The law firm HWW Hewelt Wojnowski Lindner i Wspólnicy successfully represented a client in a dispute with the Director of the Tax Administration Chamber in Warsaw, which ended with the revocation of a decision setting a liability in tax on civil law transactions (PCC) in the amount of more than PLN 1,149,754 at a sanctioning rate of 20%. In a judgment dated July 15, 2025 (ref. III SA/Wa 420/25), the Provincial Administrative Court of Warsaw agreed with our client on all key issues, ordering the tax authority to reconsider the case.
Genesis of the case – allegations of the tax authorities
The case concerned tax proceedings initiated by the Head of the Mazovian Customs and Fiscal Office in Warsaw regarding undeclared property and civil law activities for 2020. In the course of the audit, the tax authorities questioned the legal nature of the agreements concluded by the client, qualifying them as two irregular deposit agreements – concluded between spouses (a written agreement concerning the amount of PLN 4,800,000 and an oral agreement concerning PLN 348,770), despite the fact that the client consistently indicated that he had concluded agreements for the safekeeping of funds;
On this basis, the tax authorities applied a sanctioned PCC tax rate of 20%, based on Article 7(5)(1) of the PCC Law. The UCS Head’s decision of July 17, 2024 was upheld by the IAS Director in a decision dated December 13, 2024.
Legal Argumentation of HWW Law Firm
On behalf of the client, HWW Law Firm formulated a complaint to the WSA in Warsaw, raising allegations of both substance and gross violations of tax procedure.
With regard to the loan agreements, the law firm has shown that the prerequisites for applying the 20% sanctioning rate of Article 7(5)(1) of the PPC were not cumulatively met:
- The client paid the outstanding PCC tax with interest 5 days before the initiation of the customs and tax inspection (January 21, 2023), so the tax due was already paid before the initiation of the procedures mentioned in the provision;
- The provision of Article 7(5)(1) of the PCC does not provide a condition for effective filing of the declaration – it only requires that the tax has not been paid. The position of the authorities conditioning the effectiveness of payment on the prior filing of the PCC-3 declaration constituted the application of extra-statutory prerequisites.
Regarding the qualification of storage contracts, the law firm raised a number of violations of the rules of evidence, the most important of which were:
- The tax authorities accepted in advance the thesis of an irregular deposit and selectively gathered evidence under this thesis, ignoring the client’s consistent statements and the testimony of his spouse about giving instructions as to the destination of the funds;
- The authority misinterpreted numerous bank transactions as evidence of free disposal of funds, without considering the possibility of issuing a general instruction as to the allocation of a certain amount;
Judgment of the WSA – the ruling and its implications for the client
In a judgment dated July 15, 2025. The Provincial Administrative Court of Warsaw overturned the appealed decision in its entirety, agreeing with the client on the following points:
- No basis for applying the 20% rate on loan agreements: the court clearly stated that since the client had paid the tax due before the initiation of the customs and tax inspection, the second of the cumulative prerequisites of Article 7(5)(1) of the Customs Code was not met. This alone is sufficient grounds for revoking the contested decision.
- Flawed evidentiary proceedings with regard to storage contracts: The court explicitly pointed out that the authorities assumed in advance the existence of an irregular deposit and collected evidence under a predetermined thesis, ignoring facts favorable to the client.
Significance of the judgment – guidelines for tax authorities
The ruling of the WSA in Warsaw is significant not only for the present case, but also sets the jurisprudential direction for future cases of this type. The court emphasized that:
- The sanctioning PCC rate of 20% under Article 7(5)(1) of the PCC requires the combined fulfillment of both prerequisites: the invocation of a civil action in the course of tax procedures and the failure to pay the tax due. A payment made even late, but before the initiation of control, excludes the application of the sanction rate.
- In disputes over the qualification of escrow agreements and irregular deposits, tax authorities are required to fully and impartially gather evidence, taking into account both evidence in favor of and against the taxpayer.
- Tax authorities cannot form a conclusion about the free disposal of funds solely on the basis of the number of bank transactions, without determining whether these transactions were carried out on the basis of the depositor’s instructions for safekeeping.
The law firm’s team responsible for handling the case
The following were responsible for handling the case on the law firm’s side:
- Mikolaj Hewelt – attorney, tax advisor, restructuring advisor, partner,
- Matthew Kowalski – legal counselor, tax advisor,
- Piotr Magda – legal counsel.
Do you need help with this topic? Write to us!
If you are engaged in a dispute with a tax authority in the field of tax on civil law transactions or other tax proceedings, we invite you to contact our law firm. Our tax lawyers provide assistance at every stage of the proceedings – from customs and tax inspection to administrative court proceedings.
Frequently asked questions
When must the PCC tax be paid to avoid the 20% penalty rate?
The tax must be paid before the commencement of customs and tax control. The court ruled that even if payment was made with delay, making it before the start of control excludes the possibility of imposing a higher, penalty tax rate.
Does failure to file the PCC-3 declaration before tax payment result in a 20% penalty?
No, tax authorities cannot make the effectiveness of payment conditional on prior filing of the declaration. The regulations only require that the tax not be paid, and the requirement to file a declaration constitutes an extra-statutory burden on the taxpayer.
How should tax authorities collect evidence in cases concerning custody agreements?
The authority is obligated to impartially and fully gather evidentiary material, taking into account facts both favorable and unfavorable to the taxpayer. It cannot assume from the outset the existence of improper deposit and ignore the client’s claims.
Is the mere number of bank transactions sufficient to determine that funds were freely disposed of?
No, authorities cannot formulate a conclusion about free disposal of funds based solely on the number of transactions. It must be established whether these transactions were executed based on specific instructions from the person depositing the funds for custody.
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HWW Hewelt Wojnowski Lindner i Wspólnicy is a Warsaw law firm advising businesses and public entities. We combine experience in commercial law, energy, tax, data protection and litigation to deliver solutions tailored to our clients’ business realities.
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