For many business owners, an individual tax ruling is a kind of ‘insurance policy’. It allows them to confirm the specific tax consequences of the facts or future events set out in the application. Unfortunately, in recent years, the specialist tax authority responsible for examining applications (the Director of the National Tax Information Service) has increasingly refused to initiate interpretation proceedings, arguing that the case in question would require an “examination of the facts or future events”, which is not permitted. The September ruling by the Supreme Administrative Court puts a stop to this practice.
What was the case about?
The dispute concerned settlements between two companies following the sale of an organised part of an enterprise (OPE) engaged in aviation training. The parties had not addressed the issue of advance payments previously collected from trainees in the main contract. To remedy this omission, they entered into a supplementary agreement under which the seller transferred the funds from the advance payments to the buyer. The companies approached the National Tax Information Service (KIS) to enquire about the tax implications of this agreement: whether it would constitute a tax-deductible expense for the transferor and revenue for the recipient.
However, the Director of the National Tax Information Service (KIS) refused to issue an interpretation. He considered that, in order to respond, he would have to assess the validity and effectiveness of the agreement under civil law and verify the facts, which exceeds his powers. The authority also stated that the request sought an assessment of the facts rather than the provisions of the law.
The Supreme Administrative Court’s position: The tax authorities are bound by the application, not by conjecture
The Supreme Administrative Court, upholding the first-instance court’s ruling in favour of the applicants, firmly rejected the tax authority’s arguments. The Court reiterated a fundamental principle of interpretative procedure: the tax authority is bound by the description of the facts presented in the application.
In the grounds for its judgment, the Court stated that:
- tax authorities are not entitled to modify, reconstruct or make assumptions regarding the facts presented by the taxpayer.
- the interpretation procedure serves to assess the taxpayer’s position in the light of tax law, not to conduct evidentiary proceedings.
- if the applicant has described the situation exhaustively and asked questions regarding specific provisions of tax law, the Director of the National Tax Information Service is obliged to issue an interpretation, rather than hiding behind the need to examine contracts.
Why is this ruling so important for businesses?
This ruling has practical implications and is extremely beneficial for businesses interested in applying for an individual tax ruling. It strengthens the taxpayer’s position in relation to the tax authorities:
- Greater certainty in complex transactions
In its judgment, the Supreme Administrative Court clearly stated that even if the situation is complex and based on specific civil law contracts, the tax authorities must answer questions regarding the tax consequences of these events.
- No more ‘evasions’ by the tax authorities
This judgment deprives officials of the argument regarding the “necessity of examining the facts”. If a taxpayer states in their application that they have entered into an agreement with specific terms, the authority should accept this as a given. It cannot refuse to provide an interpretation on the grounds that it would need to verify whether the agreement was validly concluded.
- Legal protection
Obtaining an interpretation provides so-called protective value. Thanks to this ruling, it will be easier to compel the authority to issue a substantive decision that protects the management and the company from the negative consequences of a tax audit in the future.
Summary
The Supreme Administrative Court’s ruling of 3 September 2025 sends a clear signal: the role of the interpreting authority is to interpret the law, not to question the facts described by the business. For businesses, this means a better chance of obtaining an interpretation that effectively mitigates tax risk.
Frequently asked questions
Can the Director of National Tax Information refuse to issue an interpretation, claiming that it requires examination of the factual state?
No, according to the groundbreaking judgment of the Supreme Administrative Court (NSA), the tax authority cannot refuse to issue an interpretation by invoking the necessity to examine the factual state. The tax authority is bound by the description of the factual state presented in the application by the taxpayer and cannot modify or challenge it. Its role is to assess the taxpayer’s position in light of tax law, not to conduct evidentiary proceedings.
How does the NSA judgment affect the certainty of entrepreneurs in complicated transactions?
This ruling strengthens the taxpayer’s position, ensuring greater certainty regarding tax consequences even in the case of specific civil law contracts. The authority must answer questions concerning specific provisions if the application is comprehensively described. This makes it easier to obtain a substantive ruling that protects the company against negative consequences of future tax inspections.
Can the tax authority question the validity of contracts described in the interpretation application?
No, the tax authority is not authorized to question the validity or effectiveness of concluded agreements if they have been comprehensively described in the application. The tax authority must accept the described factual state as given and focus solely on assessing the tax consequences. Refusing to issue an interpretation due to the need to verify the validity of a contract is contrary to the principles of the interpretation procedure.
What benefits does obtaining an individual interpretation bring after this judgment?
Obtaining an interpretation provides the so-called protective value, which means that the taxpayer can rely on the issued interpretation in future settlements. The NSA judgment makes it easier to compel the authority to issue a substantive ruling, which protects the management and the company against tax risk. This provides certainty that complicated transactions will be assessed in accordance with the law, and not based on the tax authority’s assumptions.
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He specializes in tax law, focusing on the liability of taxpayers, payers and collectors, as well as issues related to income taxes and fiscal criminal law. Her master's thesis, defended at the Department of Financial Law at the University of Warsaw, dealt with tax and criminal liability for tax fraud in income taxes.
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