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“Tax trap” of the government's anti-crisis shield. There is a judgment of the Supreme Administrative Court

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The Polish Development Fund (PFR) has launched lawsuits for the refund of Covid subsidies against companies that allegedly incorrectly determined the status of a small or medium-sized entrepreneur – reports Friday's “Rzeczpospolita”. As the newspaper adds, the latest ruling of the Supreme Administrative Court indicates that many companies may have fallen into a “tax trap”.

“Rz” described on Friday the case of a company that applied to the tax office for a tax interpretation. “In the application, she explained that in 2021 her sales revenue did not exceed the equivalent of EUR 2 million, i.e. the limit on which the right to a 9% CIT rate for small taxpayers and start-ups depends. She added that at the same time she used also from the cancellation of subsidies from the PFR anti-crisis shield for small and medium-sized companies.

“It is true that the company admitted that by adding up the depreciation and sales revenues, the limit of EUR 2 million had been exceeded. However, the company was convinced that it had the right to tax its income for 2021 at the preferential 9% CIT rate, because without the depreciation subsidy is within the limit,” the newspaper reported.

However, the tax office ruled that the equivalent of the canceled subsidy, setting the limit for the reduced rate, should be taken into account anyway. After this decision, the company took the case to court.

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Read also: They receive demands to return their money. “We have been deceived and wronged”

Unfavorable judgment of the Supreme Administrative Court

Initially, the Provincial Court of Appeal in Rzeszów agreed with the company's position, explaining that the tax office did not take into account the unique situation at that time and the disruptions caused by the Covid epidemic. According to the judges, it is also difficult to assume that the legislator, when creating the aid program, took into account and agreed to the deterioration of the situation of entities that received aid.

Ultimately, however, the officials triumphed because The Supreme Administrative Court ruled that state aid for the company was limited to the tax neutrality of the granting of the subsidy and its cancellation. “It cannot, however, constitute a basis for granting the company other tax benefits, including a reduced CIT rate, if the will of the legislator in this respect has not been properly expressed in a normative manner” – explained “Rz”. The position of the Supreme Administrative Court was assessed negatively by experts who emphasize that it completely did not take into account the uniqueness of the situation caused by the Covid epidemic.

Main photo source: Adobe Stock

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