The verdict of the Supreme Administrative Court (“SAC”) issued in the recent days, deals with the allocation of interest costs on a loan incurred for the purpose of financing a purchase of shares to the correct income baskets (capital or operational) in a situation where the aim of the purchase of shares was to extend / support the business activities of the taxpayer (and not for the purpose of resale of shares). 


The SAC departed from the previous case-law dominating in the verdicts issued by the Provincial Administrative Courts. In general the courts of the 1st instance accepted the position of the tax authorities according to which interest on a loan in the situation described above should be in every case settled within the so-called capital gains basket. 

In the opinion of the Supreme Administrative Court: 

  • since the interest accrued on the loan taken out for the purpose of financing the purchase of shares is deemed as an indirect cost for the purpose of the CIT settlements, it is not possible to allocate them directly to the operational activity or capital gains basket, 
  • in the light of the relevant provisions of the Polish CIT Act, a taxpayer who obtains revenues from capital gains as well as operational activity revenue basket is required to allocate indirect costs through proportion (that is on the basis of annual ratio of operational activity and capital gains), 
  • the fact that in the future shares may be sold and revenues may be obtained on this account, does not mean that the interest on the loan granted for the purpose of purchasing shares must be automatically settled within the capital gains basket. 

Companies, which are not able to utilize cost related to purchase of shares, e.g. due to lack of  revenue in capital gain basket, may consider changing adopted approach. In such a case, our experts, which represented the client in the above described case, are ready to support you.