The Court eases the burden of the GPW-listed companies

25.01.2011 Publications

The Supreme Administrative Court has ruled that indirect costs associated with a share capital increase can be posted as an expense for tax purposes in a decision of especial importance to companies which are publicly listed or which are just preparing their Warsaw IPOs. In other words, the bulk of the costs of a public share placement shall now constitute an expense deductible from the tax base.

In the oral reasoning for its decision, the court cited by way of example the costs of drawing up the issue prospectus (legal, financial advisory, etc) and of performing financial analyses prior to the share issue. These costs would also include bourse fees and Financial Supervision Authority fees , enumerates Leszek Koziorowski, partner in GESSEL (and representative of the Equity Issuers Association, a party to the proceedings). (…)

The companies welcomed this decision quite enthusiastically, comments Inarda Bielińska, an attorney with GESSEL’s tax law practice. For services rendered by specialised entities constitute a significant part of the overall outlays towards a share capital increaseThey are not required by law, so they can constitute an expense deductible for tax purposes.

That said, at this point it is difficult to clearly delineate between expenses which will now be deductible and compulsory expenditures. The court has clearly stated that the resolution shall apply to any share capital increase, irrespective of whether it is effectuated via the stock exchange or not , the expert notes. Publicly listed companies have more legal duties so, for the moment, it is difficult to assess how things will stand with them – these doubts should be dispelled by the written reasoning for the resolution, Inarda Bielińska concludes.

Anna Koper, Mateusz Maj, Rzeczpospolita

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