So far the tax authorities were of the opinion that all expenses incurred by a capital company in connection with share capital increase could not be included into the revenue earning costs of the company, since such expenses were connected with a revenue not subject to taxation (contributions made for the coverage of the share capital are not included into the company’s revenues). Until recently this view was also shared by administrative courts.

However, the Supreme Administrative Court in the resolution dated 24 January 2011 mitigated its previous standpoint and stated that only expenses without which the share capital increase is impossible are not revenue earning costs. The remaining expenses, which have only an indirect connection with the share capital increase will constitute revenue earning costs. In the light of the abovementioned resolution of the Supreme Administrative Court it needs to be assumed that the costs of the tax on civil law transactions, the notary fees or the court fees, without which it is impossible to increase the share capital will not constitute revenue earning costs. However, the expenses incurred on legal assistance, or other advisory services, audit services, costs of preparation of opinions and analyses, valuations or translations concerning the share capital increase will constitute revenue earning costs for the company.

Contact: Aleksandra Faderewska-Waszkiewicz, tax adviser, Laszczuk & Partners
(aleksandra.faderewska@laszczuk.pl)