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Judgement on price reduction for R&D services
The Administrative Court in Warsaw issued a judgment regarding the right to reduce the price for R&D services by the amount of grants received. Taxand Poland look at the judgement and what it means for companies.
The grants given to the Polish subsidiary acting as a group R&D centre were dedicated to refund the costs of new lab’s development in particular creation of new jobs. In tax authority’s opinion the remuneration for R&D services applied by the company was not in line with arm’s length principle. The Court did not support the tax authority’s standpoint.
The company claimed that it was entitled to reduce the price for R&D services by the amount of grants received. They underlined that the possibility to receive the state aid was one of the decisive factors taken into account by the group while taking a decision on the location of R&D centre. The court supported the company’s standpoint. In its view, subsidies may have an impact on the final price of services offered by the entity competing with another group’s R&D labs.
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The judgment concerns a TP issue which may be viewed as a new area of increased interest of tax administration in Poland. This judgement may be useful for the companies acting as R&D or cost-sharing centres which are at the same time beneficiaries of public aid/ subsidies, etc.