GPW - Giełda Papierów Wartościowych w Warszawie S.A.

Legal Proceedings Report • Jan 25, 2017

Current Report No. 13/2017Date: 25 January 2017Subject: Decisionof a subsidiary to change the previously applicable tax policy and toadjust VAT paymentsLegal basis: Article 17 (1) of MAR - InsideinformationContent:The Management Board of the Warsaw StockExchange ("GPW", "Company") announces that it was informed on 25 January2017 by the Management Board of the Polish Power Exchange ("TGE"), asubsidiary of which GPW holds 100%, about a decision made by the TGEManagement Board concerning a change of TGE's previously applicable taxpolicy regarding certain services and a concurrent correction ofrelevant value added tax ("VAT") payments.In 2011 -2016, TGE considered exchange fees charged on transactions concluded onthe Property Rights Market, the Electricity and Gas Forward Market andfor the maintenance of the Register of Certificates of Origin (jointly"Fees") to be fees exempt from VAT.The TGE ManagementBoard has informed the GPW Management Board that following a tax reviewof TGE's VAT payments, it commissioned several independent third-partyinterpretations of tax regulations concerning VAT on exchange feescharged by TGE. Even in the absence of consistency of the received taxopinions, the Management Board of TGE has decided to change thepreviously applicable tax policy and to correct VAT payments relating tothe Fees basing on the opinion that in the light of the VAT Actapplicable as of 1 January 2011 TGE was not eligible to use the VATexemption for charged Fees.Furthermore, TGE has informed theManagement Board of GPW that its previous approach where the Fees wereconsidered to be exempted from VAT was based on a differentinterpretation of tax regulations. In the opinion of TGE they could leadto different interpretations as to the scope and method of theirapplication, and that TGE's previous approach relied on the opinion ofan independent advisor which suggested that a VAT exemption could applyto the Fees.Further to the foregoing, the TGE Management Board hasdecided to change the previously applicable tax policy as of 1 January2017 and to correct VAT payments which are not overdue. The decisionrequires the issuance of correction invoices to TGE's counterparties,requesting them to pay the VAT not previously charged for taxliabilities which are not overdue as a result of the Fees (for theperiod from December 2011 to December 2016, inclusive) in the totalamount of PLN 69.8 mn.At the same time, TGE will be required to payto the account of the tax office an amount of the resulting tax debitunder correction invoices to be issued to TGE's counterparties andadditionally the interest on the tax debit at PLN 10.2 mn.As a rule,counterparties should be entitled to deduct the VAT, i.e., the entireamount of the correction invoices, in the current or future financialperiods.According to estimates, the final cost of the correction ofTGE's invoices will be the interest cost on the debits at PLN 10.2 mn.Legalbasis: Article 17 (1) of Regulation (EU) No 596/2014 of the EuropeanParliament and of the Council of 16 April 2014 on market abuse (marketabuse regulation) and repealing Directive 2003/6/EC of the EuropeanParliament and of the Council and Commission Directives 2003/124/EC,2003/125/EC and 2004/72/EC (EU Legal Journal L 173) ("MAR").