• Taxation of Transmission Easement Fees
  • June 11, 2014
  • Law Firm: BSJP Brockhuis Jurczak Prusak Sp.k. - Warsaw Office
  • Thus far, there was no agreement as to the interpretation in respect of the obligation to pay personal income tax on account of establishment of a transmission easement. Pursuant to the act on personal income tax, compensation paid under court judgments and agreements concluded to owners of land constituting a part of an agricultural farm on account of establishment of a transmission easement and due to the execution of investments relating to the construction of technical infrastructure equipment is exempt from income tax. In turn, the civil code stipulates that the relevant provisions on land easements apply to transmission easements. However, there arose the issue of whether the application of the relevant provisions concerns the regulations of the civil code only or possibly some other legal acts too, and consequently does the income tax exemption on account of establishment of a land easement apply to transmission easements. As a result, there were varying views as expressed by the Ministry of Finance and judicial decisions in respect of the exemption from the obligation to pay tax. The disagreement seems to be resolved now that on 21st May 2014, the Ministry of Finance has published a general interpretation that modifies the previously taken position of the Minister of Finance in this regard.

    Initially, the Ministry of Finance, within individual interpretations as well as in the general interpretation, indicated that there were no grounds for applying the income tax exemption in respect of land easements to transmission easements. However, the courts were of a different opinion and they maintained that the tax exemption in respect of land easements applied to transmission easements too. Ultimately, on 21st May 2014, by issuing a general interpretation (DD3/033/126/CRS/14/RD-46264/14), the Minister of Finance changed his previous position and concluded that income achieved on account a transmission easement shall be exempted from the obligation to pay income tax. Furthermore, as per judicial decisions, referring to the payment as a “fee” as opposed to a “compensation” cannot result in the owner of the land constituting a part of an agricultural farm being deprived of the right to be exempted from payment of tax on account of receipt of the financial consideration in respect thereof.