The restriction referred to above applies to depreciation write-offs on fixed assets included in Group 1 of the Classification of Fixed Assets, i.e.:

• buildings,
• premises,
• cooperative rights to commercial premises, and
• cooperative ownership rights to residential premises.

From the start, this provision of Article 15(6) of the CIT Act has raised numerous interpretive doubts. Many real estate companies decided to apply for individual tax rulings in order to confirm that the new restriction would not apply to investment assets that were not depreciable fixed assets for balance sheet purposes. The real estate companies argued that the amended provision of Article 15(6) of the CIT Act only applies to those properties which, for balance sheet purposes, constitute fixed assets on which depreciation deductions are made in accordance with the Accounting Act.

The Director of the Department of National Fiscal Information did not agree with the taxpayers' position and pointed out that if a real estate company does not make depreciation deductions for balance sheet purposes, it should be assumed that the depreciation allowance for balance sheet purposes is "0". In practice, this would mean that real estate companies holding real estate investment assets (which are not fixed assets within the meaning of the Accounting Act) would be completely deprived of the right to include tax depreciation write-offs on these assets as deductible expenses.

However, various voivodship administrative courts have sided with the taxpayers. On 31 January 2023 a ruling was issued in case number III SA/Wa 1788/22, whereby the Voivodship Administrative Court in Warsaw stated that the provision of Article 15(6) of the CIT Act should be understood to mean that the limitation on the amount of tax depreciation write-offs would only apply if the assets in question, which are included in Group 1 of the Classification of Fixed Assets, were fixed assets subject to depreciation in accordance with the Accounting Act. A similar position was also presented in a number of other judgments before the Voivodship Administrative Court in Warsaw, and the Voivodship Administrative Court in Poznań.

Interestingly, in the justification for the judgment, the panel of judges stressed that the literal interpretation of the provision of Article 15(6) of the CIT Act does not provide an unequivocal answer to the question as to whether the restriction referred to in this provision also applies in those cases in which depreciation write-offs for balance sheet purposes have not been made at all. Consequently, the court decided to apply Article 2a of the Tax Ordinance which mandates that doubts that cannot be eliminated should be resolved in favour of the taxpayer.

Please note that the abovementioned favourable rulings of the voivodship administrative courts are not final. We will have to wait for the final resolution of the dispute before the Supreme Administrative Court.