Ruling description

In its award of 24 July 2015, case no. II FSK 1455/13, the Supreme Administrative Court stated that the CIT exemption for the income of foreign funds is in place even when the fund is managed by a manager, i.e. an investment firm authorized to manage the fund’s assets and make statements of will on behalf of the fund.

A private investment fund headquartered in Cyprus (the “Fund”) applied for a tax ruling regarding the right to a CIT exemption. Pursuant to the provisions of Art. 6 (1) point 10a of the CIT Law, collective investment institutions with their registered office in a Member State of the European Union other than the Republic of Poland or in another Member State of the European Economic Area are exempted from the corporate income tax if, without limitation, they are managed by entities that operate on the basis of a permission issued by the competent financial market supervision authorities in the state where their registered office is located (Art. 6 (1) point 10a letter f of the CIT Law).

Specifically, the Fund was seeking confirmation that in the event that the management of a fund is entrusted to a manager, i.e. an investment firm with legal status, the premise for the exemption referred to in Art. 6 (1) point 10a letter f of the CIT Law would be fulfilled.

The Head of the Fiscal Chamber in Warsaw pronounced the Fund’s position to be incorrect. In the Chamber’s view, the scope of an investment firm’s management is narrower than the fund management referred to in Art. 6 (1) point 10 letter f of the CIT Law. The Provincial Administrative Court in Warsaw upheld the unfavorable tax ruling on the abovespecified provisions. In the Court’s opinion, the decisive factor involved the fact that the powers of the company managing investment activity (Invest Manager) overlapped with the powers vested in the management board of a capital company as the body authorized to manage the company’s affairs and represent the company externally. The Supreme Administrative Court did not share the opinion and set aside both the award and the tax ruling. It emphasized that when an invest manager is authorized to act on behalf of the fund, then one cannot state that the manager’s powers are limited to the management of investment funds only. Additionally, one cannot compel the Fund to be organized and operate in exactly the same manner as Polish investment funds. As a consequence, the Fund has the right to a CIT exemption.


JIt is one of the first favorable awards of the Supreme Administrative Court that corroborates the possibility of applying a CIT exemption to income generated by a foreign investment fund.

After the day on which Art. 6 (1) point 10a of the CIT Law took effect, the tax authorities frequently refused to issue a tax ruling or acknowledge tax overpayment acting based on the assumption that foreign funds operate in other conditions than Polish funds and it is not possible to fulfill the premises contained in the provision at hand. Harmonized funds of the UCITS type were an exception of a kind. Owing to the award, there is a chance for a change in that practice so that a larger number of funds (including also alternative investment funds and Luxembourg funds in the form of SICAV) may enjoy the tax exemption. Hence, it is worth considering filing an application for an individual tax ruling or the acknowledgement of a tax overpayment.