Assessing the Applicability of the General Anti-Avoidance Rule Under Polish Tax Law

An Eight-Test Framework Grounded in Administrative Court Jurisprudence

The General Anti-Avoidance Rule (Klauzula przeciwko unikaniu opodatkowania, hereinafter “GAAR”), codified in Articles 119a through 119f of the Polish Tax Ordinance (Ordynacja podatkowa), empowers the Head of the National Revenue Administration (Szef Krajowej Administracji Skarbowej) to disregard the tax consequences of transactions undertaken principally to obtain a tax advantage. The boundary between permissible tax planning and impermissible tax avoidance, however, remains notoriously elusive — and the exercise of administrative discretion in this domain is not infrequently arbitrary.

This article distills from the statutory framework and from an extensive body of administrative court jurisprudence — encompassing over two hundred judgments of the Supreme Administrative Court (Naczelny Sąd Administracyjny, hereinafter “SAC”) and voivodship administrative courts (wojewódzkie sądy administracyjne, hereinafter “VAC”) rendered between 2017 and 2025 — a systematic eight-test protocol for evaluating GAAR exposure with respect to any given transaction or transactional structure. Each test is anchored in specific judicial holdings and illustrated by case-law patterns in which the courts upheld or rejected the revenue authorities’ invocation of the GAAR.

Preliminary Observations: The Three Cumulative Conditions

As the Poznań VAC confirmed in its judgment of April 15, 2025 (I SA/Po 47/25), the application of Article 119a § 1 of the Tax Ordinance is contingent upon the conjunctive satisfaction of three conditions: first, the tax advantage must have constituted the principal purpose, or one of the principal purposes, of the transaction; second, the attainment of that advantage must, in the circumstances, contravene the object or purpose of the tax statute or the relevant provision thereof; and third, the manner of conduct must have been artificial. A court’s confinement of its review to a single prong of this tripartite inquiry constitutes a procedural deficiency (SAC, December 10, 2024, II FSK 1772/23).

The operative mechanism of the GAAR entails what the SAC has characterized as a sui generis recharacterization of the taxpayer’s transaction: tax consequences are determined not on the basis of the actual course of events, but on the basis of a hypothetical state of affairs deemed more consonant with the economic substance of the taxpayer’s position (SAC, June 13, 2025, II FSK 1235/22).

TEST 1: Identification of a Tax Advantage

Statutory basis: Article 119a § 1, read in conjunction with Article 119e of the Tax Ordinance (repealed, but the definition remains operative in the jurisprudence)

Inquiry: Does the transaction give rise to a tax advantage — i.e., the non-emergence of a tax liability, the deferral of its emergence, a reduction in the amount of tax, the creation or inflation of a tax loss, or the generation or increase of a tax overpayment or refund?

If NO — the GAAR is inapplicable. A transaction that is tax-neutral does not generate a tax advantage within the meaning of the clause. As the SAC held in its judgment of August 30, 2023 (II FSK 412/22): “The transaction of returning a capital contribution, being tax-neutral per se, does not give rise to a tax advantage.”

If YES — proceed to Test 2.

Jurisprudential patterns:

• Tax advantage identified: Reduction of the effective rate from 19% (dividend taxation) to 8.5% (lump-sum tax) by outsourcing tasks from a company to a shareholder’s sole proprietorship (numerous holdings, inter alia, SAC, November 5, 2024, II FSK 996/24). Substitution of two-tier CIT-plus-PIT taxation with a single 15% CIT levy at the family foundation level through intra-group bond issuances (Poznań VAC, November 7, 2024, I SA/Po 323/24; October 31, 2024, I SA/Po 319/24, I SA/Po 329/24).
• Tax advantage negated: Partial withdrawal of a contribution from a limited partnership — a transaction that is tax-neutral irrespective of the underlying motivation (SAC, December 13, 2024, II FSK 1155/24; SAC, August 30, 2023, II FSK 412/22).

TEST 2: The Purpose Test — Principal or Merely Incidental?

Statutory basis: Article 119a § 1, read in conjunction with Article 119d of the Tax Ordinance

Inquiry: Was the attainment of a tax advantage the principal purpose, or one of the principal purposes, of the transaction — or did it merely constitute an incidental consequence of an economically motivated undertaking?

