Head of the National Revenue Administration can challenge the authenticity of transactions conducted by taxpayers, including those that took place before July 15, 2016, i.e., before the implementation of the so-called anti-tax avoidance clause. This was confirmed in a ruling by the Supreme Administrative Court on August 22, 2023. This verdict means that the tax office will be able to investigate actions taken by taxpayers years ago and if it is determined that their main purpose was to gain tax benefits, it can deprive the entrepreneur of such benefits, determine the tax consequences on its own, and impose additional tax obligations.
Permission for Retroactive Application of the Clause
The ruling handed down by the Supreme Administrative Court on August 22, 2023, could however have a significant impact on taxpayers who conducted transactions before July 15, 2016. In one case, a Polish company that entered into a sale and leaseback agreement with an affiliated company in early 2009, the Supreme Administrative Court ruled that while tax authorities wanting to apply the clause must demonstrate that the transaction’s primary purpose was for tax benefit, they can also apply it to actions undertaken by a taxpayer before July 15, 2016, if their tax effects occurred after that date.
Entrepreneurs Cannot be Penalized for Actions that Were Not Punishable at the Time
Given one of the fundamental principles of non-retroactivity of law (prohibition of granting regulatory effects retroactively), the Supreme Administrative Court’s verdict is considered controversial. The rule, “lex retro non agit,” states that the law doesn’t act retroactively and operates not only in criminal law but also in civil law. Although there is a concept of autonomy of individual branches of law, caution is necessary when it comes to retroactivity so as not to undermine and violate constitutionally guaranteed rights and freedoms.
Citizens’ Rights Cannot be Revoked
The Supreme Administrative Court seems to have overlooked the fundamental principle of protecting lawfully acquired rights from a legal security perspective. The necessity to respect this principle has been repeatedly recalled by the Constitutional Tribunal. This principle essentially prevents citizens from being deprived of their rights granted under the law unless fully compensated for their loss.
Impact of the Ruling Could Affect a Wide Range of Taxpayers
With the provision of the still valid Entrepreneurs Law dated March 6, 2018, an entrepreneur may undertake any activities, except those prohibited by law. It is hoped the Supreme Administrative Court’s ruling won’t establish a precedent in courts’ rulings and will be “corrected” soon. Otherwise, its consequences may affect a wide range of entrepreneurs and other taxpayers who undertook optimization activities for their business and wealth before July 15, 2016.
Author: Robert Nogacki, Legal Advisor, Managing Partner, Legal Office Skarbiec, specializing in legal, tax, and strategic advice for businesses.
