VAT Taxation Basis Determination in Exchange for Shares – ECJ Judgment C-241/23

• The case concerned a dispute between a company and the Tax Administration Chamber in Warsaw regarding the refusal to deduct VAT on non-monetary contributions made by shareholders in exchange for shares.
• The company increased its share capital by non-monetary contributions from shareholders W. and B., who transferred real estate to the company in exchange for shares.
• The Tax Administration Chamber argued that the VAT base should be calculated based on the nominal value of the shares, not the issuance value, leading to a disallowance of VAT deduction.
• The decision was upheld by the Warsaw Administrative Court, prompting the company to appeal to the Supreme Administrative Court.
• The Supreme Administrative Court referred the case to the Court of Justice of the European Union to determine whether the payment received in exchange for shares should be based on the nominal value or the issuance value.
• The Court of Justice of the European Union clarified that the nominal value of shares is determined by the assets contributed by shareholders at the creation of the company, while the issuance value corresponds to the actual value of the shares.

Source: mddp.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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