Published on 4 July 2022
FIRST SECTION
Application no. 32520/19
Zbigniew URBAN
against Poland
lodged on 12 June 2019
communicated on 15 June 2022
STATEMENT OF FACTS
1. The applicant, Mr Zbigniew Urban, is a Polish national, who was born in 1948 and lives in Kopaliny. He is represented before the Court by Mr G. Pawelec, a lawyer practising in Cracow.
The circumstances of the case
2. The facts of the case, as submitted by the applicant, may be summarised as follows.
3. The applicant was a founder and shareholder of a limited liability company – Zetwu Invest Hotele Maribor sp. z o.o.
4. In 2008 it was decided to increase the company’s share capital by 3,680,000 euros (EUR) by creating new shares. All of those shares were acquired by the applicant, who deducted their cost (potrącenie) against the company’s debts towards him, arising from thirty-seven loans he had obtained between 2004 and 2007.
5. According to the Polish Act on Personal Income Tax (Ustawa o podatku dochodowym od osób fizycznych), as in force at that time, the revenue (przychód) was considered to be equal to the nominal value of the shares acquired in exchange for non-pecuniary contributions (wkład niepieniężny). Income (dochód) to be taxed under a fixed rate of 19% was considered as the difference between the amount of revenue and the costs incurred during its acquisition (koszty uzyskania przychodu). The applicant regarded the value of the compensated debts as his costs and he did not pay any tax in this regard.
6. In December 2013 the Head of the Cracow Tax Office instituted proceedings against the applicant and ordered him to pay 2,800,000 Polish zlotys (PLN –approximately EUR 700,000) in income tax (19% of the value of the acquired shares). It determined that the applicant could not have offset his company’s debts against costs. The applicant’s appeal was dismissed. The tax authority found that only a debt that was acquired from a third party could be considered as costs for taxation purposes. The applicant lodged a further appeal, arguing that the impugned decision was contrary to the literal interpretation of the law, to the principle in dubio pro tributario and to any logic. As to the latter point, the applicant explained that the giving of the loans to his company had diminished his own funds. Moreover, the applicant argued that the Act on Personal Income Tax was amended on 1 January 2015, precisely in order to confirm that it was lawful to consider one’s loans as a cost of income acquisition. On 14 January 2016 the Cracow Regional Administrative Court dismissed the applicant’s appeal. On 12 December 2018 the Supreme Administrative Court dismissed his cassation appeal.
7. On 14 June 2021 the Supreme Administrative Court, sitting as a bench of seven judges, issued a resolution (no. II FPS 2/21) concerning a similar factual situation as the one in the present case. The court clarified that, as the law had stood prior to 2015, the acquisition by a creditor of shares of a debtor company equal to the value of the debt, was not subject to taxation.
COMPLAINTS
8. The applicant complains under Article 1 of Protocol no. 1 to the Convention that he had borne an excessive burden by making public contributions in a situation where the law was unclear and ought to have been interpreted in his favour.
9. He also complains under the same provision, in conjunction with Article 14 of the Convention, that he suffered discrimination since a different treatment would have been accorded to a shareholder who had acquired shares as a reimbursement of a third-party’s debt.
QUESTIONS TO THE PARTIES
1. Has the applicant exhausted all effective domestic remedies, as required by Article 35 § 1 of the Convention?
2. Has there been an interference with the applicant’s peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1? If so, was that interference necessary to secure the payment of taxes or other contributions or penalties? In particular, was this interference lawful? Did it impose an excessive individual burden on the applicant (see Immobiliare Saffi v. Italy, [GC], no. 22774/93, § 59, ECHR 1999-V?
3. Has the applicant suffered discrimination in the enjoyment of his right of property, contrary to Article 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1 to the Convention (see Carson and Others v. the United Kingdom [GC], no. 42184/05, 16 March 2010)?