Maciej Wilczkiewicz

Tax adviser (Poland)
Senior Associate
Phone: + 48 32 330 12 06

More and more often corporate groups use cash-pooling arrangements as a tool for effective management of financial resources. Although cash-pooling arrangements have been in business practice for a long time, no detailed regulations have been provided for in either civil law or tax law.  The lack of such regulations has given rise to many doubts related to cash pooling in terms of taxes. One of them was about whether interest disbursed under cash-pooling arrangements is subject to limitations set forth in the regulations on the so-called thin capitalisation.  

The prevailing opinion among the Polish tax authorities is that cash-pooling arrangements are loan agreements in the meaning of the thin capitalisation regulations.  Consequently, including interest disbursed under cash-pooling arrangements in tax-deductible costs is subject to the limitations set forth in the thin capitalisation regulations. 

Initially, administrative courts used to solve disputes concerning that issue in favour of taxable persons. The courts emphasised that the substance of a loan agreement in the meaning of the thin capitalisation regulations is thata commitment is made to transfer the ownership of specific funds to another entity specified in the agreement. Nevertheless, cash-pooling arrangements do not contain any such commitment (e.g. the  Provincial Administrative Court (PAC) in Poznan in its ruling of 9 September 2014, file no. I SA/Po 156/14). 

Lately, however, the prevailing approach of the administrative courts has tended to change. The change was initiated by the SAC's ruling of 30 September 2015 (file no. II FSK 3137/14) and confirmed by subsequent rulings (of 13 July 2016, file no. II FSK 1706/14 and of 4 August 2016, file no. II FSK 1097/16).

In the last of the rulings cited above the SAC takes the view that the accounts settled within intra-group liquidity management structures demonstrate the characteristics of loans. This is because cash-pooling arrangements actually aim at providing financial means to the companies within the group, thus enabling them to achieve benefits in the form of interest. Consequently, accounts settled under cash-pooling arrangements should be treated as loans, thus they are subject to the thin capitalisation limitations. 

At present, in consideration of a large number of similar rulings passed by the SAC, the case law concerning the matter in question can be regarded as established.

If you are interested in more details about this issue, please contact our legal team. Our tax advisers in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw are at your service in this respect. We are also at your service to answer any other questions you may have with respect to tax advisory services in Poland.