Current Report No.: 30/2020

Date of preparation: 29.07.2020

Abbreviated name of the Issuer: CIECH S.A.

Subject: Judgement of the Provincial Administrative Court in Krakow upholding a tax decision. 

Legal basis: Article 17.1 of the MAR – inside information 

Report:

The Management Board of CIECH S.A. (the “Company” or “Issuer”) herewith informs that today, at a hearing, the Provincial Administrative Court in Krakow (the “WSA”), upon consideration of a complaint brought by a subsidiary of the Issuer, i.e. Verbis ETA sp. z o.o. S.K.A. (the “Subsidiary”), announced its judgement in which it dismissed the complaint of the Subsidiary and upheld the decision of the Head of the Małopolskie Province Customs and Tax Office in Krakow (hereinafter referred to as the “Decision of the 2nd Instance” and the “2nd Instance Authority” respectively) dated 11 October 2019. Following an appeal lodged by the Subsidiary, the 2nd Instance Authority upheld the decision of the Head of the Małopolskie Province Customs and Tax Office in Krakow (hereinafter referred to as the “Decision of the 1st Instance” and the “1st Instance Authority” respectively) dated 9 July 2019, defining the amount of the tax liability in the form of tax on goods and services for the fourth quarter of 2013 – i.e. PLN 37,893,505, of which the amount of the disputed liability arising from the Decision of the 1st Instance is PLN 30,775,122.00 (the “Liability”).

The WSA judgement is not final. 

The Decision of the 2nd Instance was due and payable, and the amount of the Liability, together with interest in the amount of PLN 12,365,162, has already been paid to the competent tax office in connection with the immediate enforceability of the Decision of the 1st Instance, as advised by the Issuer in its Current Report No. 36/2019 of 29 August 2019.

Moreover, the Issuer informed about the pending proceedings in current reports:

1. No. 17/2019 of 22 May 2019,

2. No. 26/2019 of 17 July 2019,

3. No. 31/2019 of 6 August 2019,

4. No. 43/2019 of 24 October 2019. 

Additionally, the Issuer informed about the pending proceedings and the amount of the Liability in the consolidated statements of the CIECH Group. In the extended consolidated financial statements of the CIECH Group for the first quarter of 2020, these proceedings are described in Note 3.12 in the section: “Audits of tax settlements in the CIECH Group”, in the paragraph “VAT audit for the fourth quarter of 2013 at VERBIS ETA Sp. z o.o. S.K.A.”  

The Subsidiary and its advisors do not agree with the approach expressed in the WSA judgment. The Subsidiary intends to take further procedural steps to defend the tax consequences of its 2013 operations by submitting a complaint to the Supreme Administrative Court.

The Management Board of the Company is analysing the current WSA decision in terms of the legitimacy of creating a provision for the amount of the Liability and interest. The creation of such provision, if any, would result in the reduction of the consolidated financial result, however, it would not involve the need to pay any additional amounts since the Liability, together with interest, has already been settled.

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 Company’s representatives:: 

Dawid Jakubowicz – President of the Management Board
Jarosław Romanowski - Member of the Management Board