On 23 July 2024, in case no. K 13/20, the Polish Constitutional Tribunal ruled that imposing an obligation on tax advisors (acting as promoters / intermediaries or supporters / secondary intermediaries) to report tax arrangements against the obligation of professional secrecy (legal professional privilege - LPP) violates the constitutional principle of citizens’ trust in the state and the laws adopted by this state.
According to the reporting judge, “the challenged provisions do not comply with the principle of definiteness of the law provided for by the Polish Constitution and prevent tax advisors from acting within the limits of public interest and for its protection”.
The Constitutional Tribunal ruled that the Polish MDR provisions are unconstitutional to the extent that they impose an obligation on tax advisors covered by the LPP to report tax arrangements, taking into account parallel obligation imposed on users (relevant taxpayers) as well as to the extent that they do not sufficiently define legal grounds and procedures for releasing tax advisors from the LPP.
Moreover, the Tribunal stated that imposing an obligation on intermediaries to report certain tax arrangements which had been effectively implemented before the MDR regulations came into force (i.e. 1 January 2019) is also unconstitutional.
The judgment may have a significant impact both on the practice of applying MDR provisions as well as their wording. It is expected that the Polish MDR rules will be amended accordingly in the near future.
Official written justification of the Tribunal’s judgement has not been published yet. In fact, it’s exact impact on the reporting obligations of tax advisors is not entirely clear (i.e. whether intermediaries covered by LPP will be exempt from all reporting obligations or only in specific circumstances). It is important to note that the Tribunal’s judgment applies directly only to the Polish certified tax advisors’ group (being the official filing party in the proceedings). However, it is expected that its indirect impact may be broader (i.e., the expected changes in law are likely to cover broader scope of intermediaries).
Lastly, the Tribunal rejected the complaint in the remaining scope, which means that the Polish MDR rules (also covering areas / issues beyond DAC-6) have not been effectively challenged as a whole.
More information on the judgment (in Polish) can be found on the Constitutional Tribunal’s websites.
