According to new regulations, in case of settlement of liability by other in kind benefits (e.g. release of loan, asset) taxpayers should recognise revenue in the market value of the settled liability. At the same time, there are no specific rules relating to calculation of tax-deductible costs in this respect.
Before the entry into force of these new regulations, in the case of transfer of own liabilities, the tax authorities often denied the possibility to recognise the value of own liabilities as tax-deductible costs, arguing that expense in such a case has not been incurred. This view does not reflect the reality at all because what is a principal amount of loan transferred to the account of the borrower, if not an expense on the acquisition of specific loan liability.
Discover more: Settlement of liabilities in nature – what about tax-deductible costs?
For similar content to our Global Guide, subscribe to our mailing list and keep up to date.
Voivodship Administrative Court has confirmed this argument together with the possibility to treat the principal amount of liability as tax-deductible cost.