Current Report No.: 31/2019

Date of preparation: 06.08.2019

Abbreviated name of the Issuer: CIECH S.A.

Legal basis: Art. 17.1 of the MAR – inside information

Subject: Information on the order to make the decision of the Head of the Małopolskie Province Customs and Tax Office in Krakow immediately enforceable

Contents of the Report:

With reference to Current Report No. 26/2019 of 17 July 2019, the Management Board of CIECH S.A. (hereinafter referred to as the “Issuer” or “CIECH”) herewith informs that on 6 August 2019, the commercial proxy of a subsidiary of the Issuer, Verbis ETA sp. z o.o. S.K.A. (hereinafter referred to as the “Subsidiary”), received an order (hereinafter referred to as the “Order”) of the Head of the Third Tax Office for Warszawa-Śródmieście (hereinafter referred to as “Authority 1”) to make the decision of the Head of the Małopolskie Province Customs and Tax Office in Krakow (hereinafter referred to as the “Decision” and “Authority 2”, respectively) immediately enforceable, which was issued in connection with the tax proceedings conducted against the Subsidiary by Authority 2 with respect to the settlement of VAT for the fourth quarter of 2013. 

The Issuer informed about pending tax proceedings and the amount of potential tax liability in the consolidated statements of the CIECH Group. In the consolidated statements of the CIECH Group for 2018, the proceedings are described in note 9.2, in the section "Audits of tax settlements in the CIECH Group", with regard to VAT audits: “VAT audit for the fourth quarter of 2013 at VERBIS ETA Sp. z o.o. S.K.A.”.

In the Decision, Authority 2 provided the Subsidiary with the determination of the amount of the tax liability, i.e. PLN 37,893,505.00. In consideration of the fact that on 24 January 2014, the Subsidiary paid 7,118,383.00, the disputed amount is PLN 30,775,122.00. The Subsidiary has a claim against the State Treasury for a VAT refund of PLN 30,775,122.00 (hereinafter referred to as a “Tax Claim”). Thus, the tax liability specified in the Decision may be enforced against the Tax Claim. The enforcement proceedings conducted by Authority 1 also pertain to interest, which currently, i.e. today, amount to PLN 14,033,456.00. 

The Subsidiary and its advisors disagree with the position of Authority 1. Accordingly, the Subsidiary intends to submit a complaint against the Order.

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).

Signatures of the persons representing the Company: