A tax audit in Poland is conducted by the National Revenue Administration (KAS) and follows a structured administrative procedure that affords taxpayers specific rights at each stage, including access to files, the right to submit explanations, and formal channels to contest findings. If an assessment is issued, the taxpayer may appeal (odwołanie) to the second-instance tax authority, then bring a complaint before the competent voivodeship administrative court (WSA), and ultimately seek cassation review before the Supreme Administrative Court (NSA). Understanding these stages, their sequence, and the practical requirements at each step is essential for any foreign investor or internationally active business operating in Poland.
The Legal Framework: KAS Authority and the Basis for Audit
The National Revenue Administration (KAS) was established as the unified body responsible for tax administration, customs control, and fiscal intelligence in Poland. KAS exercises audit powers through its dedicated audit offices (urzędy celno-skarbowe) and standard tax authorities (urzędy skarbowe), with the distinction being significant in practice: the celno-skarbowe offices handle larger-scale investigations, cross-border cases, and matters with a potential criminal or fiscal-penal dimension, while standard offices deal with routine compliance checks.
The legal basis for audit activities derives primarily from the Tax Ordinance Act (Ordynacja podatkowa) and the Act on the National Revenue Administration. Poland's general anti-avoidance rules (GAAR), transfer pricing regulations, and obligations arising from EU directives – including DAC6 on mandatory disclosure of cross-border arrangements – operate alongside these procedural frameworks. For international businesses, this means that tax structuring decisions made outside Poland can attract scrutiny if they produce tax effects in Poland.
EU-level instruments such as the Anti-Tax Avoidance Directives (ATAD I and ATAD II) have been transposed into Polish law, and their interaction with domestic anti-avoidance rules creates a layered compliance environment. KAS auditors increasingly apply these provisions in cross-border scenarios, particularly where intra-group transactions, hybrid instruments, or treaty-based structures are involved.
Types of Audit Procedures: Choosing the Correct Framework Matters
Polish law distinguishes between several types of control proceedings, and the choice of procedure affects both the taxpayer's rights and the procedural timeline:
- Tax audit (kontrola podatkowa) – a standard examination of whether the taxpayer has complied with tax obligations; conducted by the local tax office.
- Customs and fiscal audit (kontrola celno-skarbowa) – a more intensive procedure carried out by the celno-skarbowe offices, often used in cases involving significant amounts, suspected irregularities, or international elements.
- Tax proceedings (postępowanie podatkowe) – the formal administrative procedure that typically follows an audit and results in a tax assessment decision.
For foreign businesses operating through a Polish entity such as a sp. z o.o. (a limited liability company registered in the KRS), it is common for a customs and fiscal audit to be initiated without prior notice in the same way as a standard audit. The distinction matters because the rights of the taxpayer and the procedural requirements imposed on KAS differ across these tracks. Receiving the wrong procedural classification – or failing to challenge it promptly – is one of the more consequential errors that international clients encounter.
Initiation: How a KAS Audit Begins
A standard tax audit generally commences with a notice of audit (upoważnienie do przeprowadzenia kontroli podatkowej) served on the taxpayer. The taxpayer ordinarily has the right to be present during the audit and to be informed of the subject and scope of the proceedings. The audit is then documented through a protocol (protokół kontroli), to which the taxpayer may submit corrections and objections within a defined period.
A customs and fiscal audit may, in certain circumstances defined by statute, begin without advance notice – typically where prior notification could frustrate the purpose of the audit. In such cases, the authority presents its authorisation at the moment of entry. This distinction has significant practical implications for document management and internal communication within any business subject to audit.
At the outset, the taxpayer should:
- Verify the scope and legal basis stated in the authorisation document;
- Confirm the identity and authority of the auditing officers;
- Identify which tax periods and which taxes are under examination;
- Notify internal counsel or external legal advisers without delay;
- Preserve and organise documentation relevant to the scope indicated.
