Polish Court Limits Tax Authority's Use of Anti-Abuse Clauses

A Polish court has set a significant precedent, restricting the tax authority's broad application of anti-abuse clauses. The Provincial Administrative Court (WSA) in Wrocław ruled that tax authorities cannot refuse to issue an individual tax interpretation based on the General Anti-Abuse Rule (GAAR) without proving a specific tax benefit the taxpayer would achieve.

The court's decision, issued on February 26, 2026, in case I SA/Wr 638/25, overturned a decision by the Director of the National Revenue Administration (KIS) to deny an interpretation. The ruling, processed under an expedited procedure, highlights that mere connections between transaction parties are not enough to invoke GAAR, particularly when the described services would need to be sourced from external entities at comparable or higher prices.

Poland's GAAR, introduced in 2016, states that a transaction does not yield a tax benefit if achieving that benefit, contrary to the tax law's purpose, was a primary objective and the method was artificial. However, the law also mandates that tax authorities must refuse an interpretation if there's a reasonable suspicion that elements of the transaction constitute tax avoidance. Before issuing such a refusal, the authority must seek an opinion from the head of KAS.

In this specific case, a limited liability company, established in 2023 and operating in construction investment services, adopted the Estonian CIT tax system from May 1, 2024. Its three individual shareholders, each holding one-third of the shares, were also general partners in three separate limited partnerships involved in construction. These partnerships provided the company with a range of services, including construction supervision, transport, equipment rental, and cost estimation. The company argued that the terms with these related partnerships were market-based, the remuneration was independent of dividends, and it also procured identical services from unrelated entities, asserting the cooperation stemmed from genuine business needs, not tax optimization.