Experts from the Tax Practice have obtained for our client a positive ruling on tax law provisions on the absence of the obligation to carry out a physical inventory and to pay VAT on the company's assets in the event of the heir continuing the activities of the company inherited.

The individual ruling is of a precedential nature as the Director of the National Revenue Administration (NRA) clearly confirmed that paying VAT on inherited business assets would be contrary to the principle of VAT neutrality and the purpose of the regulation introduced.

According to the previous line taken by the tax authorities in rulings, in the event of expiry of a succession board or the right to appoint a succession manager, heirs were obliged to carry out a physical inventory and thus to pay VAT on the goods comprising the enterprise. In the tax authorities’ view, the tax liability arises even when the activities of the inherited business are continued.

In the ruling obtained, the NRA Director broke away from the previous negative line of ruling in this respect. He stated, first of all, that where the business activity is continued by an heir, there is no obligation to carry out a physical inventory and pay VAT on the company's assets.

The NRA Director indicated, inter alia, that the application of Article 14(1)(3) of the VAT Act both with regard to expiry of the succession board and the expiry of the right to appoint a succession manager should be assessed in the context of the neutrality principle. Moreover, an interpretation of the law should not be limited to a grammatical interpretation, but the principle of making a systemic or teleological interpretation should also be taken into account.

After months of a line of ruling that was incorrect and unjust for entrepreneurs and their families, a position was finally obtained that complied with the aims of the Act on Succession Management.

The client's was represented by DZP lawyers Artur Nowak, Partner, and Jan Czerwiński, Senior Tax Manager, from the Tax Practice.