Payment by the parent company of the liabilities of its subsidiary cannot be regarded as a tax deductible cost

Important interpretation of the rules

Entrepreneurs are obliged to make or accept company payments through their own bank accounts, when the one-time transaction value exceeds PLN 15,000.00. Failure to comply with this obligation removes the possibility for this payment to be taxable deductible for this transaction, which was made without the intermediation of their own bank account.

How you should interpret this provision.

The parent company should pay the invoice of the daughter company, and the subsidiary pays back the amount due to the parent company in due time. In light of this new legislation, does such a solution not have any legal implications?

The Ministry of Finance is response to a question on 26th March, 2019 from the Editorial Office of Gazeta Podatkowa stated in its reply:

The presented method of settling accounts between a shareholder and a limited liability company does not give the company the right to recognise the expense incurred as a tax deductible cost, as in such a case the method of payment does not meet the condition set out in Article 15d of the Tax Code Act. In the opinion of the Minister of Finance, it follows from its content that the expenditure incurred without the intermediation of a taxpayer's bank account may not be recognised as a tax deductible cost and that there are no exceptions to this rule. Therefore, the payment made through the account of the company's shareholder cannot be recognised by the company as a tax cost in the calculation of corporate income tax. Also, the subsequent making of compensatory transfers between a shareholder and his company does not allow such a payment to be treated as a tax deductible cost.

We will be keeping track of the legislative work and keep you informed of any changes in this respect.

If you have any further questions, please do not hesitate to contact us.

The information contained above is of a general nature and does not concern the situation of a specific company. Due to the speed of changes occurring in Polish legislation, we kindly ask you to determine, on the date of this information, whether it is still up to date.

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