Krajský soud k časovému rozlišení poplatku za sjednání úvěru

Regional Court on the Accrual of Loan Arrangement Fees

The Regional Court in Ostrava dismissed the taxpayer's lawsuit regarding the accrual of the loan arrangement fee ("upfront fee") in the issued judgment No. 25 Afs 3/2023 - 41.

Specifically, the case involved a situation where a group of banks provided an external loan to the parent company, which was subsequently transferred to the taxpayer as part of an intra-group loan along with the upfront fee. The taxpayer accrued this fee over the duration of the loan in their accounting books.

Taxpayer's Argumentation

 Based on statements from two banks, this fee is invoiced to bank's clients for services provided throughout the duration of their financing. The banks themselves accrue the fee into revenues over the period of the loan provision.

Tax Authority's Argumentation

 It was necessary to distinguish between two legal relationships, namely: 1) the loan between the group of banks and the parent company, and 2) the intra-group loan between the parent company and the taxpayer. The accrual of the banking fee from the first legal relationship does not automatically mean that the re-invoicing of the banking fee in the second legal relationship will be subject to accrual, unless it is proven that actual counter-services were provided by the parent company during the duration of the loan.

The Regional Court agreed with the tax authority's interpretation.

For completeness, we add that no cassation complaint against the judgment was filed, so a review by the Supreme Administrative Court is not expected.

What to take away from this? In the accounting and tax world, one should always focus on the substance of the performance to avoid violating the accrual principle. A conservative approach to recognising costs does not mean that the tax authority will always accept the taxpayer's approach.

For completeness, we would like to add that the above brief commentary cannot replace a detailed tax assessment of a specific situation.

If you have any questions, please contact the author of the article or the EY tax team with whom you regularly work.

Authors:

Ivan Zhurkin

Lucie Vrabcová