Current report no. 36/2018
Date of preparation: 27.12.2018
Abbreviated name of the Issuer: CIECH S.A.
Subject: Information on the decision of the Head of the Customs and Tax Office of Małopolskie Province in Krakow
Legal basis: Art. 17. 1 of the MAR – inside information
Contents of the report:
The Management Board of CIECH S.A. (the “Company” or the “Issuer”) hereby informs that today it has received the decision of the Head of the Customs and Tax Office of Małopolskie Province in Krakow (the “Office”, the “Authority”) of 13 December 2018, issued following a tax procedure conducted in relation to the Company, involving a corporate income tax audit for 2012. In its decision, the Office made a tax assessment, unfavourable for the Company, of an event consisting in the increase of the cash amount of the share capital in a subsidiary of the Issuer, with a deduction for a loan receivable. Contrary to the position of a part of the then-current case-law and tax authorities, in the opinion of the Authority, such an increase of the share capital was non-monetary. Accordingly, the Authority has concluded that in 2012, the Company obtained taxable income in the nominal value of the subscribed shares.
At the same time, the Authority decided that the Company had no right to consider the tax deductible cost on the above transaction since it did not incur any expense in connection with the acquisition of the contribution-in-kind in the form of its own receivables.
The Company and its advisers disagree with such approach. Therefore, the Company intends to take procedural measures to defend the tax consequences of its operations in 2012. The decision is neither final nor enforceable. If such unfavourable decision is maintained at the next stage of administrative proceedings, the Company may be required to pay income tax of PLN 43,7 million, including late payment interest, which as at the date of publication of the report amounts to PLN 23,5 million.
The Management Board of the Company is in the process of analysing the decision in terms of the expediency of creating a provision for income tax and interest.
Legal basis: article 17.1 of the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of 16 April 2014 on Market Abuse (the Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union L No. 173, p. 1) (the “MAR”).
Signatures of persons representing the Company:
Artur Osuchowski – Member of the Management Board
Mirosław Skowron – Member of the Management Board
