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Tax may be paid for another taxpayer – verdict of the Supreme Court

2013-04-16

A company acting as a third party may effectively pay tax for another taxpayer. So ruled the Supreme Court in its verdict of 11 April 2013 (ref. no. CSK 368/12).

To date tax authorities have quite often presented a standing that the taxpayer’s bank account must be debited in order for payment of the tax to be effective. It happened that payments made by third parties were returned to such entities as overpayment, whereas tax arrears were stated at the taxpayer liable to pay the tax.

In the case resolved by the Supreme Court a company leasing a real property, without being the owner thereof, paid a real property tax instead of the owner to the account of the local authority. The owner of the property was insolvent and the company acquired that entity, so payment of the owner’s arrears would pass onto the buyer. When in the course of a fiscal control it was found that the company could not include real property tax under tax deductible expenses, the company applied for refund thereof.

The Supreme Court confirmed that the company as a third party could pay the tax for the taxpayer liable for real property tax and the local authority had the right to accept such tax. Therefore, refund of the tax paid by the company consciously, without being the taxpayer, was not justified.