A recent case before the Provincial Administrative Court (“PAC”) in Kielce (case no. I SA/Ke 709/21) involved a company doing business within a special economic zone (SEZ). The company received assistance from the Guaranteed Employee Benefits Fund to help fund its employees’ wages. The court gave its judgment on 10 March 2022 to uphold a recent line of authority where such wage assistance for companies doing business in SEZs can be treated as income from tax-exempt SEZ business for corporate income tax purposes.

The Kielce court began by endorsing the existing case law on this issue, including case no. I SA/Sz 125/21 (PAC in Szczecin, judgment dated 29 April 2021), case no. I SA/Rz 811/21 (PAC in Rzeszów, judgment dated 14 December 2021), case no. I SA/Rz 865/21 (PAC in Rzeszów, judgment dated 16 December 2021), and case no. I SA/Gl 1344/21 (PAC in Gliwice, judgment dated 11 January 2022). This taxpayer-friendly line of authority has been already reported by us in our blog post from January, 7th 2022.

The Kielce court made clear that exempt income includes not only income generated directly in courase of SEZ business by selling SEZ-originated goods or services, but also income the taxpayer earns in connection with other activities which are strictly, inseparably and functionally connected with his core business. According to the Kielce court, there is such a connection between the subject wage support assistance and permitted business conducted within SEZ, therefore the assistance is an integral part of SEZ business.

Note, however, that none of those judgments is definitive yet and we still need to see if and how the issue is finally resolved by the Supreme Administrative Court. We will keep you updated.

If thiss issue pertains to your business and you are interested in our assistance, please contact us.

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