When a Polish tax authority opens an audit or issues an adverse assessment, international businesses face a multi-stage administrative and judicial process that can run for several years. Ferraz & Whitmore advises foreign investors, holding structures and cross-border groups on defending tax audits conducted by the National Revenue Administration (KAS), pursuing administrative appeals and, where necessary, litigating before the voivodeship administrative courts (WSA) and the Supreme Administrative Court (NSA). Our work also covers treaty-based dispute resolution, including mutual agreement procedures (MAP) and EU arbitration mechanisms, when double taxation arises in a cross-border context.
When International Clients Typically Need This Service
Tax disputes in Poland rarely arise in isolation. They tend to surface when a group restructuring draws scrutiny, when transfer pricing documentation is challenged, or when the KAS questions the substance of a Polish entity – most commonly a sp. z o.o. – within a wider holding chain. Other frequent triggers include VAT refund blocks, withholding tax reclassifications, and disagreements over the application of regimes such as IP Box, the Polish holding company regime, or Estonian CIT (tax on distributed profits).
Foreign investors are also increasingly encountering mandatory disclosure rules (MDR), Poland's domestic implementation of DAC6-type obligations, which can generate parallel reporting exposure across several jurisdictions simultaneously. Where a client has already engaged local counsel at the audit stage but requires international coordination, Ferraz & Whitmore can step in at any point in the dispute chain.
The Polish Tax Dispute Pathway
Understanding the procedural architecture before a dispute escalates is essential. Poland operates a two-tier administrative system followed by independent judicial review.
- KAS audit (kontrola podatkowa / kontrola celno-skarbowa): The National Revenue Administration opens the proceedings and may issue a decision assessing additional tax liability.
- Administrative appeal (odwołanie): The taxpayer appeals to the second-instance tax authority. This stage is a full merits review and should not be treated as a formality; the factual record built here shapes the entire subsequent litigation.
- Complaint to the voivodeship administrative court (WSA): If the second-instance decision is upheld, the taxpayer may bring a complaint before the competent WSA. The court reviews the legality of the administrative decision rather than re-determining the tax on the merits.
- Cassation to the Supreme Administrative Court (NSA): Either party may lodge a cassation appeal on points of law. NSA rulings carry significant precedential weight and are closely monitored by practitioners advising on lawyer Poland mandates in the tax field.
Each stage has its own procedural requirements and strict formal conditions. Failing to raise a specific legal argument at the administrative appeal stage can foreclose it before the WSA. This makes early, coordinated legal involvement – rather than reactive intervention – critical to protecting the client's position.
If your organisation is facing an audit notice or has received an adverse assessment from the KAS, early advice on strategy can materially affect the outcome of subsequent stages. Contact our team at info@ferrazwhitmore.com or visit our contacts page to arrange an initial discussion.
Advance Certainty Instruments: Prevention Before Dispute
Poland offers two key instruments designed to reduce audit risk before it materialises. Individual tax interpretations (interpretacje indywidualne) allow taxpayers to obtain a binding written view from the tax authorities on the application of tax law to a described set of facts. While an interpretation does not substitute for a court ruling, it confers significant legal protection if the taxpayer acts in accordance with it.
Advance pricing agreements (APAs) are available for transfer pricing arrangements and provide multi-year certainty on the arm's length treatment of intra-group transactions. Given the volume of transfer pricing disputes in Poland involving cross-border groups, an APA should be considered as a risk management tool rather than a procedural burden.
Both instruments require careful preparation. An interpretation request that mischaracterises the facts, or an APA application that understates the complexity of the arrangement, can undermine rather than protect the taxpayer's position.
Cross-Border Dispute Resolution: MAP, EU Arbitration and the Directive
When a KAS adjustment creates or threatens double taxation at the level of a foreign-resident group member, domestic litigation alone is unlikely to resolve the problem. Treaty-based and EU mechanisms exist precisely for this scenario.
- Mutual agreement procedures (MAP): Available under Poland's tax treaties, MAP allows the competent authorities of two jurisdictions to negotiate the elimination of double taxation. The process runs in parallel with, rather than instead of, domestic proceedings, and its outcome depends on the treaty in question and the cooperation of both competent authorities.
- EU Arbitration Convention (90/436/EEC): Specifically designed for transfer pricing disputes between EU Member States, this Convention provides a route to binding arbitration if the competent authorities cannot reach agreement within a defined period. It applies to cases involving associated enterprises within the EU.
