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Take-up of investment certificates in exchange for securities and shares in a limited liability company (sp. z o.o.) is not treated as revenue – new verdict of the Supreme Administrative Court

2013-04-18

Contribution of securities and shares in sp. z o.o. to a closed end investment fund in exchange for investment certificates does not create revenue on account of the transfer of such assets. So ruled the Supreme Administrative Court in its verdict of 8 March 2013, ref. no. II FSK 1479/11.

In the case under discussion the tax authority giving an individual binding ruling found that contribution by the taxpayer of shares in sp. z o.o. and securities to a closed end investment fund was equivalent to their transfer for a consideration, and the value of received investment certificates, corresponding to the value of contributed shares in sp. z o.o. or securities, represented revenue from financial capital.

The Supreme Administrative Court supported the taxpayer’s standing that a derivative financial instrument having the form of an investment certificate does not replace money and is not a cash value referred to in Article 11.1 of the Personal Income Tax Act, and therefore take-up of investment certificates in exchange for securities and shares in sp. z o.o. does not represent revenue from the exercise of rights under derivative financial instruments.

It should be noted that the Government is currently preparing an amendment to legal regulations, according to which take-up of investment certificates in exchange for securities or shares in sp. z o.o. will be treated as revenue. The amendment is to enter into force as of 2014.