The Identifiable Beneficiary Requirement in VAT Taxation
Crowdfunding Services and the Limits of Taxable Supply
Abstract: This article examines a significant ruling by the Provincial Administrative Court in Gdańsk concerning the VAT treatment of services rendered to decentralized blockchain communities through crowdfunding mechanisms. The court held that where identification of the service beneficiary proves objectively impossible, no taxable supply arises under Article 8(1) of the Polish VAT Act. This decision illuminates a fundamental structural requirement of value-added taxation: the existence of an identifiable recipient of the supply.
I. Introduction
The proliferation of blockchain technology and decentralized autonomous organizations has generated novel questions concerning the application of traditional tax frameworks to transactions occurring within these ecosystems. Among the most vexing of these questions is whether services rendered to an amorphous, anonymous community of blockchain users constitute taxable supplies for value-added tax purposes.
The Provincial Administrative Court (Wojewódzki Sąd Administracyjny) in Gdańsk recently addressed this question in a ruling of considerable doctrinal significance. In its judgment of July 11, 2023 (Case No. I SA/Gd 304/23), the court annulled an individual tax ruling issued by the Director of the National Tax Information Agency (Dyrektor Krajowej Informacji Skarbowej), holding that services financed through crowdfunding mechanisms and provided to an unidentifiable blockchain community fall outside the scope of VAT liability. The court’s reasoning rested on a foundational principle: absent an identifiable beneficiary of the supply, no taxable transaction exists within the meaning of Article 8(1) of the Act on Tax on Goods and Services.
This article analyzes the factual matrix underlying the dispute, examines the competing interpretive positions advanced by the tax authority and the taxpayer, and evaluates the court’s doctrinal contribution to the jurisprudence on the structural requirements of VAT liability.
II. Factual Background
A. The Nature of the Taxpayer’s Activities
The case concerned a Polish limited liability company (spółka z ograniczoną odpowiedzialnością) engaged in software development. During 2022, the company executed several information technology projects within the P. and K. blockchain networks. These projects involved the development of web-based applications enabling users to access transaction statistics and communicate with other network participants.
The company’s engagement with the blockchain community operated according to a crowdfunding model with distinctive characteristics. The company would submit project proposals (proposals) specifying the scope of work and estimated costs denominated in United States dollars. The decentralized community would then vote on submitted proposals through blockchain-based governance mechanisms. Upon approval, funds would transfer automatically from the network’s treasury to the company’s cryptocurrency wallet, with the dollar amount converted to tokens at the exchange rate prevailing on the date of proposal submission.
B. The Anonymity Problem
The critical factual element underlying the dispute concerned the identity—or rather, the unidentifiability—of the service recipients. The blockchain network maintained no designated representatives or authorized agents. All users participated on equal terms through pseudonymous addresses, with no mechanism for ascertaining personal data, geographic location, or tax status. The company characterized its arrangement with the blockchain community as an “unwritten understanding with an undefined collectivity.”
The mutual obligations of the parties found protection through a staged payment mechanism: the community transferred funds before each project phase, contingent upon acceptance of previously completed work. This arrangement provided the company with payment assurance while affording the community oversight of project execution. Nonetheless, this practical accommodation did not resolve the fundamental legal problem: the objective impossibility of identifying any natural person, legal entity, or organizational unit as the counterparty to the transaction.
III. The Tax Authority’s Position
A. The Individual Ruling
In its individual tax ruling of January 18, 2023 (No. 0114-KDIP4-3.4012.597.2022.2.JJ), the Director of the National Tax Information Agency concluded that the company’s services to the blockchain community constituted taxable supplies subject to VAT.
The authority’s reasoning proceeded from the premise that a direct nexus existed between the information technology services rendered and the consideration received. The blockchain community, in the authority’s view, obtained concrete, measurable benefits in the form of web applications facilitating network statistics review and user communication. The company thus operated as a service provider executing specific commissions in exchange for remuneration corresponding to estimated project costs. Accordingly, the payments received constituted consideration for taxable supplies within the meaning of Articles 5(1)(1) and 8(1) of the VAT Act.
B. Reliance on CJEU Precedent
The tax authority invoked the judgment of the Court of Justice of the European Union in Skatteverket v. Hedqvist (Case C-264/14) for the proposition that any supply of goods or services for which remuneration is paid in cryptocurrency must be treated identically to any other supply for VAT purposes. From this premise, the authority reasoned that the form of consideration—tokens rather than fiat currency—bore no relevance to the taxability determination.
This reliance on Hedqvist, while doctrinally sound as a general matter, arguably missed the point of the taxpayer’s objection. The taxpayer did not contest that cryptocurrency-remunerated transactions fall within the VAT system; rather, the taxpayer challenged whether any taxable transaction arose in circumstances where no identifiable beneficiary existed.
