The Voivodship Administrative Court (WSA) in Poznań, in a judgment of the 19th of March this year, stated that the only source of revenue to which the payment of remuneration in the form of participation units may be included is revenue from monetary capitals, and its taxation is deferred until the moment of redemption of these units.

The interpretation was requested by a company which is an association subject to the Investment Funds Act. According to the internal remuneration policy, certain persons in the company (board members, proxies, members of the investment committee) receive part of their remuneration in the form of financial instruments. 

According to the applicant, in the case of employees receiving certain financial instruments, income arises only at the time of their redemption. Moreover, the income should be recognised as income from financial capitals and taxed at 19% rate. The Director of the National Fiscal Information Division disagreed, arguing that income from remuneration paid in the form of participation units arises on the part of employees twice: both at the time of payment (receipt) of the participation units from the employer and at the time of their disposal to the fund for redemption. 

However, the position of the claimant was supported by WSA in Poznań. In its justification, the court rightly noted that at the moment of the payment of the financial instruments, the gain connected with them is only potential and its precise value cannot be determined. The value of the benefit can be definitively determined only on the date of presentation of financial instruments for repurchase or redemption. In the opinion of the Court, the receipt of financial instruments by employees in such a situation cannot be considered as a gratuitous benefit. As a result, the only source of income to which the payment of remuneration in the form of participation units may be included is income from capital funds, and its taxation is deferred until the moment of redemption of these units. 

Similarly, the Administrative Courts have ruled on the taxation of shares granted to employees under various types of employee share schemes, even those which are not qualified as incentive schemes within the meaning of the tax regulations.