Newsy

Property tax after the general ruling – clarifying the rules or drawing new battle lines?

The general tax ruling issued by the Polish Minister of Finance and Economy on 27th of November 2025 addresses the issue of land, buildings and structures being deemed as “related to business activity”. It is one of the most significant documents in recent years in the area of property taxation. Its importance goes well beyond a purely technical explanation of statutory provisions. At its core, it touches on a fundamental and long-running dispute between taxpayers and tax authorities: where the line should be drawn between mere ownership of real estate and its use for business purposes.

The stated aim of the ruling was to bring order to a practice that, for years, had been marked by excessive automatism. In many cases, the mere fact that a property was owned by an entrepreneur was sufficient to justify the application of the highest property tax rates, regardless of whether the property actually served any business function. The new position adopted by the Polish financial administration significantly recalibrates this approach – although it does not eliminate all problems.

From “owner status” to a genuine link with business activity

For a long time, the prevailing assumption was that if a taxpayer carried on a business, his/her entire real estate portfolio should be regarded as connected with that business. This interpretation was convenient for the authorities, but increasingly challenged by Polish administrative courts and the Constitutional Tribunal. Case law consistently stressed that local taxes, as public-law burdens, must remain in a rational relationship to the actual manner in which property is used.

The general ruling clearly aligns with this line of reasoning. Rather than relying solely on the formal criterion of who-owns-the-property, it shifts the focus towards a functional analysis: whether, and in what way, a given property serves business activity, either at present or in a reasonably foreseeable future.

Three models for classifying real estate

To structure the assessment, the Minister of Finance and Economy identified three basic scenarios in which the link between real estate and business activity should be examined.

The first model covers entities whose activity is exclusively commercial in nature, such as capital companies and other legal persons established to carry out profit-aimed operations. In their case, a presumption applies that the real estate they own is related to business activity, even if it is not currently generating income or being actively used. What matters here is the overall business profile of the entity, rather than the temporary manner in which a specific property is used.

At the same time, the ruling qualifies this presumption by using the phrase “as a rule,” suggesting that exceptions may exist. However, the absence of any detailed guidance on such exceptions means that the boundaries of this presumption remain blurred and may give rise to further disputes.

The second model concerns taxpayers operating in a so-called dual role, combining business activity with other, non-commercial, pursuits, whether private or statutory. This group includes, in particular, individuals running sole proprietorships, as well as foundations, associations and other entities for which business activity is ancillary. In these cases, the ruling clearly rejects the automatic application of the highest tax rate to the entire property portfolio. Business property taxation is limited to those assets that are actually used for business or that remain in a clear, functional relationship with it.

The third model addresses situations in which a property is used in the business activity of another entity, for example under a lease or tenancy arrangement. The interpretation emphasizes that the mere fact that a property is used by an entrepreneur does not determine its tax classification. What is decisive is the status of the owner and whether, on their side, there is a business activity with which the property can be linked.

Actual use versus preparation for future activity

One of the more practical aspects of the ruling is the distinction it draws between the actual use of a property and its maintenance or preparation for future business purposes. According to the Minister, a connection with business activity may also exist where a property is not currently in use but remains at an investment, redevelopment or safeguarding stage, provided that the taxpayer is taking evident steps aimed at its future commercial use.

At the same time, the ruling clearly distances itself from the notion of purely hypothetical usefulness. The mere abstract possibility that a property could be used in a business, unsupported by any tangible actions on the part of the taxpayer, should not justify the application of the highest property tax rates.

Practical implications for taxpayers

From the taxpayers’ perspective, the general ruling strengthens arguments against overly aggressive taxation, particularly for individuals and entities with a mixed activity profile. At the same time, it does not put an end to all disputes—especially where the analysis relies on open-ended concepts such as a “functional link” or “preparation for business activity.”

In practice, the document should prompt taxpayers to take a critical look at their real estate holdings, reassess how individual properties are used, and ensure that relevant circumstances are properly documented. For many entities, this may affect not only current tax settlements, but also the assessment of whether corrections to property tax liabilities for prior years are justified.

