The Principle of Free Evaluation of Evidence in Tax Proceedings
The principle of free evaluation of evidence constitutes the cornerstone of fact-finding in tax proceedings, establishing the methodological framework through which tax authorities determine the factual predicate underlying administrative determinations. Codified in Article 191 of the Polish Tax Ordinance, this principle provides that “the tax authority shall evaluate, on the basis of the entirety of the collected evidentiary material, whether a given circumstance has been proven.” While this formulation grants administrative bodies substantial discretion in weighing evidence, such latitude must not be conflated with arbitrariness—indeed, the transgression of principled boundaries in evidentiary assessment remains among the most frequently cited grounds for judicial annulment of tax decisions.
I. The Doctrinal Foundation of Free Evidentiary Evaluation
The principle of free evaluation of evidence in tax proceedings signifies that the adjudicating authority operates unencumbered by formal hierarchies prescribing the probative weight of particular evidentiary categories. In contradistinction to systems of legal proof—wherein statutory provisions predetermine the evidentiary significance of designated instruments—free evaluation reserves to the administrative body the competence to independently assess the credibility and materiality of each evidentiary element.
As the Supreme Administrative Court articulated in its judgment of March 6, 2025 (Case No. I FSK 1815/21), the principle of free evaluation of evidence presupposes that the tax authority may freely assess the credibility and probative force of individual pieces of evidence upon which it predicates its decision, provided that such freedom does not degenerate into arbitrariness. In conducting this assessment, the authority must be guided by the canons of logical reasoning, consistency with scientific principles and practical experience, treatment of collected evidence as objective phenomena, evaluation of evidence exclusively from the perspective of its relevance and value to the matter at hand, and comprehensiveness of analysis.
The principle of free evaluation manifests two distinct analytical dimensions. Its positive aspect conduces to the establishment of findings of fact through identification of evidence deemed credible. Its negative aspect finds expression in the refusal to credit certain evidence, with the consequent rejection of factual narratives divergent from those determined by the administrative authority.
II. Prerequisites for Proper Evidentiary Assessment
Proper assessment of evidentiary material must satisfy three cumulative requirements as delineated in administrative court jurisprudence. First, it must comport with the rules of logical reasoning. Second, the assessment must accord with practical experience and common knowledge. Third, it must be comprehensive, encompassing all admitted evidence in their mutual interrelationships.
The Voivodeship Administrative Court in Wrocław, in its judgment of January 22, 2025 (Case No. I SA/Wr), emphasized that examination must extend not merely to individual pieces of evidence in isolation, but to all evidence collectively—in their reciprocal connections. To ensure that the latitude inherent in free evaluation does not transgress into arbitrariness, the tax authority must adhere to the principles of logic, maintain consistency with scientific knowledge and practical experience, treat collected evidence as objective phenomena, evaluate evidence exclusively with reference to its significance and value to the pending matter, and conduct comprehensive analysis.
III. Evidentiary Completeness as a Predicate for Free Evaluation
The principle of free evaluation of evidence can be properly effectuated only when the tax authority has compiled, in accordance with applicable procedural requirements, all evidence necessary to ascertain objective truth. Evidentiary material achieves completeness when all evidence has been gathered and considered, evidentiary motions have been resolved, and the established factual state constitutes a complete, coherent, and logical whole.
As the Voivodeship Administrative Court in Kraków held in its judgment of July 29, 2025 (Case No. I SA/Kr 342/25), the principle of evidentiary completeness does not, however, mandate the continuation of evidentiary proceedings when the totality of circumstances disclosed in the matter suffices for resolution. Tax authorities bear no obligation to admit every piece of evidence proposed by a party where other evidence adequately and sufficiently establishes the relevant facts.
The omission of evidence may engender doubts as to the correspondence between established facts and reality, and may similarly impeach the soundness of the assessment of other evidence. Accordingly, the authority, in evaluating evidentiary material, may not disregard any material evidence—the reasoning of the tax decision must demonstrate which evidence was credited, which was not, and the grounds therefor.
IV. The Demarcation Between Free and Arbitrary Evaluation
The distinction between free and arbitrary evaluation of evidence carries dispositive significance for the propriety of tax determinations. Arbitrary evaluation constitutes a methodology of fact-finding predicated upon criteria other than those appropriate to free evaluation. In arbitrary evaluation, the tax authority proceeds according to criteria known only to itself, or criteria for which no objective reference point conducive to assessment of the authority’s fact-finding can be identified.
