A case won before the Provincial Administrative Court in Opole concerning borrowing costs.
Another success of SENDERO Tax & Legal tax advisors. Following a complaint against a tax ruling by the Head of KIS, we secured a favourable outcome for our client in a case before the Provincial Administrative Court in Opole. The case was about the correct interpretation and application of the provisions contained in Article 15c of the CIT Act. In this ruling, the court accepted our arguments that the maximum limit for deductible borrowing costs is PLN 3 million plus 30% of tax EBITDA. Furthermore, the Court pointed out that the exchange differences arising in the repayment of foreign currency loans that constitute security instruments are not subject to borrowing cost regulations.
As regards the part of the judgement concerning the classification of exchange differences, this is the first such judicial ruling in Poland. The ruling may indeed be considered a real breakthrough. This is because the Court held that the economic purpose and the manner of using the foreign currency loan – which, in the case at hand, is a financial instrument and not a source of funding – are of significant importance for the treatment of exchange differences arising in the repayment of a foreign currency loan that constitutes a security instrument.
The success before the Provincial Administrative Court in Opole is satisfying particularly because, with our support, the Client gained a chance to significantly decrease their tax burden and reduce their costs of debt financing.