Zamknij

It may be worth seeking your own Polish tax ruling on invoices issued outside Poland’s e-Invoicing System (KSeF)

Even though penalties for issuing invoices outside Poland’s National e-Invoicing System (KSeF) have been deferred until 1 January 2027, the real headache may come sooner.

In 2026, plenty of “traditional” invoices (e.g., PDFs sent by email) will likely still be in circulation in Poland – some due to lack of awareness, some because of a misinterpretation of the rules, and some simply out of habit. For buyers, that’s not just an operational nuisance; it can also create Polish tax exposure.

In practice, a buyer may be left without clear answers to two basic questions:

• Why wasn’t the invoice submitted to Poland’s KSeF?

• Does it still allow the buyer to deduct Polish VAT and/or treat the expense as tax-deductible for Polish CIT/PIT purposes?

The uncertainty is compounded by the monthly PLN 10,000 gross threshold for invoices issued outside KSeF. A seller loses the right to invoice outside KSeF starting with the invoice that pushes them over the limit. From a buyer’s perspective, it may be impossible to tell whether the invoice they received should already have been issued via KSeF or whether it still falls within the “allowed” threshold. Cross-border transactions add another layer of complexity—especially when the key issue is whether a foreign counterparty has a “fixed establishment” in Poland. That assessment is often not straightforward, and it’s easy to get wrong.

On the VAT side, some comfort comes from individual rulings issued by the Head of Poland’s National Tax Information (DKIS) (e.g. case 0114-KDIP1-3.4012.838.2024.1.MPA and 0114-KDIP1-3.4012.507.2025.1.JG). These indicate that VAT deduction may still be possible where the invoice reflects a genuine transaction connected with taxable activity – even if, in theory, it should have gone through KSeF.

That said, tax authority practice can be inconsistent. So where significant amounts are involved, purchases are recurring, or counterparties are “hard cases”, it may be sensible to apply for your own individual ruling to secure protection tailored to your specific activity in Poland.

The biggest open question remains Polish tax-deductible costs (CIT/PIT) – there is still no clear guidance from either DKIS or the Ministry of Finance. All the more reason to consider an individual ruling in your specific case.

Zamknij

When can contractual penalties for delays be tax-deductible in Polish Corporate Income Tax (CIT)?

The Court held that, in certain circumstances, contractual penalties for delays may qualify as tax-deductible in Polish CIT. The case concerned a property developer unable to hand over apartments to clients in time, due to delays caused by the general contractor. The clients charged contractual penalties, which the developer has paid and qualified as tax-deductible costs. The Polish tax authority (KIS) argued that any penalty for non-performance or improper performance is excluded from tax costs under Art. 16(1)(22) of the Polish CIT Act. The Polish Supreme Administrative Court (NSA) disagreed.

The Court held that, in certain circumstances, contractual penalties for delays may qualify as tax-deductible in Polish CIT.
The case concerned a property developer unable to hand over apartments to clients in time, due to delays caused by the general contractor. The clients charged contractual penalties, which the developer has paid and qualified as tax-deductible costs. The Polish tax authority (KIS) argued that any penalty for non-performance or improper performance is excluded from tax costs under Art. 16(1)(22) of the Polish CIT Act. The Polish Supreme Administrative Court (NSA) disagreed.

The Court stressed that this provision is an exception to the rule and thus must be interpreted precisely. According to the judges, it only covers penalties related to defective performance and to delays for which the taxpayer is at fault (for example, failure to remedy defects within the agreed timeframe). Crucially, the Court distinguished between:
• a delay caused by circumstances within the taxpayer’s control (where the taxpayer can be blamed), and
• a delay resulting from circumstances beyond the taxpayer’s control (where the taxpayer is not at fault).

Only the first category falls within the statutory exclusion. A contractual penalty for a delay not attributable to the taxpayer’s fault may therefore be recognized as a tax-deductible cost – provided it still meets the general test required by Art. 15(1) of the Polish CIT Act, i.e. the cost is linked to earning, preserving or securing taxable income.

