The ECJ decided in a Polish case that the taxable amount of a contribution of property by one company to the capital of a second company in exchange for shares in the latter must be determined based on the issue price of those shares if the parties mutually agreed to that effect.
Background
P. is a company registered for VAT; its authorized capital is by shares. P. sought to increase that capital through contributions in kind from two other companies (W. and B). More specifically, those two companies concluded several contracts with P. concerning the transfer of properties they owned and a cash contribution in exchange for shares in P. Under the relevant contracts to that effect, it was agreed that the consideration for the contributions in kind to P.’s capital should be the issuing of shares in the latter, valued at their issue price. The share price was based on the value of the properties contributed, which had been assessed in in adherence to third party (market) prices.
