A connection fee is remuneration payable to the transmission or distribution system operator, borne by the entity seeking to connect its investment to network infrastructure (such as energy, water, sewage, or gas networks). Its purpose is to ensure the technical possibility of receiving or transmitting electricity. This fee represents the investor’s share in the operator’s infrastructure investment expenditure.
This principle applies equally to investments in the energy sector, including photovoltaic plants, wind power plants (both onshore and offshore), biogas plants, and other energy sources. Investors in these facilities must also pay connection fees.
Historically, connection fees raised substantial tax uncertainty, particularly regarding whether they should be included in the initial value of the fixed asset or treated directly as tax-deductible costs. In recent years, however, tax authorities and administrative courts have largely harmonized their interpretations.
Legal context
According to Article 16g(4) of the CIT Act, the initial value of a fixed asset encompasses all expenses directly related to its production or construction. Such expenses are recovered gradually through depreciation write-offs according to the prescribed rates for the asset. Including the connection fee in the initial value spreads the cost over time, potentially advantageous if the investment generates low initial revenues.
Previous interpretation – connection fee as part of initial value
Until around 2016, interpretations by tax authorities varied. Some concluded that connection fees are integral to creating a fixed asset, being necessary for the operational readiness of a facility. For instance, the Director of the Tax Chamber in Warsaw, in a ruling dated January 14, 2016 (ref. IPPB6/4510-402/15-2/AK), considered connection fees integral to the initial value of a wind farm. Similarly, a July 27, 2015 ruling by the Director of the Tax Chamber in Katowice (ref. IBPB-1-3/4510-190/15/IŻ) supported this view. Conversely, other interpretations (e.g., Director of the Tax Chamber in Bydgoszcz, January 14, 2014, ref. ITPB3/423-535a/13/AW) argued that connection fees were operational expenses, not affecting the initial value of fixed assets.
Current practice – connection fee as indirect cost
Since 2017, a more uniform approach has emerged. Authorities now consistently treat connection fees as indirect, current tax-deductible costs. Examples include interpretations from the Director of the National Tax Information Service dated August 22, 2022 (ref. 0111-KDIB1-3.4010.372.2022.1.PC), January 5, 2023 (ref. 0111-KDIB2-1.4010.656.2022.1.DD), and December 10, 2024 (ref. 0114-KDIP2-1.4010.576.2024.1.KW). These rulings clarify that while connection fees facilitate facility use, they do not directly pertain to asset construction, instead securing access to infrastructure owned by the operator.
Judicial interpretation
Administrative courts uphold the current tax authorities’ stance. For instance, judgments of the Supreme Administrative Court (August 4, 2020, ref. II FSK 80/20, and July 8, 2021, ref. II FSK 1884/18) state that network connections form part of the transmission infrastructure owned by operators. Therefore, connection expenditures expand existing networks rather than creating investor-owned fixed assets.
This view was reinforced by the Supreme Administrative Court’s parallel judgments on April 23, 2025 (refs. II FSK 959/22, II FSK 960/22, II FSK 967/22, II FSK 968/22, II FSK 969/22), confirming that connection fees are related to the operational use of an existing facility rather than its construction. Courts emphasized that recognizing connection fees as part of an asset’s initial value could result in double-counting the same asset value on both the investor’s and operator’s books, violating principles of accurate asset valuation.
Summary
Although earlier interpretations permitted including connection fees in the initial value of fixed assets, the prevailing contemporary position—supported by recent administrative court rulings—clearly designates these fees as current indirect costs. Departing from this established approach poses significant risks of tax disputes, particularly problematic if recognition deadlines for these expenses lapse due to statutory limitations.