What does this mean in practice for businesses in Poland?
• carefully document the reasons for any delay,
• be clear whether the delay was within or outside your control,
• show how paying the penalty helps protect or secure your revenue (e.g. good relationship with a key client).

This is another taxpayer-friendly ruling under Polish law – and a good reminder to revisit your contracts and penalty clauses before the tax office does.

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TP true-ups under VAT? CJEU on 4 Sep 2025

CJEU: Is a TP profit true-up a service? Key takeaways from 4 Sep 2025 (C-726/23, Arcomet) The Court held that intra-group payments determined under TNMM (e.g., skimming part of a subsidiary’s operating margin above a threshold) can be deemed as consideration for services and thus fall within VAT—if there is a legal relationship and a direct link between the supply and the consideration.

In Arcomet, the slice of operating margin above 2.74% was treated as remuneration for actual head-office services.

Why this matters For years, year-end TP adjustments were often seen as “purely accounting” and VAT-neutral. Arcomet ends that automatic presumption: if the true-up reflects concrete activities (management, procurement, finance, engineering), it’s a taxable supply. Not every adjustment triggers VAT—facts and contracts decide.

What the Court actually said

• Qualification. A TNMM-based payment may be a service fee where the legal-relationship/direct-link test is met.

• Evidence. Authorities may request documents beyond the invoice to prove the service existed and was used—subject to proportionality.

• Input VAT. No refusal merely because an expense seems “unnecessary”; what matters is the use for taxed output transactions (see also Weatherford Atlas Gip, C-527/23). Wider context

• Högkullen (C-808/23, 3 Jul 2025): valuing intra-group services by reference to open market value (Arts. 72/80 VAT Directive); don’t assume a bundled single service without analysis.

• Tauritus (C-782/23, 15 May 2025): post-transaction price adjustments may affect customs value—watch the TP–VAT–customs interplay.

What to do—practical and simple

1. Label the adjustment. Is it a mere accounting equalisation (no services) or top-up for identified activities? If the latter, VAT rules apply.

2. Invoice, not a credit/debit note (if it’s a service). Determine place of supply and account for reverse charge/import of services where relevant.

3. Make contracts and TP policy explicit. Define roles, risks, scope of support and TNMM mechanics (ranges, direction of flows) to evidence the supply ↔ consideration link.

4. Document the service (“substance”). Show what was done (scope, deliverables), by whom (teams/skills), when (timeline/time-sheets), how it was used (deployments, processes), and the business effect (KPIs).

5. Unbundle. Where feasible, separate management/IT/HR, etc., and benchmark components—aligned with Högkullen.

6. Sync VAT–CIT–customs. Ensure the TP story matches invoicing and assess any customs-value impact (Tauritus).

Poland angle

With the Ministry of Finance and KAS launching new units in Aug 2025 to step up scrutiny, expect closer reviews of intra-group settlements—including the VAT treatment of TP adjustments.

Bottom line

Arcomet doesn’t make every TP true-up taxable. It sets a clear test: where the adjustment genuinely remunerates services, VAT is in play. Strong contracts, proper invoicing, and solid evidence of substance are your best defence.

Zamknij

When is land really „undeveloped” for VAT?

Is a plot of land with a building scheduled for demolition considered ‘undeveloped land’? Under the Polish VAT Act, the sale of undeveloped land is exempt from VAT as long as it does not have the status of ‘building land’. Otherwise, such sale might be subject to 23% VAT. In contrast, the VAT on a sale of a developed plot of land is determined based on the history of the buildings/structures. In general: older buildings = VAT-exemption. A recurring question, however, is how to classify land where there are buildings or structures in poor condition that are intended to be demolished. Can such a property still be treated as “developed” for VAT purposes? The question might seem irrelevant, yet there is another layer to it. According to Polish tax law, if the sale of immovable property (plot, building) is not subject to VAT at all or is VAT-exempt, the buyer must pay a 2% tax on civil law transactions (Podatek od czynnosci cywilnoprawnych, also known as PCC). Thus, many B2B-sales aim at having the transaction taxed with VAT (deductible) to avoid PCC (non-deductible).

