Repayment of irregular deposit under datio in solutum is a tax – neutral payment

According to the Judgement of Voivodship Administrative Court in Szczecin, dated 25th November 2015 (case no.: I SA/Sz 915/15), repayment of irregular deposit under datio in solutum form shall be understood as tax – neutral payment. The aforesaid judgment creates jurisprudence confirming that usage of irregular deposit may be an effective form of optimization of corporate income tax resulting from particular transactions, subject to e.g. transfer of intangible assets, especially intellectual property rights.

First of all it should be explained, that according to Article 835 of the Polish Civil Code, by the contract of bailment the bailee undertakes to keep a movable thing, which has been left to him under bailment, in a non-deteriorated condition. The bailment contract authorizing the bailee to dispose of money or items provided to him for the purpose of the bailment shall be understand as irregular deposit. According to Article 845 of the Polish Civil Code, the regulations concerning loan agreements shall apply to irregular deposit. 

Datio in solutum, i.e. deed in lieu, shall be understand as fulfilling an obligation by the debtor, other than his primary obligation, with the creditor’s consent. As a result of the aforesaid, the primary obligation of the debtor shall expire. 

In respect of the above, the Voivodship Administrative Court in Szczecin adjudicated, that the taxpayers gain tax incomes only when they receive a definitive benefit, having influence on growth of the taxpayer’s assets. In the Court’s view, in case of repayment of irregular deposit under datio in solutum, debtor does not gain any tax income, because neither receiving the goods under the bailment agreement nor returning those goods are definitive benefits. This type of transaction shall be understand as return of subject of bailment. 

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