A taxpayer cannot resort to the principle of in dubio pro tributario to select an interpretation of a provision of law that is more favourable when a different interpretation is more favourable for the vast majority of taxpayers.
The judgment of the Supreme Administrative Court provides important directions on to how the principle of resolving doubts in favour of a taxpayer (i.e. Article 2a of the Tax Ordinance) should be interpreted. A taxpayer which is a municipality (i.e. an entity exempt from CIT) applied for a tax ruling regarding the tax qualification of grid connection fees. If the connection fees were considered to be a part of the initial value of a fixed asset, as the municipality requested, the taxpayer would gain an advantage with regards VAT owing to the possibility of extending the deadline for making tax adjustments. Importantly, such a qualification under the CIT Act would be neutral for the municipality, albeit disadvantageous for the vast majority of taxpayers since it would entail the necessity of settling expenses for grid connection fees over a longer period (i.e. the period of depreciation of a fixed asset) rather than through direct settlement in tax deductible costs.
The Supreme Administrative Court made it clear that a taxpayer cannot resort to Article 2a of the Tax Ordinance to select an interpretation of a provision of law that is more favourable for it where a different interpretation is more favourable for the vast majority of taxpayers. According to the Supreme Administrative Court, it is impossible to adapt the interpretation of a provision of law to a taxpayer’s individual situation.
By Wojciech Jaskula, Tax Expert, Penteris
