Recovering CIT overpayments for intangible services
Did you know that you have a chance to recover significant amounts of Corporate Income Tax (CIT) overpayment? This is due to the past limitation on costs for certain intangible services purchased from related parties under Article 15e of the Polish CIT Act. This applies to services such as consulting, marketing, management and control services, as well as some intellectual property rights.
How can we help you?
Regarding our support in recovering overpaid tax, we divide our services into two parts – the preparation stage and the stage of proceedings.
Preparation stage:
- Reviewing the calculation of costs excluded by the company in the past under Article 15e of the Polish CIT Act.
- Presenting the most effective strategy for proceedings to recover the amount of overpayment at the earliest possible date and by the safest way.
- Providing a recommendation regarding the scope of the overpayment recovery request, along with an assessment of the chances of successfully recovering the overpayment and the steps to be taken (recommended proceedings strategy).
Stage of proceedings:
- Preparing and submitting an overpayment claim to the tax office.
- Representing the company in the course of overpayment proceedings.
- Ongoing contact regarding the current status of the case.
Recovered funds are an opportunity for investment!
In the light of the current practice of interpreting Article 15e of the Polish CIT Act, the unrecovered overpayments for years 2018-2021 can be compared to an unused resource waiting to be properly managed or to support the liquidity of the company.
What appears to be a complicated tax matter is actually the potential for significant tax savings, available to those who choose to take full advantage of the opportunity to increase deductions resulting from the application of the current line of interpretation.
Thereby, those who have not yet taken steps to analyze their expenses with regard to recovering overpayments may unknowingly be one step behind their competitors, who are already using these opportunities to their advantage.
Any questions?
What you should know about Article 15e?
Article 15e of the Corporate Income Tax (CIT) Law was a key provision in 2018-2021 that introduced limitations on the deduction of expenses for certain intangible services (including consulting, marketing, management and control, as well as certain intellectual property rights).
It was intended, among other things, to prevent the excessive transfer of profits to foreign affiliates that are taxed in other jurisdictions. In reality, this restriction in many cases prevented the inclusion of strictly business-related, legitimate expenses in the tax calculation.
According to our experience, taxpayers have often interpreted this provision in a conservative manner, whereas nowadays we see a formed line of jurisprudence and interpretation , which makes it possible to approach the qualification of this type of expenditure in a much more lenient way, and as a result, to include most of it as a tax expenses.
Currently, there are two bases for claiming an overpayment:
- broader use of the exclusion of incurred expenses from limited costs, which is supported by case-law of national courts;
- argumentation regarding the inconsistency of Article 15e with EU law based on CJEU case-law.
Many of our clients have already taken advantage of this opportunity, recovering significant amounts that can be reinvested in business operations. It is worth noting that in many cases overpayments have been recovered as early as during the first stage of the proceedings before tax office.