IV. The Taxpayer’s Challenge
A. Grounds of Appeal
The company filed an administrative complaint (skarga) with the Provincial Administrative Court, advancing two principal grounds of challenge. First, the company alleged that the tax authority had misapplied Article 8(1) of the VAT Act by treating a supply to an unidentifiable collectivity as a taxable service. Second, the company contended that the authority had violated the principle of procedural conduct inspiring public confidence (zasada prowadzenia postępowania w sposób budzący zaufanie) codified in Article 121(1) of the Tax Ordinance, by disregarding established administrative court jurisprudence on the scope of Article 8(1).
B. The Beneficiary Identification Argument
The company’s substantive argument proceeded from the statutory text of Article 8(1), which defines a supply of services as “any supply to a natural person, legal person, or organizational unit without legal personality” that does not constitute a supply of goods. The company emphasized that this definition presupposes an identifiable recipient—a requirement that could not be satisfied where:
First, the blockchain network lacks legal capacity (zdolność prawna) and possesses no authorized representative capable of entering into binding obligations. Second, the complete anonymity of network users precludes identification of any individual counterparty. Third, no bilateral obligational relationship (stosunek zobowiązaniowy) exists because neither party possesses the capacity to enforce claims against the other.
The company further noted the practical impossibility of issuing a proper VAT invoice, which under Article 106e(1)(3) and (5) must contain the purchaser’s name, address, and tax identification number. Where the purchaser remains unidentifiable, compliant documentation cannot be produced.
V. The Court’s Analysis
A. The Jurisdictional Framework
The Provincial Administrative Court prefaced its analysis by reference to Article 57a of the Law on Proceedings Before Administrative Courts (Prawo o postępowaniu przed sądami administracyjnymi), which circumscribes judicial review of individual tax rulings to allegations of procedural violations, interpretive errors, or misapplication of substantive law. The court emphasized that this provision limits the scope of review to the specific grounds articulated in the complaint, analogizing the standard to that applicable in cassation proceedings.
B. The Structural Requirements of VAT Liability
Proceeding to the merits, the court identified a fundamental deficiency in the tax authority’s reasoning: the failure to address the beneficiary identification requirement as a structural element of VAT liability.
The court articulated the governing principle in terms of considerable clarity:
“It is uniformly accepted in the jurisprudence that a transaction is subject to taxation only when it is executed within the framework of an obligational agreement, and one of the parties to the transaction may be regarded as the direct beneficiary of the activity. Moreover, the nexus between the payment received and the supply rendered to the payor must be direct and sufficiently distinct to permit the conclusion that payment is made in exchange for that supply.”
This formulation synthesizes two requirements: the existence of an obligational relationship and the identifiability of a direct beneficiary. The court found both elements absent in the circumstances at bar.
C. Doctrinal Support
The court drew support from prior jurisprudence, citing in particular the judgment of the Provincial Administrative Court in Kraków (Case No. I SA/Kr 122/22), which held that “a necessary element for concluding that an agreement encompassed a supply of services within the meaning of Article 8(1) of the Act on Tax on Goods and Services is the identification of the entity constituting the recipient of the supply (the existence of a service beneficiary).”
The court further invoked academic commentary for the proposition that beneficiary identification constitutes a structural requirement of VAT. As one commentator has observed: “A condition for VAT taxation of a given supply is the identification of the beneficiary of that service. Without an entity that actually derives benefit in connection with the receipt of a particular supply, one cannot speak of a transaction subject to VAT taxation.”
D. The Authority’s Analytical Failure
The court found that the tax authority had committed a fundamental analytical error by addressing only one element of the taxability inquiry—the existence of consideration—while ignoring another—the existence of an identifiable beneficiary. The authority’s interpretation thus rested on an incomplete application of Article 8(1), warranting annulment.
The court declined to resolve the substantive question of VAT liability, observing that such resolution would be premature given the authority’s failure to engage with the beneficiary identification issue. The court further noted that the authority had not addressed the taxpayer’s second and third questions concerning invoice documentation and the applicable tax rate, confirming the incomplete nature of the ruling under review.
VI. Doctrinal Implications
A. The Beneficiary Requirement as Structural Element
The Gdańsk court’s judgment reinforces the doctrinal position that beneficiary identification constitutes not merely an evidentiary matter but a structural prerequisite of VAT liability. This understanding finds support in the grammatical structure of Article 8(1), which speaks of supplies rendered “to” (na rzecz) identified categories of persons, and in the functional logic of value-added taxation, which contemplates a chain of identified taxable persons through whose hands goods and services pass.
The judgment thus stands for the proposition that the VAT system cannot accommodate transactions in which the recipient of a supply remains permanently and objectively unidentifiable. Such transactions may generate economic value and may involve the exchange of consideration, but they lack the bilateral obligational character that Article 8(1) presupposes.
