complaint filed, the Law Firm drew attention to the functioning and specific character of the entities indicated in the interpretation and stressed the intention of the legislator in introducing provisions concerning affiliated entities.
The Voivodship Administrative Court accepted the arguments presented by tax advisor Iwona Jacieczko and repealed the individual interpretation issued by the tax authority.
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