On 8 December 2017, the Supreme Administrative Court issued a verdict of great importance for banks (case file number II FSK 2667/15) which referred to the possibility of recognising repayments made by a bank on account guarantees given by it, as revenue earning costs. The essence of this dispute was the provision of Article 16 par. 1 point 25) letter c) of the Act on CIT which stipulates that receivables written off as being uncollectible were not considered to be revenue earning costs, except for those losses incurred by the bank on account of guarantees or suretyship [Polish: "poręczenia"] for the repayment, granted after 1 January 1997, of bank credits and loans, calculated according to point 25 letter b).
In the issued ruling, the tax authority recognised that the revenue earning costs could be losses incurred only on account of those guarantees which refer to the repayment of bank credits and loans, while other losses related to other guarantees given by the bank-applicant (e.g. commercial guarantees, transit guarantees, extended warranties, rent guarantees, etc.) could not constitute revenue earning costs.
Both the Provincial Administrative Court in Warsaw (in the verdict dated 3 June 2015, case file number III SA/Wa 3068/14) and the Supreme Administrative Court did not agree with the aforementioned verdict with the ruling issued by this tax authority. Basing on the literal interpretation of the provision in question, these courts ruled that since the conjunction “or” means the strong disjunction, in the provision in question, after the conjunction “or” the words "repayments of bank loans and loans” refer only to suretyship [Polish: “poręczenia’]. As a consequence, the losses incurred by the bank on account of any types of guarantees which were granted (not only those which referred to repaying bank credits and loans) could be recognised as revenue earning costs.