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DZP's Tax Practice in cooperation with the law firm WPW Wołczek, Proksa & Wspólnicy from Wrocław successfully represented the client in the precedential dispute before the tax authorities concerning the application of the so-called small anti-avoidance clause to company mergers (the amount of corporate income tax arrears together with interest on the arrears was nearly PLN 8 million).
The first instance tax authority challenged the tax neutrality of the company merger and set income for the acquiring company of the value of the target company’s assets, as it found that the merger was the final element of a sequence of events aimed at gaining a tax advantage and was not economically justified. Therefore, according to the tax authority, the provisions excluding the tax neutrality of mergers (the so-called small anti-avoidance clause) applied and the merger resulted in income arising for the acquiring company.
As a result of an appeal against the first instance authority decision prepared by experts from DZP's Tax Practice in cooperation with the law firm WPW Wołczek, Proksa & Wspólnicy, the head of the customs and tax office overturned the decision issued by the same authority at first instance and discontinued the proceedings. The decision ends the dispute with the tax administration authorities and means that the tax authorities have to return arrears paid with interest.
This decision is extremely important not only for the client, but also for other taxpayers because of its precedential nature, as although these provisions have been in force for more than 17 years, they have been applied extremely rarely in practice and there is no practice of assessing legitimate economic reasons and activity whose main objective is either to avoid or evade taxation.
When repealing the decision delivered at first instance, the tax authority upheld the arguments raised in the appeal by experts from DPZ’s Tax Practice and WPW Wołczek, Proksa & Wspólnicy and issued a number of guidelines on the application of the small anti-avoidance clause (SAAR), inter alia:
These guidelines show the direction in which tax authority practice may go as regards SAAR application and challenging the tax neutrality of mergers and divisions of companies both in the previous legal order (which concerns most of the proceedings currently pending) and the current one, as from 2017 onwards, in order to apply SAAR, it is enough for there to be no economic justification for the merger and division (presumption of acting in order to avoid or evade tax), which underlines the importance of the reasons behind the restructuring processes carried out for their tax consequences.
This case is also precedential in procedural terms. When examining the case as second instance authority, the head of the customs and tax office overturned his decision delivered at first instance due to his earlier incorrect legal assessment. It is therefore one of a very few decisions at national level where the head of the customs and tax office has overturned his own decisions.
From 25 May 2018 the General Data Protection Regulation (GDPR) applies in Poland and other European Union countries. We would therefore like to give you several details on the subject of how DZP processes personal data.
The administrator of the personal data is Domański Zakrzewski Palinka Sp.k. (“DZP”; address: Rondo ONZ 1, 00-124 Warszawa). Data are processed for contact purposes and to impart information on changes to provisions and authority practices and on other issues, including events concerning day-to-day legal, economic and cultural issues, inter alia, by sending DZP newsletters. The above is carried out on the basis of legitimate interests, i.e. in accordance with art. 6(1)(f) of the GDPR. Data can also be processed where necessary for the conclusion or performance of a contract and for compliance with a legal obligation to which DZP is subject, i.e. pursuant to art. 6(1)(b) and (c) of the GDPR. Data can be transferred to entities with whose help DZP achieves the indicated aims, including entities maintaining IT infrastructure. Giving data is voluntary and in contractual relations is a requirement for concluding and performing a contract. It is possible to object to data processing, request access to, rectification and erasure of personal data or restriction of processing and data portability. Data are kept until an objection is made, and in contractual relations – throughout the term of the contract and thereafter for a period specified in provisions on archiving and limitations period for claims. Anyone has the right to file a complaint with the President of the Personal Data Protection Office. Questions concerning privacy at DZP can be sent to DZP’s Data Protection Inspector, Macieja Maciejewskiego, at: firstname.lastname@example.org.
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