Position of the National Tax Information Service
To date, the Director of the National Tax Information Service has maintained the position that the provisions concerning the reporting of tax arrangements (MDR) are not provisions of substantive law and, as such, cannot be subject to interpretation by the National Tax Information Service. The authority justified this position on the grounds that the provisions governing obligations relating to the reporting of tax schemes do not, after all, concern issues related to the creation of a tax liability or the determination of its amount, which makes them procedural provisions. On this basis, proceedings concerning applications for the issuance of interpretations were concluded with a decision refusing to issue them.
The position of provincial administrative courts and the Supreme Administrative Court
By early 2020, the first rulings from provincial administrative courts had already begun to appear, which were favourable to applicants and confirmed their right to submit applications for interpretations regarding obligations related to the reporting of tax schemes, thereby recognising the legal provisions governing these obligations as substantive law. However, this case law was not uniform. A landmark ruling in the matter was the judgment of the Supreme Administrative Court of 28 January 2021, ref. no. I FSK 1703/20. The Court, siding with the applicants, highlighted two significant issues relating to the provisions on tax schemes:
- firstly – the informative nature of the provisions could not determine that they were procedural provisions. In the Court’s view, the obligations arising from these provisions, being of an instrumental nature, serve the proper fulfilment of the tax liability, and obligations of this type are expressed through substantive law provisions;
- secondly – in interpreting these provisions systematically, the Court emphasised that the provisions concerning the reporting of tax schemes are set out in Section III of the Tax Ordinance (Chapter 11a), which is devoted to tax obligations. The Court noted that the section in question relates to general issues of substantive tax law, particularly those concerning the creation, regulation and expiry of tax liabilities, as well as tax liability for such obligations.
In addition to the above arguments, the Court also pointed to the absence of an explicit prohibition on issuing interpretations regarding these provisions and the fact that these provisions are subject to criminal and fiscal sanctions.
The Director of the National Tax Information Service remains silent on interpretations concerning the reporting of tax schemes
Although a year and a half has passed since the Supreme Administrative Court issued the above judgment, the Director of the National Tax Information Service has still not issued an individual interpretation regarding the provisions on the reporting of tax schemes. As noted by Dziennik Gazeta Prawna in the article “Tax schemes to be heard again” of 1 August 2022, “in five cases concerning MDRs concluded with judgments of the Court of Cassation, the Director of the National Tax Information Office issued requests to taxpayers to clarify the facts of the case. Three of these cases resulted in a decision to leave the application for an interpretation unexamined, one of which has already been appealed to the provincial administrative court. In the remaining two cases, although the taxpayers provided additional facts, the tax authorities are nevertheless preparing decisions to leave the applications unexamined”. It follows from the above, therefore, that despite the favourable case law of the administrative courts and the Supreme Administrative Court, the National Tax Information Service continues, inexplicably, to resist ruling on the merits of taxpayers’ applications concerning provisions relating to the reporting of tax schemes. This approach can only be viewed negatively, as interpretations by the Director of the National Tax Information Service could provide significant support to applicants in applying the already highly complex regulations on tax schemes.
Author: Mateusz Kowalski, trainee legal adviser.
Dziennik Gazeta Prawna, 1 August 2022, “Tax schemes to be back on the agenda” https://podatki.gazetaprawna.pl/artykuly/8502403,schematy-podatkowe-mdr-sad-administracyjny.html
Frequently asked questions
Can I obtain an individual interpretation regarding tax scheme reporting obligations?
Yes, according to a 2021 ruling of the Supreme Administrative Court, provisions concerning tax scheme reporting should be treated as substantive law, not procedural law. This means they are subject to interpretation, which is confirmed by administrative courts, although the Director of the National Tax Information still often refuses to issue them.
Why does the tax authority refuse to issue interpretations concerning MDR?
The tax authority considers provisions on scheme reporting as procedural, not substantive, which in its view excludes the possibility of issuing an individual interpretation. Despite favorable court jurisprudence, the Director of the National Tax Information continues to leave such applications without consideration or refuses to issue them.
On what grounds did the court recognize that interpretations regarding MDR are possible?
The court indicated that provisions on schemes have an instrumental character and serve the proper performance of tax obligations, which qualifies them as substantive law regulations. Additionally, it was emphasized that these provisions are located in the section concerning tax obligations and that there is no express prohibition on issuing interpretations in this scope.
What are the consequences of the lack of substantive resolution of applications for MDR interpretations?
The lack of substantive interpretations makes it difficult for taxpayers to apply complicated provisions on tax schemes. Instead of resolving cases, the tax authority often leaves applications without consideration, which is assessed negatively as a lack of support for taxpayers in complying with the law.
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I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.
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