Is a plot of land with a building scheduled for demolition considered ‘undeveloped land’?

Under the Polish VAT Act, the sale of undeveloped land is exempt from VAT as long as it does not have the status of ‘building land’. Otherwise, such sale might be subject to 23% VAT. In contrast, the VAT on a sale of a developed plot of land is determined based on the history of the buildings/structures. In general: older buildings = VAT-exemption.
A recurring question, however, is how to classify land where there are buildings or structures in poor condition that are intended to be demolished. Can such a property still be treated as “developed” for VAT purposes?
The question might seem irrelevant, yet there is another layer to it. According to Polish tax law, if the sale of immovable property (plot, building) is not subject to VAT at all or is VAT-exempt, the buyer must pay a 2% tax on civil law transactions (Podatek od czynnosci cywilnoprawnych, also known as PCC). Thus, many B2B-sales aim at having the transaction taxed with VAT (deductible) to avoid PCC (non-deductible).

Polish court rulings
The Supreme Administrative Court (NSA) has consistently held that holding a demolition permit is not enough to treat the land as ‘undeveloped’. Until demolition work has actually begun, the property remains ‘developed’. This was confirmed, for example, in a judgment of 19 June 2015 (case no. I FSK 818/14). Therefore, only the actual commencement of demolition can change the VAT treatment.

Tax authority practice
The Polish tax authorities share this view. In an individual ruling of 6 October 2021 (ref. 0111-KDIB3-3.4012.405.2021.2.JSU), they stressed that even buildings that are unfit for use and destined solely for demolition still make the land ‘developed’ – until they are removed. A later ruling from 22 July 2024 (ref. 0111-KDIB3-3.4012.153.2024.3.PJ) confirmed that merely obtaining project documentation and demolition permits does not change the status of the land if no demolition work has started before the sale.

EU perspective
The European court (CJEU), in its fundamental judgment of 19 November 2009 (C-461/08, Don Bosco Onroerend Goed BV), added an important nuance. It held that if the seller undertakes demolition and works start before the transaction, the said buildings may be disregarded for VAT and the supply must be treated as the sale of undeveloped land.

Key takeaways
Demolition started before the sale → sale treated as the sale of ‘undeveloped’ land.
Only a demolition permit, no works prior to the sale → still considered ‘developed’ land.

In short: under Polish VAT law, what matters is the timing of the demolition work. Neither the poor technical condition of the buildings nor the plans for their demolish are decisive. If you wish to avoid paying PCC on a B2B-purchase, sometimes the best solution might be to pay (and later deduct) VAT on the purchase of ‘undeveloped’ land.

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Poland’s e-Invoicing Revolution – KSeF 2026

KSeF 2.0 is here – the President of Poland has signed the bill! On August 27, 2025, the President approved amendments to the VAT Act introducing the new version of the National e-Invoicing System (KSeF). This marks one of the most significant tax reforms in recent years – transforming how every Polish company or entrepreneur issues and processes invoices.

KSeF 2.0 is here – the President of Poland has signed the bill!
On August 27, 2025, the President approved amendments to the VAT Act introducing the new version of the National e-Invoicing System (KSeF).
This marks one of the most significant tax reforms in recent years – transforming how every Polish company or entrepreneur issues and processes invoices.

KSeF rollout schedule
• February 1, 2026 – mandatory for entities with 2025 sales above PLN 200M (incl. VAT)
• April 1, 2026 – mandatory for other businesses
• January 1, 2027 – exception for micro-enterprises (monthly invoiced sales ≤ PLN 10K)

What’s new in KSeF 2.0
• “offline24” mode – a business may issue invoices outside the system, as long as they are uploaded to KSeF till the end of the next business day.
• Invoice attachments – the option to attach documents directly to invoices (hint: requires prior request).
• KSeF certificates – available from November 1, 2025, essential for authentication and offline mode.
• VAT corrections – the timing of submission to KSeF will at most times determine when VAT adjustments are to be made.

