Poland vs R.B.P. (P.) Sp. z o.o.., August 2021, Supreme Administrative Court, Case No II FSK 3830/18

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The company is a producer of household chemicals and belongs to the R. B. (“the Group”), which is active in the manufacture and sale of consumer products in the home, health and hygiene products industry. The Company has entered into supply agreements for the goods it produces with Group companies. On the basis of the agreements, the Applicant sells goods produced by it to entities of the Group indicated by R. A. h. Companies and to R.B. [E.] B.V.

The remuneration of the Polish company was determined based on a target margin – and if the profits were below or above the target margin, an invoice was issued subtracting or adding income to arrive at the target income.

The tax authorities held that the quarterly “Transfer Pricing-adjustment” was not a transfer in regards of VAT.

The company then filed a request for a individual interpretation (binding ruling), which was rejected by the authorities.

A complaint was filed by the company to the Court of first instance, where the decision of the tax authorities was set aside.

The tax authorities then filed an appeal to the Supreme Administrative Court. The tax authorities requested that the appealed decision be reversed in its entirety, that the Company’s complaint be examined and dismissed, or alternatively, in the event that the merits of the case are not sufficiently clarified, hthat the appealed decision be reversed in its entirety and the case be referred back to the Court of First Instance for re-examination.

Judgement of the Supreme Administrative Court

The Court decided in favour of the tax payer.

“In the Company’s view, the issue requiring interpretation referred only to the question of the moment of making the correction, and not to the correctness of the adopted model for correcting income. Therefore, the Court of First Instance rightly pointed out that the prerequisites referred to in Article 165a of the Tax Code relating to the lack of possibility to institute proceedings were not exhausted in the case because the phrase “proceedings may not be instigated” used in Article 165a § 1 of the Tax Code should be referred to the C In view of this, the allegation of a violation of Article 145 § 1 (1) (c) of P.p.s.a. in conjunction with Article 165a § 1 and in conjunction with Article 14h and 14b § 1 of the Code of Civil Procedure should be deemed unjustified. ”

As already indicated above, the mechanism of “profitability” adjustment is in the case under consideration an assumption of factual nature and as such does not require the interpretation authority to confirm the correctness of its application by the Company.”


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Poland Supreme Court II FSK 3830_18 - Wyrok NSA z 2021-08-12

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