Tax customs & excise

A loan for a partner now tax free

In order to determine whether there is a need to pay tax on civil law transactions, it is necessary to first establish whether a given activity is not subject to the obligation to pay VAT. If a given activity is performed as part of business activity, it is subject to VAT, if not, the taxpayer must take into account the necessity to pay PCC.

In past practice, the tax authorities have recognized that if a company grants a loan, e.g. to a partner or an employee, but granting loans is not the company’s core activity (which was determined e.g. by the appropriate PKD code), then such an activity is not subject to VAT taxation, and therefore it is necessary to pay the tax from civil law transactions. Why is this issue important? Well, according to Art. 43 sec. 1 point 38 of the VAT Act, the services of granting cash loans are exempt from VAT tax. If it were considered that the granting of such a loan was subject to VAT, it would also benefit from the exemption in question.

Recent tax interpretations suggest a change in the approach of the tax office. The Director of the National Tax Information, in the interpretation number 0114-KDIP4-3.4012.80.2021.2.JJ of May 17, 2021, agreed with the taxpayer that the granting of interest-bearing cash loans constitute a paid service and are subject to tax on goods and services (VAT), even if the Company’s scope of activities is not in the field of lending or other similar financial activities. Consequently, the act of granting an interest-bearing loan to the borrower constitutes the provision of services against payment, and thus, pursuant to Art. 43 sec. 1 point 38 of the VAT Act shows that services in the field of granting cash loans are exempt from tax. The consequence of this position is that the tax authorities cannot claim that such an activity is subject to PCC taxation.

As noted in the introduction, the above position confirms the recent, but relatively fresh, line, definitely beneficial for taxpayers. A similar interpretation was also issued, inter alia, in January 2021, file ref. 0111-KDIB3-1.4012.986.2020.2.KO. It is worth noting, however, that in the facts of the case in which the interpretation was issued, the loan was interest-bearing, and probably on market terms.

Author team leader DKP Legal Magdalena Napierała
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