In its judgement of 9 October 2012 (case file III
SA/WA 428/12), the Regional Administrative Court
ruled in line with the existing case-law which states
that in the event of distribution of property dividend
revenues are not generated and consequently there is
no related tax obligation. The above issue arose
against the background of the following facts. A
joint-stock company was the sole shareholder of a
limited liability company. A sole-shareholder
company of the State Treasury was in turn the sole
shareholder of the joint-stock company. The joint-
stock company considered distribution of property
dividend by transferring ownership of shares in the
limited liability company to the sole shareholder of
the joint-stock company. In this connection a request
was submitted to the Minister of Finance for an
individual interpretation as to whether the above
transaction would produce revenues for the joint-
stock company.
One of the main arguments in support of the view
that a company distributing property dividend is not
required to pay tax is that as a result of dividend
distribution the company receives no gain. In the
light of that no revenues are received and so a tax
claim would be without grounds.
In order to ascertain unequivocally whether or not
payment of non-cash dividend produces revenues,
one should refer to the Act on Corporate Income Tax
of 15 February 1992 (Journal of Laws No. 74, item
397, as amended) (“CIT”) and the Commercial
Companies Code of 15 September 2000 (Journal of
Laws No. 94, item 1037, as amended) (“CCC”).
None of the two statutes differentiates between
various procedures for dividend distribution. There is
no doubt that dividend can be paid either in cash or
in assets. Since the legislators decided that there is
no need to provide for separate dividend distribution
procedures, the tax effects of both the procedures
should be alike. In the administrative practice,
authorities often seem to miss those similarities. In
general, authorities argue without grounds that non-
cash dividend has to be taxed, since the process of
distribution of profit in such form involves transfer
of ownership title to assets. Such a transaction
generates revenues which require to be taxed.
Contrary to the above view, it must be concluded
that unless the provisions of CIT expressly provide
that distribution of non-cash dividend produces
revenues for the distributing company or that such
distribution is a form of transfer of assets against
consideration, then there are no grounds to conclude
that distribution of dividend is not neutral in terms of
tax for the distributing entity. One must agree with
the case-law of administrative courts (so held,
among others, by the Supreme Administrative Court
in its judgements of 12 June 2012, II FSK 1260/11;
of 14 March 2012, II FSK 1673/10; and of 8
February 2012, II FSK 1384/10) which construe any
doubts in the provisions of the tax law in favour of
the taxpayer.
In the light of the above, it must be concluded that in
its judgement referred to above the administrative court has rightly found that the transaction outlined
above does not produce revenues (no gain) and
consequently by no means does any tax obligation
arise.As indicated by the judgements cited above, this
view seems to have taken root in the case-law of
administrative courts. One can only hope that in the
future also public authorities will adopt the view
advocated by the courts.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
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81-366 Gdynia
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Fax +48 58 782-0060
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