Taxpayers who are the addressees of tax law interpretations (individual interpretations) concerning the research and development (R&D) relief are in conflict with the Director of the National Revenue Information Service (KIS). This authority claims that the General Interpretation No. DD8.8203.1.2021 of the Minister of Finance of 13 February 2024 on the possibility of including in the eligible costs for the R&D tax credit, incurred by the taxpayer in a given month, the claims referred to in Article 12(1)(1) of the Income Tax Act and financed by the contributor on the basis of these obligations specified in the Social Security Act in connection with the justified absence of an employee, constitutes the basis for the annulment of the individual interpretation in its entirety, even if it concerns issues that go beyond the scope of the aforementioned general interpretation. However, the administrative courts tend to rule in favour of the taxpayers in this dispute.
General Interpretation
In General Interpretation No. DD8.8203.1.2021 on the eligibility of an employee’s remuneration and social security contributions in connection with the employee’s justified absence for the purposes of the R&D tax credit, the Minister of Finance stated that the employee’s total working time takes in the time related to justified absences, including the period of vacation, occasional leave or the period of incapacity to work due to illness (the employee is on sick leave). However, in previous individual interpretations, the Director of the National Revenue Information Service took the opposite position, considering that the aforementioned general working time is the time actually worked.
This discrepancy has led the tax authorities to take measures aimed at cancelling individual interpretations of the R&D tax credit – issued both before and after the date of the above-mentioned general interpretation, and regardless of the scope of such individual interpretations, which often go beyond the scope of the general interpretation.
Reasons for the expiration of an individual tax ruling
The expiry of an individual tax ruling can be declared on the basis of Article 14e(1a)(2) of the Tax Ordinance. According to this provision, the Director of the National Revenue Information Service (KIS) may ex officio declare the expiry of an individual tax ruling if it is inconsistent with a general ruling issued under the same legal framework.
By declaring the expiry of individual interpretations, the Director of the National Revenue Information Service indicates that the current regulations do not provide a basis for declaring the partial expiry of an individual interpretation. If this had been the intention of the tax legislator, the Director of the National Revenue Information Service believes that it would have been explicitly stated, as is the case in Article 233(1)(2)(a) of the Tax Ordinance, according to which the appellate body issues a decision annulling the decision of the first instance body in whole or in part.
Consequences of the KIS Director actions
The expiry of an individual tax ruling is important for the protection of the taxpayer – the addressee of such a ruling.
The individual tax ruling provides for the protection of its addressee, as stipulated in Article 14k of the Tax Ordinance. Pursuant to Article 14k §1 of the Taxation Ordinance, compliance with an individual tax ruling before it is amended or declared invalid, or before a copy of the administrative court’s final decision cancelling the individual tax ruling is served on the tax authority, cannot be used to the detriment of the taxpayer, nor can it be used to the detriment of the taxpayer in the settlement of the tax case. As a result, the protection resulting from compliance with an expired individual tax ruling remains in force until the decision cancelling the individual tax ruling that is served on the taxpayer, becomes legally binding.
Possible operating scenarios
Taxpayers whose individual tax ruling has been terminated may consider submitting a new application for an individual tax ruling. However, it is not certain that the Director of the National Revenue Information Service will issue a positive individual tax ruling on all issues submitted to him for interpretation. An application for an individual interpretation concerning general working hours cannot be considered on the basis of Article 14b(5a) of the Tax Ordinance. According to this provision, if the facts or future events described in the application correspond to the issue that is the subject of a general interpretation issued under the same legal status, a decision is issued stating that the general interpretation applies to the facts or future events described in the application, while at the same time stating that the application is irrelevant. In this case, the decision indicates the name of the general interpretation and the place of its publication.
The decision to revoke an individual tax ruling in its entirety, which covers more than the subject matter of the general ruling, can be appealed in connection with the general ruling. This is all the more true as the existing case law of the administrative courts questions the correctness of the actions of the Director of the National Tax Administration (KIS) with regard to the termination of individual tax rulings.
Administrative court judgments
Administrative courts, including the Supreme Administrative Court, confirm that the Director of the National Tax Information Office may declare the partial expiry of an individual tax ruling in cases where the individual ruling is inconsistent with the general ruling. This is also confirmed by the decisions of the Provincial Administrative Court (WSA) in Wroclaw of 14 February 2025, Ref. I SA/Wr 738/24, and the decision of the WSA in Poznañ of 14 January 2025, ref. I SA/Po 678/24, ref. no. I SA/Wr 738/24, WSA in Poznañ of 14 January 2025, ref. no. I SA/Po 678/24, WSA in Kraków of 18 December 2024, ref. no. I SA/Kr 801/24, and the Supreme Administrative Court of 8 August 2023, file no. II FSK 1157/21. In the last of the aforementioned judgments, the Supreme Administrative Court stated that „(…) since the authority could have declared the individual interpretation void in its entirety, it could even have done so in relation to only a part of it”.
A different approach violates the principle of the protection of legitimate expectations, since the taxpayer who has obtained an individual tax ruling on a wide range of issues has the right to expect that this protection will be maintained to the extent that his position is considered correct and is not challenged by the general tax ruling.
Consequences for tax practices
According to Article 14e § 1a point 2 of the Tax Ordinance, the expiry of an individual interpretation is permissible, but only if two conditions are met:
- a declaration of direct incompatibility of the individual interpretation with the general interpretation; and
- the issuance of both interpretations with the same legal status.
The Director of the National Revenue Administration (KIS) cannot automatically repeal individual interpretations, but is obliged to compare them in detail with the general interpretation. The above applies not only to the R&D exemption, but to all issues covered by general interpretations, in relation to which the Director of the National Revenue Information Service issues decisions repealing individual interpretations in their entirety, even if their scope is broader than the scope of the general interpretation.
