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Evaluating the new instrument of securing tax safety in Poland

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Agnieszka Wnuk of MDDP considers the utility and effectiveness of the ‘securing opinion’, a specific protective tax ruling available in Poland.

The Polish Head of the Country Fiscal Administration (CFA) has recently decided several cases instituted by taxpayers motions through the so-called ‘securing opinion’. 

The securing opinion is a specific tax ruling which protects against the application of the general anti-avoidance rule (GAAR) implemented to the Polish tax system in 2016. The taxpayer that plans, conducts or has already implemented certain business arrangements may apply to the Head of CFA to obtain confirmation that the arrangement should not be treated as tax avoidance and thus, GAAR will not be applicable to determine its tax consequences. The Head of CFA may either issue a securing opinion, or refuse to issue such opinion if he finds the operation to account to tax avoidance. 



Taking into account that (i) GAAR is quite new institution in Polish tax law and (ii) the approach of tax administration has been restrictive (including trials to apply anti-abuse rules retroactively), some taxpayers ask for securing opinions even in cases where the applicability of GAAR is unlikely. For example, this is seen with regard to  the decrease of amortisation rates by the entity conducting business activity in special economic zones. There are also several cases in which business justification of the transaction determines certain tax consequences, such as where there is tax neutrality in corporate income tax. however the cases presented by the taxpayers seem to be quite clearly justified. Therefore, securing opinions become a more and more popular tax safety instrument, a kind of tax ruling and not necessarily an institution to be referred to, only if, the risk of tax avoidance charge is material.



Moreover, the level of analysis of economic background by the administration seems to become more advanced, which is important taking into account that the prerequisites of application of GAAR are difficult and ambiguous:

  • The taxpayer obtains tax benefits which in a given situation is contrary to the subject or purpose of a tax law act or its provision;

  • Obtaining this tax benefit is main or one of main purposes of the operation; and

  • The way of action is artificial.


From the above perspective, it should be noted that the position taken by the Head of CFA in the recent cases may be considered to be controversial. 




In particular, on May 28 2020, the Head of CFA refused to issue a securing opinion (Case No. DKP3.8011.8.2019) to the taxpayer that incurred a capital loss on the sale of shares of the foreign company in 2017. Based on the description of the case, the loss resulted from business circumstances and the sale of shares was a part of a reorganisation of the group, designed by the parent company of the Polish company selling the shares and the acquirer. 



In its motion, the taxpayer presented several economic reasons for the reorganisation, including inter alia:

  • Clear split of functions between the group companies;

  • Decrease of the level of economic risk of the Polish taxpayer due to the transfer of guarantees connected with the business of the sold company to the acquirer of shares;

  • Increased potential for external financing for new projects; and

  • Obtaining financial resources for the settlement of current liabilities. 


The Head of CFA rejected the majority of arguments of the taxpayer and claimed that the transaction was actually tax driven. Many aspects of group reorganisation, including possible tax optimisation in the country of residence of the sold company, were subject to the detailed analysis of tax administration. As a result, the Head of CFA came to the conclusion that the reorganisation could have been conducted differently, e.g. by the sale of enterprise and/or the division (demerger) of the Polish company. The sale of the shares to a related entity should be deemed to be an artificial way of group reorganisation. 




Although according to the relevant corporate income tax (CIT) provisions, the taxpayer is allowed to recognise an expense on the acquisition of shares upon its sale even if it generates tax loss. This should not – in the opinion of the Head of CFA – apply to the intra-group reorganisation, i.e. when the company whose shares are sold remains a group company. In such a case, the tax benefit (the loss) should be treated as contrary to tax law. 



Furthemore, the Head of CFA noted that the capital loss in 2017 could be set off with operational income of the company (due to the fact that the division of sources of income, including capital gain / loss source have been implemented to Polish law starting from 2018) which could be perceived as tax optimisation. Therefore, the tax authority tries to apply the division of sources of income retroactively, again without any legal basis. Hopefully, the taxpayer will appeal against this decision to the administrative court. 



Another recent decision which was unfavourable for the taxpayer was issued on June 2 2020 and concerned a reverse merger. 



The conclusion is that it is worth considering taking advantage of the tax safety instrument, however one should take into account that the practice of Polish tax administration regarding the application of anti-avoidance regulations, at least in some cases, consists in its extensive interpretation of past transactions. 



Agnieszka Wnuk

E: agnieszka.wnuk@mddp.pl



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