Who is exempt?
Foreign businesses registered for Polish VAT without a “fixed establishment” in Poland are not required to use KSeF.
Still, they may opt in voluntarily – for example, if requested by key Polish clients.

What does this mean for Polish business?
• Invoicing will become fully digital and centrally recorded, similar to Italy (as from 2020)
• KSeF 2.0 is more than just another compliance requirement – it’s a fundamental shift in how invoicing works across Poland.

Zamknij

Advance invoices issued too early – a major change in the approach of the Polish Tax Administration

Advance invoices issued too early – a key change in Polish VAT practice On 23 July 2025, the Polish tax administration has published (ref. DOP7.8101.28.2025.FMLM) a revision to a ruling issued in 2017 which reshapes the treatment of prematurely issued advance invoices. Previous approach Article 106i(7) of the Polish VAT Act allows most invoices (with limited exceptions) to be issued up to 60 days before supply, performance of a service or receipt of an advance payment. Prior to 2022, the limit was 30 days, whereas before 2014 such an option did not exist at all. Those changes were welcomed by many firms, as some B2B clients (particularly larger companies in the construction sector) requested advance invoices even weeks before contractual payment dates. In other words: for some firms it was/is a “must have”.

Advance invoices issued too early – a key change in Polish VAT practice
On 23 July 2025, the Polish tax administration has published (ref. DOP7.8101.28.2025.FMLM) a revision to a ruling issued in 2017 which reshapes the treatment of prematurely issued advance invoices.

Previous approach
Article 106i(7) of the Polish VAT Act allows most invoices (with limited exceptions) to be issued up to 60 days before supply, performance of a service or receipt of an advance payment. Prior to 2022, the limit was 30 days, whereas before 2014 such an option did not exist at all. Those changes were welcomed by many firms, as some B2B clients (particularly larger companies in the construction sector) requested advance invoices even weeks before contractual payment dates. In other words: for some firms it was/is a “must have”.

Since 2014, if a taxpayer did issue an advance invoice earlier, and the payment was only received later (than 30/60 days), the Polish tax authorities treated such a document as if it was a “fictitious” invoice and required VAT to be paid under Article 108 of the VAT Act.

In practice, this often resulted in VAT being paid twice – once on the premature advance invoice and again upon actual receipt of the advance payment. Many businesses challenged this before the Polish administrative courts and frequently prevailed, yet the tax administration maintained its position for years. The only secure approach was to issue correction invoices immediately after the deadline had passed, allowing the correction to be reported within the same month (thereby offsetting the VAT to zero). What has changed?

The July 2025 interpretation clarifies that:
• an invoice issued too early is not automatically a “fictitious” invoice triggering VAT,
• if the invoiced advance payment is ultimately received, the VAT liability arises under the general rules, i.e. at the time of payment,
• the taxpayer may, but is not obliged to issue a correction “to zero”, just like many firms had done to avoid troubles,
• purchasers may deduct input VAT from such premature invoices, yet only after they settle the payments (i.e. VAT arises on the seller’s side).

Why this matters?
• No more risk of “penal VAT” solely due to a formality, where the delay in payment was often caused by the client, and not the invoice issuer
• Greater legal certainty for businesses issuing advance invoices.
• Relief for purchasers – VAT deduction remains possible (albeit only after actually settling the payment)

Important to remember
Issuing an invoice too early remains formally non-compliant under Polish VAT rules and such invoices should, in principle, be corrected. The difference now is that tax authorities apparently will no longer try to apply Article 108 if the underlying transaction eventually takes place.

This is a significant development for industries in Poland and a step towards aligning tax practice with business realities. Better late than never.

Zamknij

Mental health support at work – is it taxable in Poland?

