Tax Alerts, 12 December 2013
(2) Taxation of the profit of shareholder (both individuals and legal entities) of the partnership limited by shares (S.K.A.) upon its generation
PIT/CIT: Expenses incurred for business meetings may be classified as tax deductible costs
The general interpretation of the Minister of Finance was published in the Journal of Laws on 27 November 2013 (ref. no. DD6/033/127/SOH/2013/RD-120521) which settles the controversial issue relating to the possibility of classifying expenses incurred by the taxpayers in connection with catering services or purchase of food and beverages served during meetings with business partners, investors, contractors etc. as tax deductible costs.
In the conclusion of this interpretation the Minister of Finance explicitly indicated that „ (…) it should be said that the analysis of the judgment of the Supreme Administrative Court of 17 June 2013, ref. II FSK 702/11 leads to a conclusion that expenses for snacks (e.g. cookies, sticks, sandwiches), beverages (e.g. coffee, tea, mineral water, juices) and meals (e.g. dinners, lunches) borne by taxpayers, regardless of the place where they are served (in the taxpayer’s premises or outside), served during talks with business partners, investors or contractors, etc. concerning the scope of business activity conducted by taxpayers are not excluded from tax deductible costs pursuant to article 16 section 1 item 28 of the Corporate Income Tax Act and article 23 section 1 item 23 of the Personal Income Tax Act.”
However, it should be noted that if the only or main aim of the expenses borne by the company is to create a certain image of a taxpayer, a positive image of the company or business, to establish good relationships with participants of such meetings, the expenses are then qualified as entertainment costs.
Should you be interested in this topic, please do not hesitate to contact Mazars Tax Advisory Department.
PIT/CIT: Taxation of the profit of shareholder (both individuals and legal entities) of the partnership limited by shares (S.K.A.) upon its generation
In line with the newly issued general interpretation of the Minister of Finance (dated 25 November 2013) ref. no. DD5/033/1/13/KSM/RD-122180/13, „(…) the amount of dividend allocated by the General Meeting of a partnership limited by shares and paid to a shareholder not being a general partner (individual, legal entity) constitutes an income of such shareholder arising from business activity. (…) the date of income generation is the date of receiving payment (in this case - dividend). The received dividend will increase the amount of income tax advance payable on the shareholder’s income for the month in which such dividend was received by the shareholder.”
The above interpretation presents a different position than the one expressed for example in the general interpretation of the Minister of Finance of 11 May 2012 (ref. no. DD5/033/1/12/KSM/DD-125), according to which the date of income generation for the shareholder of partnership limited by shares is the date when the resolution on dividend payment was adopted and not its actual payment.
The newly adopted position to a large extent makes reference to the resolution adopted on 20 May 2013 by the Supreme Administrative Court (ref. no. II FPS 6/12), which harmonized divergent positions concerning the date of generating income for individuals and legal entities by concluding that the date of receiving income is the date of actual payment of dividend.
If you are interested in discussing this topic in further detail, please do not hesitate to contact Mazars Tax Advisory Department.
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