- Tax Dispute Resolution Mechanisms Directive (EU) 2017/1852: This Directive, which modernises and broadens the earlier arbitration framework, covers a wider range of income and capital tax disputes between EU Member States. It includes mandatory dispute resolution mechanisms with binding effect under defined conditions.
Coordinating a Polish domestic appeal with a concurrent MAP request requires careful sequencing. Some treaty provisions interact with domestic time limits in ways that can inadvertently narrow the options available if the international dimension is not addressed from the outset.
For a deeper examination of how these mechanisms interact with Polish procedural rules, our guide on challenging a tax assessment in Poland sets out the key considerations in detail.
Typical Pitfalls in Polish Tax Disputes
Based on the matters we handle for cross-border clients, certain failure patterns recur with regularity.
- Inadequate documentation at audit stage: Transfer pricing files, substance evidence for holding entities and intra-group service agreements are frequently challenged. Gaps in contemporaneous documentation are difficult to remedy retroactively.
- Treating the administrative appeal as a delay mechanism: The odwołanie is a substantive stage. Using it only to buy time, without advancing a fully reasoned legal position, typically produces a weaker record for the courts.
- Ignoring MDR obligations: Domestic mandatory disclosure rules can create exposure for intermediaries and taxpayers alike, and non-compliance can itself become an issue during an audit.
- Fragmenting the advisory team: When local Polish counsel handles the KAS proceedings without coordination with the group's international advisers, treaty arguments and EU-law defences can be overlooked or raised too late.
- Assuming KRS or KNF filings are sufficient evidence of substance: Registrations with the National Court Register (KRS) or notifications to the Financial Supervision Authority (KNF) are relevant but rarely conclusive on questions of economic substance or beneficial ownership.
How Ferraz & Whitmore Works on Polish Tax Disputes
Our approach is built around coordinated international representation. We work alongside Polish-qualified tax litigation counsel, combining local procedural knowledge with cross-border structuring expertise. This matters in particular for groups that hold Polish assets through Luxembourg, Dutch, Portuguese or other European holding vehicles, where the Polish audit may be one front in a broader challenge to the group's structure.
At the audit stage, we assist with document preparation, coordination of responses to KAS requests, and the identification of domestic and treaty-based arguments. During the appeal and court phases, we provide strategic oversight, draft international law submissions and coordinate MAP or EU arbitration filings where double taxation is at stake. Where a client is considering restructuring to reduce future audit exposure, we work in conjunction with our tax structuring practice in Poland to ensure that any changes are implemented on a defensible basis.
Our litigation and arbitration capabilities in the Polish market are described further on our litigation and arbitration page for Poland.
Self-Assessment Checklist for Cross-Border Groups
Before engaging with a Polish tax audit or preparing a defensive strategy, consider the following questions.
- Has the Polish entity maintained contemporaneous transfer pricing documentation consistent with the arm's length standard?
- Are intra-group agreements in place, signed and economically reflective of the actual functions performed in Poland?
- Does the Polish entity have sufficient operational substance to support its role within the group structure?
- Have any reportable arrangements been disclosed under MDR rules, both in Poland and in relevant foreign jurisdictions?
- If an individual tax interpretation exists, does the entity's actual conduct remain consistent with the facts described in the request?
- In the event of an adverse assessment, does the group have a coordinated plan that addresses both the Polish administrative timeline and potential treaty dispute options?
- Is the applicable tax treaty with Poland identified, and has MAP eligibility been assessed?
If any of these questions expose a gap or uncertainty, addressing it before a formal audit commences is considerably more cost-effective than resolving it under procedural pressure. We are available to discuss your specific situation: write to info@ferrazwhitmore.com or use our contacts page.
Working With Ferraz & Whitmore on Polish Tax Matters
Ferraz & Whitmore operates across European and international jurisdictions, advising on tax disputes that involve multiple legal systems, languages and competent authorities. For Polish mandates, our team brings together Portuguese and EU-law expertise with a network of local Polish co-counsel specialising in administrative and tax litigation before the WSA and NSA. We do not handle Polish domestic tax compliance as a standalone service; our focus is on cross-border disputes, treaty-based mechanisms and the international dimensions of Polish tax enforcement.
If your business is under audit by the KAS, has received an adverse decision, or is seeking to understand its exposure before a dispute arises, we welcome an initial conversation. Reach us at info@ferrazwhitmore.com or through our contacts page.
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.