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Is It Moral to Charge VAT on Arbitration? - Czech and Central European Yearbook of Arbitration - Interaction of Arbitration and Courts - 2015

Author(s): 
Piotr Nowaczyk
Page Count: 
6 pages
Media Description: 
1 PDF Download
Published: 
March, 2015

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Originally from Czech and Central European Yearbook of Arbitration - Interaction of Arbitration and Courts - 2015

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The assignment of VAT is a difficult issue for many people. Do we have to pay
it on all goods and services?
 
Delivering justice is not an economic activity or a business. If one
conceptualizes arbitration as a special type of justice, then it is natural to ask
whether it is moral to put a tax on justice. I suggest that the answer is NO.
 
This question is not merely rhetorical in Poland. For a long time, tax advisors
there have been providing contradictory information and interpretations
regarding Article 15 par. 3 pt. 3, pt 4)1 of the Act on Personal Income Tax
concerning the remuneration of Polish arbitrators participating in arbitration
proceedings with ‘foreign partners’. The term ‘foreign partner’ is not defined in
the legislation. Whose partner is he to be? The arbitrator’s? Or perhaps the
Polish party’s? And what if a Pole becomes an arbitrator in a dispute in which
neither party is Polish? We would then be dealing with proceedings ‘between’
foreign partners and not ‘with’ foreign partners. It is not clear whether ‘foreign
partner’ means ‘foreign party’.
 
This ambiguity could lead to doubts about whether or not an arbitrator’s
activities are subject to VAT, and if they are then when. These questions could
arise in a variety of situations. Consider when:
 
1. a Polish arbitrator takes part in arbitration proceedings with foreign
partners abroad, in an arbitration tribunal at a foreign arbitral
institution;
 
2. a Polish arbitrator takes part in arbitration proceedings with foreign
partners abroad in ad hoc arbitration;
 
3. a Polish arbitrator takes part in arbitration proceedings with foreign
partners in Poland, on the panel of arbitrators, e.g. in the Court of
Arbitration at the Polish Chamber of Commerce, which concludes
an agreement with the arbitrator on the terms and conditions of his
remuneration and liability;
 
4. a Polish arbitrator takes part in arbitration proceedings with foreign
partners in Poland, e.g. at the Court of Arbitration at the Polish
Chamber of Information Technology and Telecommunications, in
which the court concludes a fee-for-task agreement with the
arbitrator;