We have obtained a favorable judgment from the Voivodeship Administrative Court (WSA) in Wrocław in a PIT case for 2018

Is tax residence in tax dispute practice still too often determined automatically?

Our experts from the Tax Law Department of Sadkowski and Partners have obtained a favorable judgment from the Voivodeship Administrative Court (WSA) in Wrocław in a PIT case for 2018. The Court fully overturned the decisions of the tax authorities of both the first and second instance, ruling in favor of our Client.

The case concerned the settlement of income earned within an international capital structure, the determination of the taxpayer’s tax residence, and the application of the double taxation treaty between Poland and Malta. The tax liability challenged by the authorities amounted to nearly PLN 1.4 million.

The WSA pointed out significant deficiencies in the actions of the tax authorities, including shortcomings in the evidentiary proceedings, the manner of assessing the collected evidence, and the insufficient reasoning of the decisions. The Court emphasized that the amount of income must be proven, not merely made plausible, and that the authorities may not “supplement” evidentiary gaps with their own assumptions.

This judgment once again confirms that:

• changes in tax residence require a comprehensive and diligent analysis, as they remain within the close scrutiny of tax authorities,
• double taxation treaties may not be disregarded by the authorities on a discretionary basis,
• the reasoning of a tax decision should comprehensively and exhaustively present the authority’s position.

The case was handled by:

• PhD Anna Kuleszyńska – Attorney-at-law, Managing Associate, Tax Law Department
• Bartosz Balicki – Advocate Trainee, Tax Law Department