The Administrative Court found that a voluntary redemption of shares was not a controlled transaction covered by arm’s length provisions.
A redemption is a corporation’s repurchase of all or a portion of the shares held by a shareholder at an amount not in excess of the amount stated in the articles or calculated according to a formula stated in the articles.
A redemption of shares can only take place between a company and its shareholders. Hence, terms and pricing of the transaction cannot be determined based on unrelated transactions.
The purpose of the redemption of shares is not to modify the amount of income achieved by the related parties by applying a non-arm’s length price.
Poland case I SA_Bd 30_22 - Wyrok WSA w Bydgoszczy z 2022-03-22