Governing judicial principle: “Under Article 119d of the Tax Ordinance, the circumstance that eliminates the possibility of applying the GAAR is the existence of even a single economic or commercial purpose that must be regarded as more than ‘of minor significance'” (SAC, August 22, 2023 — a consolidated line of six judgments rendered on the same date: III FSK 354/23, III FSK 489/23, III FSK 490/23, III FSK 491/23, III FSK 493/23, III FSK 494/23).

If the tax purpose was the SOLE purpose — Article 119a § 5 applies (the transaction is treated as if it had never occurred).

If an economic purpose “more than of minor significance” exists — the GAAR is inapplicable.

Jurisprudential patterns — economic purpose upheld:

• Partial withdrawal of a capital contribution from a limited partnership motivated by increasing business risk — partners retain the right to determine the level of their capital exposure, and the withdrawal immediately reduces the value of assets exposed to commercial risk (SAC, December 13, 2024, II FSK 1155/24; SAC, August 23, 2023, II FSK 343/22).
• Cessation of business activity by a sixty-seven-year-old woman and transfer of real property to her personal estate — “It is the natural course of affairs for older persons to curtail their activity […] the interpretive authority has no legal basis to interfere with the lawful and natural conduct of a taxpayer” (Gdańsk VAC, October 7, 2025, I SA/Gd 563/25).
• Retention of a trademark in the proprietor’s personal estate rather than contributing it to the company — rational where the company is indebted and faces potential liquidation (Olsztyn VAC, December 11, 2024, I SA/Ol 384/24, I SA/Ol 385/24).
• Demerger (podział przez wydzielenie) motivated by risk diversification — the authority may not disregard the company’s stated business rationale without substantive evaluation thereof (Lublin VAC, May 21, 2025, I SA/Lu 34/25).

Jurisprudential patterns — tax purpose found predominant:

• Disposal of shares on the eve of the entry into force of new tax legislation, the economic source of income remaining materially unchanged — indicative that the sole purpose was the avoidance of taxation (Warsaw VAC, May 9, 2024, III SA/Wa 494/24).
• Conversion of a limited liability company (sp. z o.o.) into a joint-stock company (S.A.) for the sole purpose of inflating the cost basis upon the contemplated redemption or sale of shares — “Were it not for the prospect of obtaining a potential tax advantage, a rationally acting entity would not have adopted this course of action” (Gdańsk VAC, February 25, 2025, I SA/Gd 1037/24; Łódź VAC, October 22, 2025, I SA/Łd 452/25).

TEST 3: Conflict with the Ratio Legis of the Applicable Provision

Statutory basis: Article 119a § 1 of the Tax Ordinance — the advantage must be “contrary, in the given circumstances, to the object or purpose of the tax statute or its provision”

Inquiry: Has the authority identified a specific provision of the tax statute whose object or purpose is contravened by the advantage obtained?

Governing judicial principle: “Inasmuch as Article 119a § 1 expressly refers to ‘the object and purpose of a provision of the tax statute,’ what is required is not some generalized assertion, but rather the identification of a concrete regulation with which the advantage would be inconsistent. One must not lose sight of the fact that, since the advantage is said to violate ‘the object and purpose’ of a provision, in order to consider that ‘object and purpose,’ one must first identify the specific provision in question” (SAC, December 19, 2019, II FSK 148/18).

If the authority has NOT identified a specific provision — the invocation of the GAAR is deficient.

Jurisprudential patterns — conflict established:

• Circumvention of the prohibition on amortizing internally generated intangible assets through circular (“carousel”) transfers of a trademark among affiliated entities — conflict with Article 16b(1)(6) of the CIT Act / Article 22b(1)(6) of the PIT Act (Warsaw VAC, April 30, 2024, III SA/Wa 261/24; SAC, January 16, 2024, II FSK 134/23).
• Deployment of a family foundation (fundacja rodzinna) as a vehicle for deferring taxation — conflict with the object and purpose of the Family Foundation Act, the ratio legis of which is the accumulation of wealth and facilitation of succession, not the interposition of an intermediary in the flow of funds (Gdańsk VAC, August 5, 2025, I SA/Gd 432/25; June 18, 2025, I SA/Gd 304/25).
• Artificial generation of deductible expenses through the lease of real property “to oneself” — conflict with Article 15(1) of the CIT Act, the purpose of which is to permit the deduction of expenditures having genuine commercial justification (numerous holdings, inter alia, Poznań VAC, April 24, 2025, I SA/Po 88/25).

