Content of Report:
The Management Board of Wirtualna Polska Holding S.A. (“the Company") informs that on February 24, 2020 its subsidiary Wirtualna Polska Media S .A. ("WPM") received customs and fiscal control findings ("Tax Control Findings") carried out by the Head of the Małopolski Customs and Tax Office in Krakow ("Head of Tax Office”). The Tax Office examined WPM’s compliance with the CIT regulations for the fiscal year 2016. The Head of Tax Office concluded that WPM had incorrectly recognized the tax costs related to the acquisition of Wirtualna Polska S.A. by o2 sp.z o.o. (legal predecessor of WPM). It should be emphasized that the Head of Tax Office did not question the legitimacy of recognizing the tax costs, but the amount recognized.
The Head of Tax Office presented a different interpretation of tax regulations than WPM. Consequently, according to the Head of Tax Office, WPM was not entitled to recognize the full amount of tax costs related to the transaction on shares.
In the event that the Head of Tax Office issues a decision unfavorable for WPM, consistent with the Tax Control Findings, WPM will pursue appropriate legal action in defense of its position. WPM estimates the maximum possible negative impact on the consolidated result of the Capital Group in the amount of PLN 61.3 million (reversal of recognized tax asset and current tax deduction for 2016). Out of this amount WPM utilized PLN 42.1 million in current income tax in 2016-2019. The above amounts do not include potential interest estimated by WPM as of the date of this current report at PLN 1.3 million. The Company, together with its advisors, is currently analyzing the appropriate recognition of the Tax Control Findings in the Group's consolidated financial statements and the timing thereof.
WPM does not agree with the outcome of the tax financial audit. It’s in possession of individual tax interpretations of the Minister of Finance and tax opinions prepared by reputable tax advisory companies confirming its position. WPM is not going to submitted tax returns adjustments, and in the event it receives an unfavorable tax decision following these Tax Control Findings it will pursue appropriate legal action in defense of its position.
Legal basis: Article 17 1 of European Parliament and Council Regulation No 596/2014 of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directive 2003/124 / EC, 2003/125 /EC and 2004/72 / EC
Signatures of the individuals representing the Company:
Jacek Świderski – President of the Management Board/Chief Executive Officer
Elżbieta Bujniewicz – Belka – Member of the Management Board/Chief Financial Officer