Cash Pooling Agreements

[3] Thus, in its judgment of 4 August 2016 (case No. II FSK 1097/16), the High Administrative Court stressed that the very purpose of a cash pooling contract was to provide funds between group companies and to obtain advantages in the form of interest. In the zero-balancing cash pool, it is possible to track and determine the funds transferred to the pool manager`s account and then distribute them to the participants. Therefore, the contract fulfils the necessary conditions (essentialia negotii) of a loan agreement within the framework of its autonomous definition by the CIT Law, which went beyond the definition of civil law. Under this position, the date of determining the amount of funds to determine that cash pooling constitutes a loan and is therefore subject to the small-cap rules is not relevant. Initially, both the administrative courts and the tax authorities shared the view that cash pooling is neither a loan agreement under the Polish Civil Code nor a loan agreement within the meaning of the Corporate Tax Act[2]. Under that interpretation, taxable persons were not required to prepare transfer pricing tax documents in respect of cash consolidation contracts and were not required to comply with restrictions related to small capitalisation. However, between 2015 and 16, a new practice of the High Administrative Court was constituted. Under this new approach, cash pooling contracts were finally recognised as credit agreements under the CIT Act and are therefore subject to low capitalisation and, when certain thresholds arrived, there was an obligation to draw up transfer pricing documentation. [3] Subsequently, cash pooling became less attractive. Despite the fact that there have been several amendments, there is currently no definition of a loan under the CIT Act; the law refers to the concept of “credit (loan)”, and the High Administrative Court maintains its position that pooling treasury contracts generally fall into this category. As a result, a cash pooling contract is classified differently in Poland under different laws that do not provide for significant differences in the definition of the concept of “loan”. This inconsistent approach has no solid legal justification.

However, in practice, it does not impede the cash-pooling agreement as such. However, regardless of the type of cash pool, only unpaid assets in cash accounts held by the observed agent are subject to AnaCredit`s reporting. . . .