B. Implications for Blockchain-Based Transactions
The ruling carries significant implications for enterprises operating within decentralized blockchain ecosystems. Where services are rendered to pseudonymous user communities through decentralized autonomous organizations or similar governance structures, and where the anonymity of participants constitutes a systemic feature rather than an incidental circumstance, the reasoning of the Gdańsk court suggests that no VAT liability arises.
This conclusion does not, however, extend to all cryptocurrency-remunerated transactions. Where an identifiable counterparty exists—as would be the case in a bilateral smart contract with a known party, or in transactions conducted through regulated exchanges subject to know-your-customer requirements—the standard VAT framework applies, and the Hedqvist principle governs.
C. Crowdfunding and VAT: A Taxonomy
The judgment invites consideration of a taxonomy of crowdfunding arrangements for VAT purposes. At one extreme stand regulated crowdfunding platforms operating under Regulation (EU) 2020/1503, where investor identification requirements ensure that service beneficiaries remain identifiable. At the other extreme stand fully decentralized blockchain-based funding mechanisms, where participant anonymity is architecturally guaranteed. Between these poles lie various intermediate arrangements presenting distinct analytical challenges.
The Gdańsk ruling addresses only the extreme case of complete, objective unidentifiability. The treatment of intermediate cases—where partial identification may be possible, or where identification is theoretically feasible but practically burdensome—remains to be developed through subsequent jurisprudence.
VII. Regulatory Context
A. The Crowdfunding Services Regulation
It bears noting that the crowdfunding services market has undergone significant regulatory development in recent years. Regulation (EU) 2020/1503 of the European Parliament and of the Council of October 7, 2020, on European crowdfunding service providers for business, defines crowdfunding services as the matching of investors interested in financing business projects with project owners.
The Polish implementing legislation—the Act of July 7, 2022, on Crowdfunding for Business Projects and Assistance to Borrowers—subjects crowdfunding service providers to supervision by the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego). Platforms providing crowdfunding services for business purposes must obtain authorization from the supervisory authority.
These regulatory requirements ensure that participants in regulated crowdfunding are subject to identification procedures, thereby preserving the bilateral obligational structure that VAT presupposes. The Gdańsk judgment thus addresses a residual category of crowdfunding-like arrangements that fall outside this regulatory perimeter.
B. The Persistence of Regulatory Gaps
The coexistence of regulated crowdfunding platforms and unregulated decentralized alternatives creates potential for regulatory arbitrage and raises questions concerning the coherence of the tax treatment applicable to economically similar arrangements. A service provider rendering identical software development services might face VAT liability when engaged through a regulated platform but escape liability when engaged through a decentralized autonomous organization.
Whether this differential treatment reflects sound policy or represents an unintended gap remains a question for legislative consideration. The Gdańsk court applied existing law to the facts presented; it did not—and could not—address the broader policy implications of its holding.
VIII. Practical Considerations for Tax Compliance
A. Documentation and Evidentiary Matters
Enterprises operating in the blockchain space should attend carefully to documentation of the structural characteristics of their transactions. Where a taxpayer seeks to establish that no identifiable beneficiary exists, contemporaneous records demonstrating the anonymity architecture of the relevant blockchain network, the absence of counterparty identification mechanisms, and the decentralized nature of governance arrangements will prove essential.
B. Defensive Positions in Tax Proceedings
The Gdańsk judgment provides a doctrinal foundation for taxpayers challenging adverse determinations in similar circumstances. The argument proceeds in two steps: first, that Article 8(1) requires an identifiable beneficiary as a structural element of taxable supply; second, that the taxpayer bears no burden of proving a negative where identification is objectively impossible due to the technological architecture of the transaction.
Taxpayers should anticipate that tax authorities may resist this reasoning, as the Gdańsk case itself demonstrates. The availability of administrative court review provides a mechanism for vindication of the taxpayer’s position, though the time and expense of litigation counsel in favor of careful pre-transaction planning where possible.
IX. Conclusion
The judgment of the Provincial Administrative Court in Gdańsk represents a significant contribution to the jurisprudence on the structural requirements of VAT liability. By holding that the impossibility of identifying a service beneficiary precludes the existence of a taxable supply, the court has articulated a limiting principle of considerable practical importance for transactions conducted within decentralized blockchain ecosystems.
The ruling does not exempt all blockchain-based or crowdfunding-financed services from VAT. It addresses the specific circumstance in which beneficiary identification is objectively and permanently impossible due to the technological architecture of the transaction. Within this narrow compass, however, the court’s reasoning appears doctrinally sound: the VAT system, premised on chains of identified taxable transactions, cannot accommodate supplies rendered to no one in particular.
Whether the legislature will intervene to address the resulting gap in the tax base—and whether such intervention would prove technically feasible given the pseudonymous architecture of decentralized networks—remain open questions. For the present, the Gdańsk judgment stands as authoritative guidance that the beneficiary identification requirement constitutes an essential structural element of VAT liability, the absence of which precludes taxation regardless of the economic substance of the transaction.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