Employee wellbeing and taxes — do wellness benefits create taxable income? In today’s workplace, offering mental health support, nutritional guidance, and wellbeing resources is no longer just a “nice to have” — it’s become a strategic investment in productivity, engagement, and retention. But many employers still wonder: If we fund these kinds of benefits, do they count as taxable income for employees?

Employee wellbeing and taxes — do wellness benefits create taxable income?

In today’s workplace, offering mental health support, nutritional guidance, and wellbeing resources is no longer just a “nice to have” — it’s become a strategic investment in productivity, engagement, and retention.
But many employers still wonder:
If we fund these kinds of benefits, do they count as taxable income for employees?

The good news: not always.
In a recent tax ruling issued in May 2025 (case 0112-KDIL2-1.4011.415.2025.1.KF), the answer of the authority was clear: when wellbeing services are offered to all employees on a group basis — and there’s no way to identify who uses what — no taxable income arises.

Let’s break it down.
An employer signed a contract with a third-party provider offering a broad package of health and wellbeing services. These included:
• psychological support,
• personal development coaching,
• diet and lifestyle advice,
• access to online platforms, webinars, and wellbeing apps.

Crucially:
• The program was available to all staff.
• It was delivered under a non-personalized, group agreement.
• The employer had no access to individual usage data, due to confidentiality.

So, when does a benefit count as income?
According to Polish tax law — backed by a 2014 Constitutional Tribunal ruling — three conditions must be met jointly for a non-cash benefit to be treated as taxable income:
1. The employee voluntarily accepts the benefit,
2. It provides him/her with a real, measurable advantage (e.g. saving private money),
3. The benefit can be clearly attributed to a specific person and has a precise monetary value.
If even one of these is missing — no income, no tax.

No tracking = no tax
In the case reviewed by the tax authority, the benefit was optional and clearly valuable — but because it couldn’t be assigned to any specific employee, it failed the third condition.
The result? No taxable income. No reporting obligation.

What this means for employers
This is a big win for companies that want to support employee wellbeing without triggering extra tax complications. If the benefit is:
• open to all,
• delivered anonymously,
• and can’t be linked to specific individuals — then it falls outside the scope of taxable employee income. Most importantly, this rule also applies to other cases (e.g., company events). As long as the monetary value of a person’s benefit can only be determined statistically (i.e., total cost divided by the number of employees), and not on an individual basis, no tax obligation arises whatsoever.

Thinking of launching a similar program?
We help employers roll out wellness initiatives that are both effective and compliant. From contract structuring to tax risk analysis — and even securing binding tax rulings.

Let’s make employee wellbeing a smart investment — not a tax headache.

Zamknij

Major changes to company car tax deductions starting in Poland from 2026

Major changes to company car tax deductions starting in Poland from 2026 Beginning January 2026, Polish rules for deducting the cost of passenger vehicles used for business purposes (tax depreciation) will undergo significant changes. The new regulations, adopted in 2021 yet effective 2026, will introduce stricter limits, shifting the focus from the vehicle’s value to its CO₂ emissions. This marks a major policy shift that will particularly impact businesses purchasing combustion engine vehicles.

Major changes to company car tax deductions starting in Poland from 2026

Beginning January 2026, Polish rules for deducting the cost of passenger vehicles used for business purposes (tax depreciation) will undergo significant changes. The new regulations, adopted in 2021 yet effective 2026, will introduce stricter limits, shifting the focus from the vehicle’s value to its CO₂ emissions. This marks a major policy shift that will particularly impact businesses purchasing combustion engine vehicles.

What’s changing?
Under the new framework, the maximum deductible amount for passenger cars acquired from 2026 onwards will depend on the car’s emissions:
• PLN 225,000 – for fully electric or hydrogen-powered vehicles
• PLN 150,000 – for vehicles emitting less than 50 g CO₂/km (primarily select plug-in hybrids)
• PLN 100,000 – for all other vehicles, including the majority of combustion engine and traditional hybrid models
Currently, only two limits apply: PLN 225,000 for electric vehicles and PLN 150,000 for all others. As of 2026, many businesses will no longer be able to fully deduct the cost of their vehicles.

