‘Since in the present case we are dealing with the so-called lease of a car, there is no acquisition of the right to dispose as owner by the Company in such a case. Therefore, in the presented future event (…) no excise duty obligation will arise in connection with the intra-Community acquisition of a car, as the Company will not acquire the right to dispose of the car as owner and will not register it in Poland. (…) Therefore, it is impossible to agree with the authority and tax what is not indicated in the provisions of the Excise Duty Act. This would also constitute a violation of Article 217 of the Constitution of the Republic of Poland’. – judgment of the Provincial Administrative Court (hereinafter: ‘WSA’) in Wroclaw of 26th October 2023 (ref. I SA/Wr 592/23).
The case concerned the long-term rental of cars by a Polish company from Germany, which were registered in that territory. The cars were used and moved to the territory of Poland without prior registration. After the expiry of the term specified in the contract, the cars were then returned to the German contractor (who was the legal and formal owner of the cars).
The judgment raised a dispute that has been going on for some time between the courts and the tax authorities. The doubts concerned the interpretation of Article 101 (2) point 1 of the Excise Duty Act (hereinafter: ‘the E.D.A.‘) and the interpretation of the notion of ‘acquisition of the right to dispose of a passenger car as owner’. On tax grounds, doubts have arisen as to whether the effect of concluding a car rental agreement is to acquire the right to dispose of the car as owner and, consequently, to create an obligation on excise duty grounds.
Car rental and excise duty – an inconsistent approach
Pursuant to Article 101 (2) point 1 of the E.D.A., the tax obligation for intra-Community acquisition of a passenger car not previously registered in the territory of the country in accordance with the provisions on road traffic arises on the date of acquisition of the right to dispose of the car as owner – if the acquisition of the right to dispose of the car as owner took place after the passenger car was moved into the territory of the country.
It should be emphasized that the E.D.A. does not contain either a legal definition or a reference in its provisions as regards the concept of ‘acquisition of the right to dispose of a car as owner’. At the same time, the tax authorities equate it with the notion of ‘acquisition of the right of ownership of a passenger car’, as was the case in the present case.
The case law also notes a different approach, i.e. it indicates that the concept of ‘acquisition of the right to dispose of a car as owner’ is a broader concept than ‘acquisition of the right of ownership’. This is because it also covers an entity which, while not being the legal owner of a car, is its actual owner and which, on the basis of a specific event, e.g. a signed lease/rental agreement, has obtained the possibility to actually dispose of the vehicle in the manner and to the extent vested in the owner, while at the same time it has not legally become its owner as a result of the signed agreement (see: the judgment of the Supreme Administrative Court (NSA) of 21st September 2012, ref. no. I GSK 40/12, the judgment of the NSA of 3rd September 2014, ref. no. I GSK 199/13).
Nevertheless, the lessee does not have the same rights as the owner, and in legal terms the legislator distinguishes between the right of lease and the right of ownership. According to the court in the judgment under discussion, in the case of long-term rental of cars registered and admitted to road traffic in Germany, the effect of concluding a car rental agreement is not the acquisition by the party of the right to dispose of the car as owner, but the temporary or even long-term use of the car.
The WSA pointed out that the ‘acquisition of the right to dispose of a car as if were the owner’ can be considered only such forms of transfer of economic authority over the car that can be considered a transfer of sole possession of the goods, i.e. when the sole possessor ‘exercises the powers’ that make up the right of ownership, i.e. for example, uses the car to the exclusion of others, and considers himself entitled to dispose of it. The lessee, on the other hand, holds the car ‘as’ a person with specific right, such as use, pledge, lease or other similar form of use of the thing, with which a specific right to dispose of the thing is connected, but which is unequal to the disposal over the thing ‘as owner’ and the possibility to make a transfer of the right to dispose of such thing as owner.
The court referred to the verdict of the NSA of 19th April 2023 (ref. I GSK 2248/19), in which it was indicated that tax authorities, when interpreting the notion of ‘acquisition of the right to dispose of a car as an owner’, often disregard the linguistic interpretation and go directly to the external systemic interpretation. It should be added that in the absence of a legal definition of a given term in the law (as is the case in the present case), the tax authority should first refer to the common language by interpreting the words used for the term in question, which the tax authority did not do.
It should be noted that the use of an imprecise concept by the legislator may not at the same time cannot result in the coverage of excise duty hypothetically, i.e. what is not indicated in the E.D.A. itself. This goes beyond the designated scope of the aforementioned Act, and in particular the provision referred to at the beginning – Article 101 (2) of the E.D.A.
Summary
In the case in question, the conclusion of the judgment is that in the case of leasing a car, there is no acquisition of the right to dispose of it as owner by the company. Therefore, no excise duty obligation arises in connection with intra-Community acquisition of the car and there is no obligation to register it in the territory of Poland. As indicated in the judgment in question: ‘(…) the objection that the provision of Article 101(2) point 1 of the E.D.A. will not apply, which is tantamount to an incorrect assessment as to the application of the substantive law provision, is fully justified’.
The lack of a legal definition of the ‘acquisition of the right to dispose of a car as owner’ in the E.D.A. has caused a number of interpretative discrepancies and disputes with the tax authorities over the years. The issued judgment once again confirms that a lessee should not be equated with the same concept as an owner and does not include the same rights in connection with a rental agreement. However, the judgment handed down does not mean that the tax authorities will change their previous approach. A case-by-case decision is therefore necessary even up to the level of the courts.
Finally, it is worth mentioning that, despite the judgment, registration on the territory of Poland may be necessary, Article 101 (2) point 3 of the Excise Duty Act indicates the moment when the tax obligation arises in the case where the acquirer is not the owner (e.g. in the case of rental) and makes this moment dependent on filing an application for registration of the car on the territory of the country. In turn, the Road Traffic Law requires, under Article 73aa, the submission of an application for the registration of a car within 30 days from the date of acquisition of the vehicle.