The full text of the justification for the verdict is not yet available, but the core of the verdict has been published. The NSA overturned the January 25, 2013, verdict of the Regional Administrative Court in Warsaw, as well as the underlying February 13, 2012, ruling of the Warsaw Regional Tax Chamber, and asked the Regional Administrative Court in Warsaw to review the matter again and issue a new verdict.
As far as the substance of the verdict is concerned, the NSA held that a Cyprus-based private international collective investment scheme does fulfill the condition for tax exemption in Poland under article 6.1.10a.f of the 1992 Corporate Income Tax Law.The NSA stated that an important condition for the tax exemption is that the foreign fund must be managed by a legal person. In the verbal justification of its ruling, the NSA further stated that a foreign investment fund does not need to operate and be organized in a way that is identical to a Polish investment fund, and that it is sufficient that the foreign investment fund is organized in a similar way (in other words, that it is established based in accordance with Poland’s 2004 Law on Investment Funds).
The relevant provisions (article 6.1.10a) of Poland’s 1992 Corporate Income Tax Law provide that the formal conditions for the tax exemption of foreign investment funds (collective investment institutions) are:
10a) collective investment institutions with their seats in a European Union Member State other than the Republic of Poland or in another state belonging to the European Economic Area, which meet all of the following conditions:
a) they are liable, in the state where they have their seat, to income tax on the total amount of their incomes, regardless of the place where they are earned;
b) the sole object of their activity is collective investment of cash means raised through public or non-public proposal for acquisition of their participation titles, in securities, money-market instruments, and other property rights;
c) they pursue their activity on the basis of a permit from competent authorities supervising the financial market of the state in which they have their seat, or the pursuit of their activity requires notifying the competent authorities supervising the financial market of the state in which they have their seat if:
- they pursue their activity in the form of closed-end collective investment institutions; and
- pursuant to founding documents, their participation titles are not offered through public offer or admitted to trading on a regulated market, or introduced to an alternative trading system, and may be acquired also by natural persons exclusively when these persons make a one-off acquisition of participation titles worth no less than €40,000;
d) their activity is subject to direct supervision by competent authorities over the financial market of the state where they have their seat;
e) they have a depository keeping the assets of the given institution;
f) they are managed by subjects which pursue their activity on the basis of a permit from competent authorities supervising the financial market of the state in which they have their seat.
Although the most recent verdict of the NSA was about a private international collective investment scheme, the Court’s reasoning also applies to Cyprus-based alternative investment funds.
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