Dispute with the tax authority on estimating income from the sale of real estate | CASE STUDY

At the end of 2021, we completed with success an interesting case regarding an upward adjustment of income from the sale of real estate.

The head of the customs and tax office believed that the company concerned had lowered the selling price of the real estate by three times, which resulted in an upward adjustment of income. The company did not consult professional advisors at the stage of customs and fiscal audit and was thinking about correcting a tax return declaration and paying the outstanding tax. However, before making a final decision, they decided to consult us on this matter.

Our recommendation was clear. Evidence collected in the case allowed defending the position regarding the arm's length nature of the agreed selling price. The case required something more than just submitting a new valuation report to the authority. We had to adopt a strategy that required taking a look at all circumstances, focusing in particular on demonstrating market characteristics of the price in relation to subsequent real estate transactions. The customs and tax office concluded that the price of the real estate sold was calculated on market terms, sharing out viewpoint.

• It is worth consulting a tax advisor in disputes with tax and customs authorities
• A result of tax audit unfavorable for the taxpayer does not automatically mean that the authority will issue a decision on tax assessment decision

The case was handled by Jacek Olczyk and Mariusz Tkaczyk, GWW partner, supervisor of tax planning and income tax practice.