Resolution by 7 judge panel of the Supreme Administrative Court concerning PCC taxation of goodwill.

Taxation of goodwill with the tax on civil law transactions (PCC) has been controversial for years. Tax authorities in their interpretations indicated that goodwill should be treated as a property right, which should be subject to 1% PCC payable by the buyer of a going concern. Administrative courts, however, were not unanimous in this respect. Noticing the discrepancies in the case law, on 19 October 2021 (case ref. III FSK 271/21) the Supreme Administrative Court (SAC) submitted this legal issue for adjudication to an expanded panel of 7 judges.

Yesterday (22 February 2022), the SAC panel issued a resolution (case ref. III FPS 2/21) in which it ruled that goodwill, understood as the surplus of the purchase price over the market value of assets of an enterprise or its organized part, does not constitute a property right within the meaning of PCC and is not subject to this tax.

As a result, taxpayers who in recent years purchased an enterprise or organized part thereof (a going concern) and who paid 1% PCC on the goodwill, in our opinion, have gained an additional, robust argument to confirm that the PCC was undue. Thus, we see the opportunity to reclaim the overpaid tax in the period not yet covered by the tax statute of limitations (i.e. generally on tax paid after 1 January 2017).

If you are interested in the above issue, please do not hesitate to contact us.