1. Transactions between a Company's branches and its headquarters are not subject to VAT - ECJ judgement
On 23 March 2006 the ECJ ruled on the FCE Bank case (C-210/04). FCE Bank, whose registered office is located in Great Britain, appealed the decision of the Italian tax authorities, according to which activities conducted by FCE Bank for the benefit of its branch were interpreted as services rendered for consideration and subject to VAT. The ECJ agreed with the opinion of the Advocate General and concluded that the position of the Italian tax authorities contradicts the Sixth Directive. According to the ECJ, services provided by the head office for the benefit of its branch, which is located in another Member State, cannot be interpreted as the supply of goods or services, which is subject to VAT. The ECJ's judgement should also influence the position of the Polish tax authorities. In certain cases they recognize such activities as subject to VAT.
2. Consultations of the EC on financial and insurance services
The European Commission began public consultations on the need to amend the principles of subjecting financial and insurance services to VAT. On its Internet site () the Commission published a document that analyzed the sector's problems. The European Commission is awaiting comments and opinions on the documents until 9 June 2006. All comments will be collected and published in a report. This is the first stage in the amendment of the Sixth Directive in this scope. If you would like to submit your comments please contact us.
3. Ministry of Finance on the refusal to alter tax interpretations
In issuing the letter of 6 December 2005 the Ministry of Finance replied to the verdict of the Voivodship Administrative Court in Łódź of 11 October 2005 (S.A./Łd 1075/05), in which the Court stated that a complaint against the decision of the Tax Chamber's Director, in which the Director refused to alter a tax interpretation, is inadmissible. The Court argued that the Director acted in this case as an organ of first instance and an appeal must be first made before an appeal can be made to the court. The Ministry of Finance does not share the opinion expressed by the Court in this verdict (and similar verdicts). Pursuant to the letter in question the Director of the Tax Chamber, in examining the complaint against the interpretation issued by the Head of the Tax Office, acted as an organ of second instance because the Director controls the correctness of applying tax regulations to the actual status described by a taxpayer. Therefore, the Director rules on the same case that was the subject of the proceedings before the tax authorities of first instance - the Head of the Tax Office. As a result a complaint can be lodged in the administrative court against a decision issued by the Director of the Tax Chamber.
4. Competence of offices for “large” companies
As of 1 January 2004, pursuant to the amendment of 21 June 1996 to the Act on tax offices and chambers, new tax offices have been created to service certain groups of taxpayers, which have been named “large” taxpayers. The competence of new tax offices will include, amongst others, legal entities and organizational units that are not legal entities, which during the last fiscal year generated net revenues, as understood under accounting regulations, on sales of goods and services of at least EUR 5 million according to the average exchange rate announced by the NBP at the end of the fiscal year. According to the amendment the alterations in the competencies of tax offices will be applicable as of 1 January of the second year following the year in which the taxpayer exceeded the above described threshold. As the amendment was announced in 2003 tax authorities concluded that the offices for “large” companies should commence their activity as of 1 January 2004. Thus taxpayers, whose net revenues exceeded EUR 5 billion in 2002, should have, according to the tax authorities, changed their tax office as of 1 January 2004. The verdict of the Supreme Administrative Court issued on 23 March 2006 (file no. II FSK 1031 i 1061/05) sustained the position of the court of first instance and stated that the above mentioned two year period should begin as of 2003, because the amended regulations came into force on 1 January 2004. Therefore a taxpayer could fall within the competency of a tax office for “large” companies only as of 1 January 2005. The practical consequence of this verdict is that companies may submit motions to revoke all decisions issued in 2004 by offices for “large” companies.
If you have any questions concerning the changes presented in this publication, please contact one of the following
VAT specialists at our Deloitte office in Poland:
Agnieszka Czarnecka, Manager
Tel. (48 22) 511 08 27
aczarnecka@deloitteCE.com
Contact us for more information about this topic.
Page Last Updated: 29 March 2006
Source: Deloitte in Poland - Poland (English)