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Transfer tax on loans granted to related parties outside the EU – new judgment of the Supreme Administrative Court (SAC)

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​​​​​​by Anna Przygódzka

3. Juli 2024


According to the SAC’s judgment of 8 May 2024 (file no. III FSK 636/22), a loan granted to an US entity by a Polish entity as part of its business activity is subject to transfer tax.

This is because such a transaction is not subject to VAT in Poland or a foreign value added tax under the Transfer Tax Act.

The above judgment means that loan transactions with entities outside the EU (understood very broadly as EU member states and member states of the European Free Trade Agreement – parties to the EEA Agreement) will need to be checked.

What is the judgment about


The judgment was issued to a Polish company (lender) that provided a loan to a related party from the USA. According to the verbal statement of reasons behind the judgment (written reasoning is still missing at this point), either of the two requirements must be satisfied to apply the transfer tax exemption in the context of VAT​. This exemption is available:

  • insofar as the transactions are subject to VAT,
  • if at least one of the parties is exempt from VAT on account of the transaction.

In the SAC's view, since the borrower has neither a registered office nor a fixed establishment in Poland, the place of supply of the loan is outside Poland under Article 28b(1) of the VAT Act. The transaction is therefore neither subject to VAT nor exempt from VAT in Poland. The transaction will be taxable under US rules (therefore outside the EU/EEA). Even if we assume that it is not subject to tax, it is not exempt from tax.

When it comes to the concept of foreign value added tax, the SAC confirmed that it did not refer to taxation in third countries, but only in the broadly understood territory of the EU.

The judges also pointed out that, in order to assess whether the first requirement was satisfied, it was irrelevant whether or not the entity was engaged in a lending business. It was also irrelevant whether or not this was a one-off transaction. All that follows from the letter of law is that a transaction must be subject to VAT (this requirement relates to the object, not the subject of the transaction). 

An advance tax ruling issued by the Head of the National Revenue Information Service (NRIS) confirming that the loan granted by the lender was not subject to VAT in Poland was also cited in the case. Therefore, the SAC did not address the VAT issue in the context of the reverse charge procedure, indicating that the NRIS ruling in this respect was not challenged.


Once the written reasons for the judgment have been published, we will review the significance of the ruling in detail.


If you have questions about transfer tax on loans granted to your related parties outside the EU – contact us​.​

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