Poland vs “H-S Goods S.A.”, July 2011, Administrative Court, Case No I SA/Kr 716/11

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Category: Burden of Proof, Delineation - Substance over Form, Services and Fees | Tag: , , , , ,
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“H-S Goods S.A.” was active in wholesale trade of heating and sanitary goods. The main supplier of the products was a related company from Germany, and the cusomers/recipients of the goods were both unrelated domestic companies and foreign related companies (in Latvia and Ukraine). Approximately 30 % of sales were to related parties.

Sales prices for the controlled transactions, were determined based on the purchase prices from the supplier. “H-S Goods S.A.” argued that transactions with the related parties were not sale of goods, but rather provision of warehousing services on behalf of the related German supplier. For these services “H-S Goods S.A.” received a 5% margin.

The tax authorities found that the activities and the fact that legal title to the goods was transferred to “H-S Goods S.A.”, meant that the transaction was in fact distribution of goods. Furthermore, the margins obtained by “H-S Goods S.A.” from sale of goods to unrelated customers was considerably higher than the 5% margins obtained from sales to related parties.

A complaint was filed by “H-S Goods S.A.” with the Administrative Court.

Judgement of the Court

The Court dismissed the complaint.

According to the court, the tax authorities had proved that the margin on goods sold to unrelated customers was considerably higher than the margin obtained from sales to related parties. The court also agreed that the activities of “H-S Goods S.A.” could not be considered warehousing services.

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I SA_Kr 716_11 - Wyrok WSA w Krakowie z 2011-07-05

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