31 / 05 / 2016
KSP Tax Team represented PKP Cargo S.A in a case regarding damages paid for loss, deficiency or damage to a consignment in transport. The Province Administrative Court of Warsaw, in its judgement of 13 May 2015, vacated an adverse interpretation issued by the Minister of Finance to our client.
A question was posed whether the amounts of money paid or to be paid in the future as damages for loss, deficiency or damage of a consignment can be recognised as deductible costs in the light of the tax regulations. In his interpretation, the Minister of Finance did not address the situations described by the taxable person, but denied the right to recognise such costs as deductible in general, and indicated that they were associated with a defective service. The Province Administrative Court held that a situation where a consignment is lost, e.g. as a result of theft, does not involve a defective performance of a service but rather its non-performance. Thus, the provisions of Article 16(22) of the Corporate Income Tax Act do not apply to a loss of a consignment. Consequently, if the expense is linked to revenues on a general basis, the amounts paid as a result of the loss can be recognised as deductible costs.
During the court proceedings, the client was represented by Elżbieta Lis, Partner, Magdaleną Patryas, Partner, and Aleksandrą Miklaszewską, Tax Consultant.
case file: III Sa/Wa 1352/15