Notably, the PLN 150,000 limit has remained unchanged since 2019, even as car prices have risen significantly in recent years. Instead of adjusting this threshold to reflect market realities, the government is now reducing it further.

What about leasing?
Leasing adds another layer of complexity. As of now, there are no clear transitional provisions ensuring that operational lease or rental agreements signed in 2025 will remain subject to the current (i.e. relatively better) tax treatment in subsequent years.
If you’re considering leasing, a safer approach may be purchasing the vehicle outright or opting for a finance lease, provided the vehicle is entered into your fixed asset register before the end of 2025.

What should you do now?
• If you’re planning to acquire a company vehicle, do so before the end of 2025.
• Always check the vehicle’s CO₂ emissions—this figure might determine your tax deduction limit.
• If you’re exploring leasing options, consult with a tax advisor to fully understand the implications and avoid surprises in 2026.

The new rules clearly reflect a policy shift toward incentivizing low-emission vehicles. However, for many businesses, this will result in higher tax liabilities and more complex compliance requirements—unless decisions are made strategically and in advance.

Zamknij

Changing the legal form of a company can be an effective and legal tool for tax optimization

More and more entrepreneurs are considering transforming their general partnership (“spółka jawna”) into a limited partnership (“spółka komandytowa”) in Poland. Although both types of entities are subject to Polish CIT, the latter offers certain tax deductions on the partner-level. But could this change be seen as a tax avoidance scheme?

More and more entrepreneurs are considering transforming their general partnership (“spółka jawna”) into a limited partnership (“spółka komandytowa”) in Poland. Although both types of entities are subject to Polish CIT, the latter offers certain tax deductions on the partner-level. But could this change be seen as a tax avoidance scheme?

A recent ruling from the Head of the National Revenue Administration (reference DKP16.8082.12.2024, dated April 16, 2025) clarifies this issue. It confirms that changing the company’s legal form—even if motivated mainly by tax reasons—is not unlawful as long as it is driven by real and justified business purposes.

In the case analyzed, a general partnership subject to Polish corporate income tax (CIT) planned a transformation where several individuals and one legal entity would become general partners in the new limited partnership, with another legal entity acting as the limited partner. The reasons behind this change included facilitating family succession, unification of the legal form/structure across the groups, and reducing operational and tax costs.

The Head of the Revenue Administration pointed out that the tax benefits, such as lowering personal income tax arise from mechanisms provided by law (art. 30a(6a-6e) of the PIT Act and art. 22(1a-1e) of the CIT Act). This is not a violation of regulations but a legal tax optimization, constitutionally protected as the freedom to conduct business.

Importantly, the transformation is neither artificial nor abusive; it is economically justified and therefore does not constitute tax avoidance. The Head emphasized that taxpayers have the right to choose the business structure that enables legal tax optimization. Carrying out business activities in a form resulting in the highest possible tax burden was not the intended purpose of the changes introduced by the Polish lawmakers.

Takeaway?
If carefully planned and supported by genuine business reasons, changing the legal form of a company can be an effective and legal tool for tax optimization.

Zamknij

Articles

Property tax after the general ruling – clarifying the rules or drawing new battle lines?

It may be worth seeking your own Polish tax ruling on invoices issued outside Poland’s e-Invoicing System (KSeF)

Even though penalties for issuing invoices outside Poland’s National e-Invoicing System (KSeF) have been deferred until 1 January 2027, the real headache may come sooner.

When can contractual penalties for delays be tax-deductible in Polish Corporate Income Tax (CIT)?

TP true-ups under VAT? CJEU on 4 Sep 2025

When is land really „undeveloped” for VAT?

Poland’s e-Invoicing Revolution – KSeF 2026

Advance invoices issued too early – a major change in the approach of the Polish Tax Administration

Mental health support at work – is it taxable in Poland?

Major changes to company car tax deductions starting in Poland from 2026

Changing the legal form of a company can be an effective and legal tool for tax optimization

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