The Supreme Court has characterized as arbitrary those factual findings that, while ostensibly supported by evidentiary material, rest upon material that is incomplete or inadequately considered. The allegation of arbitrariness is precluded only by findings derived from the totality of evidentiary material, comprehensively compiled and examined (Supreme Court judgment of November 23, 1994, Case No. III ARN 55/94).
Evidentiary assessment conducted by the authority may not be selective. The tax authority may not, therefore, selectively invoke only such evidence as confirms its predetermined thesis while failing to subject that evidence to detailed analysis or mutual confrontation. This position was affirmed by the Voivodeship Administrative Court in Olsztyn in its judgment of May 19, 2022 (Case No. I SA/Ol 130/22).
V. The Binding Force of Evidentiary Material
Article 191 of the Tax Ordinance gives rise to the principle that the tax authority is bound by the evidentiary material. This signifies that all admitted evidence constitutes the subject of evaluation, and the determination as to whether a given factual circumstance has been established must proceed from the entirety of such evidence. Factual findings may be predicated only upon evidence whose content the tax authority has examined.
The formal manifestation of such examination is the authority’s order admitting the evidence. The tax authority may not derive factual findings from evidence it has not admitted and whose content it has not, therefore, apprehended. Simultaneously, the authority, being bound by admitted evidence, is equally bound by the content of that evidence—it may not distort, alter, or modify the information contained therein.
VI. Free Evaluation of Evidence in VAT Carousel Fraud Cases
The principle of free evaluation of evidence assumes particular significance in matters involving VAT carousel fraud. Participants in such schemes endeavor to project an appearance of legitimacy, generating documentary indicia of operational propriety. In such circumstances, analysis of individual pieces of evidence and particular factual circumstances in isolation from the totality of events may yield erroneous conclusions regarding fiscal compliance.
As the Supreme Administrative Court observed in its judgment of January 21, 2025 (Case No. I FSK 1689/21), only comprehensive analysis of all circumstances permits the conclusion that the true objective of the entities’ activities was the procurement of unjustified tax advantages rather than the conduct of legitimate commercial enterprise. Each circumstance must first be evaluated with reference to the evidence indicating it, with due regard for the principles of correct reasoning, the guidance of knowledge, and practical experience.
In carousel fraud cases, demonstration of conscious participation by the taxpayer requires proof of deviation from typical conduct characteristic of the taxpayer’s principal business activity. In examining the taxpayer’s good faith and exercise of due diligence, objective circumstances potentially indicative of deliberate engagement in abuse of rights or tax fraud assume material relevance.
VII. Practical Experience as an Evaluative Criterion
The criterion of practical experience in evidentiary assessment has attracted doctrinal scrutiny. Practical experience denotes knowledge, derived from past events, possessed by an individually identified subject concerning causal relationships. Such knowledge does not constitute scientific knowledge and is not susceptible to documentation, thereby complicating verification of whether the authority’s assessment employing practical experience constitutes free evaluation.
Even assuming that multiple subjects participated in identical events, their practical experience need not be identical—regard must be had to the cognitive capacities, both physical and intellectual, of each subject. Consequently, the capacity to verify the propriety of assessment predicated upon practical experience is constrained absent specification of the events from which such experience purportedly derives.
VIII. Free Evaluation of Evidence and Expert Opinions
Article 191 of the Tax Ordinance unambiguously designates the tax authority as the exclusive entity competent to make factual findings—no other subject is entitled to participate in this process. This signifies that the authority is not bound by conclusions presented by experts. Expert opinions are subject to the same evaluative criteria as other evidence, and the substance of an opinion does not determine whether a particular factual circumstance has been proven.
Expert opinion serves as an aid to the tax authority in material evaluation through incorporation of specialized knowledge. Nevertheless, the competence to find facts invariably resides with the tax authority. As the Voivodeship Administrative Court in Poznań indicated in its judgment of February 27, 2025 (Case No. I SA/Po 574/24), upon reconsideration of a matter, the authority must evaluate expert opinions for their utility to resolution of the case.
IX. Judicial Review of Evidentiary Assessment
Evidentiary assessment conducted by the tax authority is subject to review by the appellate authority upon challenge to the decision in administrative appeal proceedings. Review encom
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.