If your business has received an audit notice or an unexpected visit from KAS officers, it is advisable to seek specialist guidance promptly. Our team can be reached at info@ferrazwhitmore.com or through our contacts page.
Taxpayer Rights During the Audit
The Tax Ordinance Act grants taxpayers a meaningful set of procedural rights throughout the audit. These are not merely formal entitlements – exercising them correctly can materially influence the outcome of subsequent dispute proceedings.
- Right to be informed: the taxpayer must be notified of the subject and scope of the audit; any extension of scope during the audit must be formally authorised.
- Right of access to the file: at the stage of tax proceedings, the taxpayer has the right to review the administrative file and to take notes or copies of its contents.
- Right to submit evidence and explanations: before the authority issues its decision, the taxpayer must be given the opportunity to review the collected evidence and submit final comments (the principle of czynny udział strony).
- Right to professional representation: a pełnomocnik (attorney or tax adviser) may represent the taxpayer at every stage, and their formal appointment must be recorded in the proceedings.
- Right to challenge procedural acts: certain procedural decisions – for example, on the seizure of documents – may be challenged independently from the substantive assessment.
One area of particular concern for international clients involves transfer pricing documentation requirements. KAS has broad powers to request the local file, master file, and country-by-country reporting documentation within defined timeframes. Failure to produce compliant transfer pricing documentation can shift the burden of proof and expose the taxpayer to additional penalties. Robust tax risk management before an audit begins is substantially more cost-effective than attempting to reconstruct documentation under audit pressure.
From Audit to Assessment: The Procedural Sequence
Where the audit identifies discrepancies, KAS will typically open formal tax proceedings (postępowanie podatkowe) and ultimately issue a first-instance tax assessment decision (decyzja). This decision must be reasoned and must state the legal and factual basis for the findings.
The taxpayer has the right to file an odwołanie (appeal) against the first-instance decision with the second-instance tax authority within the statutory period, which runs from service of the decision. The second-instance authority conducts a full review of the facts and the law and may uphold, modify, or annul the first-instance decision, or remit the case for fresh examination.
It is important to note that the appeal does not automatically suspend the obligation to pay the assessed amount in all circumstances. The conditions for suspension of enforceability are defined by statute and may require the taxpayer to take specific procedural steps. Failing to address enforceability at the appeal stage is a common and costly oversight for foreign clients unfamiliar with Polish administrative procedure.
Judicial Review: WSA and NSA
Once the second-instance administrative decision is issued, the taxpayer may bring a complaint (skarga) before the competent voivodeship administrative court (WSA). The WSA reviews the legality of the administrative decision – that is, whether it was issued in accordance with substantive and procedural law – rather than conducting a full merits re-examination in the manner of a civil court. The WSA may annul the decision, remit it to the administrative authority, or dismiss the complaint.
A cassation appeal (skarga kasacyjna) to the Supreme Administrative Court (NSA) is available against the WSA judgment, but only on specified grounds relating to legal error or serious procedural irregularity. The NSA plays a significant role in developing consistent interpretation of tax law across Poland, and its resolutions and judgments are frequently cited in subsequent proceedings. Where a legal question is novel or contested, obtaining NSA-level guidance – even indirectly through published case law – can be strategically important in structuring a defence.
For businesses engaged in complex cross-border structures, the judicial phase often involves arguments under a relevant tax treaty, EU law, or domestic anti-avoidance rules. Courts have examined questions around the application of GAAR, the arm's-length standard in transfer pricing, and the interaction between domestic legislation and treaty obligations. Engaging legal counsel with experience in litigation and arbitration in Poland from the earliest stage of judicial proceedings is strongly advisable.
Timelines: What to Expect at Each Stage
Polish law sets out indicative timeframes for administrative proceedings, though in practice – particularly in complex transfer pricing or anti-avoidance cases – these are frequently extended. The following describes the general sequence without specific day counts where those figures are not provided in our verified facts:
- Audit phase: duration varies by type of audit and complexity of the case; customs and fiscal audits in significant cross-border matters can extend over multiple months.
