Landmark win before the Supreme Administrative Court on debt financing costs in full factoring

The MDDP team was responsible for leading the case to a landmark ruling by the Supreme Administrative Court on financing costs in full factoring.

The issue in dispute in the case was whether the costs of factoring proper (full factoring) are subject to the limitations on inclusion in deductible costs under Article 15c of the CIT Act.

The NSA ruled that full factoring, like the assignment of receivables, does not give rise to debt financing costs subject to limitation under Article 15c of the CIT Act. NSA definitively confirmed that the costs of proper (full) factoring incurred by a taxpayer may be recognised as tax deductible costs in full (without the need for limitation). The NSA fully accepted the argumentation presented by MDDP, which was based not only on domestic law, but also on EU regulations. 

An extremely important ruling for all businesses using full factoring. It confirms that they can fully count the expenses related to this factoring as tax costs. This ruling may now form the basis for overpayment claims by many taxpayers (who were limiting the inclusion of these expenses as tax expenses).

This is the first judgment of the Supreme Administrative Court that has unequivocally resolved this issue and is important insofar as it determines that the well-established position of the tax authorities in this regard is incorrect.

The attorney in the case was: Katarzyna Kozakowska.

Judgment of the Supreme Administrative Court of 3.10.2023, ref. no. II FSK 391/22