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Is commercial intermediation subject to tax deductibility limits?


According to the tax authorities, yes. The contract for ongoing agency services, which is a commercial agency contract, is included in the list of intangible services subject to the limitation as to the amount of tax deductible costs on under Art. 15e (1) of the CIT Act - as stated by the Head of the National Revenue Information Service in the private tax ruling of June 19, 2020 (case no. 0111-KDIB1-3.4010.191.2020.2.JKT).

The case concerned a company which provides waste packaging recycling and utilisation services, as well as conducting educational campaigns for environmental protection. It concluded an agreement with a commercial intermediary ( being a related party) for the provision of ongoing agency services, the purpose of which was to intermediate in obtaining orders. The obligations of an intermediary resulting from the contract do not differ from the standard ones in this type of transactions and include, above all, bringing about the signing of contracts for the benefit of the Company, acquiring new clients, gathering relevant documentation, examining the credibility of potential contractors, providing them with information and intermediating in negotiating contracts.

The applicant indicated that the services acquired exhibited multiple features differentiating them from advisory or advertising services, which are subject to the limitation in question. The scope of the intermediary’s tasks is substantially broader, and the promotional activities conducted by him, as if incidentally, are an essential element of his work. However, he does not provide advertising services sensu stricto.

The Head of the National Revenue Information Service disagreed with this standpoint. According to the tax authority, the list of limited costs  set out in Art. 15e (1) (1) of the CIT Act contain services which are clearly named and those that are similar in nature to the named services. The service described by the Company falls in the latter group. In support of this assertion, a number of dictionary definitions of other services listed in the provision in question were quoted in the interpretation. The authority also quoted fragments of multiple decisions of administrative courts and the CJEU which were not directly related to the case.

It is hard to agree with that decision. It disregards completely the arguments presented in the judgments made on the grounds of similar facts, which are beneficial for taxpayers. The Voivodship Administrative Court in Cracow in its judgment of November 14, 2018 (I SA/Kr 1006/18) stated that specific agreements differ with regard to the activities to be performed by intermediaries; therefore, these activities should be assessed individually, on a case-by-case basis, in the context of the limitation under Art. 15e (1) (1) of the CIT Act.

The same court, in its judgment of February 20, 2019 (I SA/Kr 1398/18) additionally pointed out that a “service of similar nature” is not any intangible service, but only service that is equivalent, from a legal point of view, to (the provision of) consulting services, market research, advertising services, management and control, data processing, insurance, guarantees and warranties. However, commercial intermediation services, which have their own character and purpose, can certainly not be considered as equivalent to them.

Due to the already shaped unfavourable line of interpretation in this respect, taxpayers are left to defend their rights in courts, which seem to show a greater understanding of the specifics of complex commercial transactions.


Wojciech Jasiński, Tax Consultant, ATA Tax Sp. z o.o.

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