- Tax proceedings and first-instance decision: the Tax Ordinance Act requires proceedings to be concluded without undue delay, but extensions are permissible and common in complex cases.
- Second-instance appeal: the second-instance authority is required to act within the statutory period, subject to procedural extensions.
- WSA complaint: court proceedings at the WSA level typically take a year or more, depending on the court's caseload and the complexity of the matter.
- NSA cassation: proceedings before the NSA may take several years in contested matters.
Total elapsed time from audit initiation to a final NSA judgment in a contested cross-border case can span many years. This has direct implications for cash flow, provisions, and business planning – particularly for foreign-owned Polish entities. Early engagement with the dispute process and careful attention to enforceability and security mechanisms is essential.
Common Errors by Foreign Clients and How to Avoid Them
In our experience advising international businesses on tax disputes in Poland, a number of recurring issues arise specifically in the context of foreign-owned entities:
- Underestimating the formality of Polish administrative procedure: Polish tax proceedings are document-intensive and procedurally strict. Failing to submit objections within the prescribed period, or failing to formally raise a point at the administrative stage, can foreclose that argument at the judicial stage.
- Inadequate transfer pricing documentation: Polish regulations impose detailed documentation requirements. Foreign groups that rely on documentation prepared for another jurisdiction frequently discover that it does not satisfy Polish standards.
- Misunderstanding the role of the second-instance authority: the administrative appeal is a substantive opportunity to introduce new evidence and legal arguments – not merely a formality before going to court. Under-investing in the appeal stage weakens the judicial case.
- Ignoring the fiscal-penal dimension: in cases involving KAS celno-skarbowe offices, there is a real possibility of parallel fiscal-penal proceedings. This changes the risk profile significantly and requires coordinated legal strategy.
- Late appointment of a Polish-qualified representative: a pełnomocnik must be formally appointed and recorded in the proceedings; informal coordination with foreign advisers does not substitute for a properly filed power of attorney.
- Assumptions based on home-country practice: procedures, timelines, and tactical norms in Polish tax disputes differ materially from those in other EU jurisdictions. Experience in, say, other jurisdictions' audit processes provides useful context but should not be used as a procedural template.
If you are managing a KAS audit or considering how to respond to a first-instance assessment, our team is available to review the procedural record and advise on available options. Please contact us at info@ferrazwhitmore.com or visit our contacts page.
Decision Checklist: Key Questions Before Challenging an Assessment
Before committing to a particular course of action in response to a KAS assessment, decision-makers should consider the following questions:
- Has the full procedural record been reviewed to identify any formal defects in the audit or assessment process?
- Were all relevant facts and arguments presented at the first-instance stage, and if not, can they still be introduced at the appeal stage?
- Is the assessed amount enforceable immediately, and have the available mechanisms to suspend enforcement been considered?
- Does the case involve transfer pricing, anti-avoidance rules, or treaty interpretation – areas where specialist tax risk management input is particularly important?
- Are there parallel proceedings – fiscal-penal or otherwise – that require coordinated strategy?
- What is the realistic timeline to a final resolution, and how does that interact with the entity's reporting, financing, and operational obligations?
- Has a Polish-qualified pełnomocnik been formally appointed in the proceedings?
These questions do not exhaust the analysis, but they provide a structured starting point for any business facing a Polish tax assessment for the first time. The answers will shape both the choice of procedural path and the allocation of resources across what may be a multi-year process.
For a structured review of your position under Polish tax law, or to discuss the implications of an ongoing or anticipated KAS audit, please reach out to our team at info@ferrazwhitmore.com or through our contacts page. We work with international businesses, funds, and legal teams across jurisdictions to provide coordinated support throughout the Polish dispute process.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.