Poland: Tax proceedings initiated to suspend limitations period; identifying rental and lease revenue

Efforts by the tax authorities to suspend the running of the limitations period and concerning the tax treatment of rental and leasing revenue

Efforts by the tax authorities to suspend the running of the limitations period

A bench of seven judges of the Polish Supreme Administrative Court issued two “resolutions” concerning efforts by the tax authorities to suspend the running of the limitations period and concerning the tax treatment of rental and leasing revenue.

  • The first resolution (case file I FPS 1/21) addresses whether administrative courts are allowed to examine the actions of the tax authorities when penal tax proceedings have been initiated by the tax authorities when such proceedings have a sole purpose of suspending the statute of limitations. The Supreme Administrative Court confirmed that in determining whether the effect of suspending the limitation period for a tax liability is to be allowed, an administrative court must verify the initiation of fiscal penal proceedings is not artificial and does not serve only to suspend the limitations period. In other words, a court that is considering a taxpayer’s appeals against the tax authorities’ actions in such instances must determine whether the initiation of fiscal penal proceedings is aimed primarily at suspending the limitations period for the tax liability, and if found, then the court must disallow this action and allow the limitations period to expire.

    KPMG observation
    The resolution of the Supreme Administrative Court concerning the limitations period is important to all taxpayers against whom tax proceedings have been brought when because of the approaching limitation period for the tax liability subject to the proceedings, the tax authorities also launched penal tax proceedings. If the court finds that the initiation of such penal tax proceedings was aimed solely at suspending the limitations period, then the court is to reject the action by the tax authorities and discontinue the tax proceedings against the taxpayer because of the expiration of the limitations period.

  • The second one (case file II FPS 1/21) relates to the method for identifying revenue from the letting (renting), leasing, and other contracts of similar type involving assets not used by taxpayers in their business activities to the correct source of revenue for individual (personal) income tax purposes. According to the court, it was up to the taxpayer to decide whether the rental or leased property was part of the personal property or the business assets (by entering this asset into the fixed asset register) and this is decisive for choosing the applicable principles of taxation of revenues on this account.

Read a May 2021 report [PDF 309 KB] prepared by the KPMG member firm in Poland


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