There is an old legal maxim: everything not forbidden is permitted. Polish tax law appends an asterisk: unless the authorities decide your method of operation was “artificial.”
Benjamin Franklin liked to say that nothing in this world is certain except death and taxes. He neglected to add that uncertainty attaches to how much those taxes will be—because that depends on how you interpret the regulations. And on how the authorities interpret them when they come to check.
Tax avoidance in Poland is, by its nature, an imprecise concept. It is not fraud—you are acting in accordance with the letter of the law. It is not a crime—you are not breaking any rules. It is something in between: using the law in a way the legislature supposedly wished to preclude, though it never quite said so.
What Constitutes Tax Avoidance in Poland
Legitimate tax planning: you choose a legal form that generates lower burdens. You take advantage of exemptions to which you are entitled. You structure transactions so as to pay what the law requires—no more.
Tax avoidance: you do exactly the same thing—but the authorities conclude that your “primary purpose” was tax-related, that your conduct was “artificial,” and that the benefit was “contrary to the purpose of the statute.”
The difference between the two lies not in what you do. It lies in how the authorities assess your motives.
This is the heart of the problem: Polish tax law punishes not action but intention—determining that intention retrospectively, on the basis of outcomes. Tax avoidance becomes a charge not when you break the rules, but when you apply them too creatively.
The Polish General Anti-Avoidance Rule (GAAR)
Since 2016, the Polish Tax Ordinance (Ordynacja podatkowa) has contained a General Anti-Avoidance Rule—known internationally as GAAR. This instrument permits tax authorities to challenge transactions that are formally legal but deemed contrary to the “purpose of the statute.”
The GAAR applies when three conditions are simultaneously present:
A tax benefit. You paid less tax, deferred payment, increased a loss, obtained a refund. Nearly any positive tax outcome qualifies.
A primary tax purpose. Achieving the benefit was the primary or one of the primary purposes of your action. It is not enough that the benefit arose “incidentally”—it must be “primary.”
Artificiality of conduct. Your method of operation was one that a “reasonably acting entity” would not have chosen were it not for tax considerations.
This sounds precise. In practice, each of these conditions requires interpretation—by an authority with an interest in interpreting them to its advantage.
The Problem of Economic Calculation
Ludwig von Mises argued that rational economic action requires the ability to calculate. An entrepreneur must know costs and revenues in order to make decisions.
The Polish tax avoidance clause introduces an incalculable element. You can execute a transaction, compute the tax consequences, pay what is owed—and learn years later that the authorities see it differently. That your calculations were wrong, because your “method of operation was artificial.”
This is not risk in the economic sense. Risk can be priced and insured. This is uncertainty in Frank Knight’s sense—the impossibility of assigning probabilities, because you do not even know the possible outcomes.
Powers of the Head of KAS in Tax Avoidance Cases
When the Head of the National Revenue Administration (Szef Krajowej Administracji Skarbowej) suspects tax avoidance, he may:
Initiate GAAR proceedings — from scratch, directly against the taxpayer.
Take over ongoing proceedings — a tax audit, customs and fiscal audit, or tax proceeding conducted by another authority.
Determine the tax consequences — as though you had performed an “appropriate transaction,” meaning the one the authority believes you should have performed.
Impose an additional liability — a financial penalty for tax avoidance that may reach 40% of the tax benefit obtained.
This is considerable power. The Head of KAS becomes, simultaneously, investigator, prosecutor, and trial judge. Only from his decision may you appeal—but it is you who must prove that you were not avoiding taxation.
The Boundary Between Tax Planning and Tax Avoidance in Poland
Robert Nozick argued that the only morally justified state is the minimal state—one that protects property and enforces contracts. Anything beyond that is coercion.
The tax avoidance clause goes further than enforcing contracts. It permits the state to redefine your contract—to say that the transaction you entered into should be treated as though you had entered into a different one.
This is not an argument that the clause is unlawful. It is lawful—enacted by parliament, signed by the president. But it changes the nature of the relationship between citizen and state. The question is no longer whether you comply with the law. It is whether the state approves of your motives.
Murray Rothbard maintained that taxes are inherently coercive—and that minimizing them is therefore not evasion of duty but defense of property. You need not share Rothbard’s libertarian views to accept that an entrepreneur has the right to pay what the law requires—no more. That choosing a legal form generating lower burdens is rational and morally neutral. That the state should write clear rules rather than punish people for using them.
Minimizing Tax Avoidance Risk in Poland
We verify transactions before execution. Will this structure survive the GAAR test? Do you have an economic justification that can be documented? Would a “reasonably acting entity” choose this path?
We conduct tax audits of existing structures. Past transactions, settlements, corporate arrangements. Where are the weak points? What might attract the attention of the Head of KAS?
We document business purposes. The best defense against a tax avoidance charge is proof that the action made commercial sense independent of its tax consequences. We create documentation before the transaction, not after the inspection.
We prepare ruling requests. An individual tax ruling may not protect against the GAAR—but it demonstrates good faith and reduces the risk of additional liability penalties.
Tax avoidance in Poland is a charge whose boundaries are defined by administrative practice and court jurisprudence. This is a tension we cannot resolve—but one through which we can help you navigate.