Jurisprudential patterns — no conflict found:

• Election of the Estonian CIT regime (ryczałt od dochodów spółek) — “The election of the lump-sum regime […], even if motivated by tax considerations, should in principle be associated with the attainment of a tax advantage consistent with the object and purpose of the statute” (Łódź VAC, October 29, 2024, I SA/Łd 509/24; Gliwice VAC, February 16, 2023, I SA/Gl 1125/22). Caveat: Ancillary transactions accompanying such an election — e.g., the lease of a going concern in order to circumvent Article 28k(1)(6) of the CIT Act — may be subject to independent scrutiny (Poznań VAC, February 25, 2025, I SA/Po 802/24).

TEST 4: Artificiality of the Course of Conduct

Statutory basis: Article 119c §§ 1–2 of the Tax Ordinance

Inquiry: Would a rationally acting entity, pursuing lawful objectives, have adopted the same course of conduct predominantly for sound economic reasons?

Governing judicial principle: Even the satisfaction of the indicia enumerated in Article 119c § 2 does not conclusively establish artificiality: “In the case of transactions with respect to which […] it must be accepted that a rationally acting entity […] would have adopted the same course of conduct predominantly for sound economic reasons, it is immaterial whether the course of conduct exhibits the characteristics that may indicate artificiality under § 2 of Article 119c. […] Section 2 does not contain a catalogue of conditions that conclusively evidence artificiality, but rather conditions that may indicate artificiality — albeit only ‘on the basis of the existing circumstances’ (§ 1)” (Warsaw VAC, February 5, 2025, III SA/Wa 2189/24).

Moreover: “Not every course of conduct adopted by a taxpayer that yields a particular economic outcome favorable to him can or should be deemed artificial” (Gdańsk VAC, May 26, 2020, I SA/Gd 375/20). “Artificiality cannot be predicated solely upon the intention to obtain a tax advantage; rather, it must be predicated upon such a configuration of the transaction — producing defined tax consequences — as ought, in the given circumstances, to be regarded as contrary to the object or purpose of the tax statute or its provision” (ibid.).

Jurisprudential patterns — artificiality established (Article 119c § 2):

• Unjustified fragmentation of operations (subparagraph 1): Conversion of a limited liability company into a joint-stock company for the sole purpose of disposing of or redeeming shares at an inflated cost basis — “the process, which is directed toward the simple objective of the sale or redemption of shares, has been elongated through the introduction of superfluous intermediate steps” (Gdańsk VAC, February 25, 2025, I SA/Gd 1037/24).
• Engagement of intermediary entities without economic justification (subparagraph 2): A company devoid of genuine business activity, employees, or assets, acquiring a going concern under a lease in order to circumvent the eligibility restrictions of the Estonian CIT regime (Poznań VAC, February 25, 2025, I SA/Po 802/24). A family foundation deployed as an “instrument” for deferring taxation (Gdańsk VAC, August 5, 2025, I SA/Gd 432/25).
• Restoration of substantially the same pre-transaction state (subparagraph 3): Demerger of real property to a newly formed company, which thereupon leases the property back to the demerged company — “the office and warehouse space will be utilized by the demerged company in the same manner as before” (Wrocław VAC, May 13, 2025, I SA/Wr 913/24).
• Economic risk exceeding non-tax benefits (subparagraph 5): Disposal by a fund of an income-producing asset in exchange for unsecured bonds issued by shell companies lacking the capacity to make payment — “it appears irrational for the Fund to divest itself of the asset […] without examining the economic risk and without any security for payment” (SAC, July 8, 2025, II FSK 1275/22).

Jurisprudential patterns — artificiality negated:

• Legal partnership (spółka partnerska) of attorneys-at-law: Partners’ sole contributions were in cash, and legal services were rendered both by the partners and by third-party lawyers — “such an arrangement is not inconsistent with the purpose of establishing the partnership” (Kielce VAC, November 21, 2024, I SA/Ke 419/24).
• Phantom stock as an employee incentive program: “Inasmuch as the conclusion of such agreements has become a recognized commercial practice for the remuneration and retention of employees […], the charge of artificiality is unwarranted” (SAC, June 13, 2025, II FSK 1286/22).
• Lease of a trademark: Where the company is indebted and may face liquidation, contributing the mark as an in-kind contribution would expose it to loss — “these are rational reasons that directed the taxpayer toward leasing the trademark that he owns” (Olsztyn VAC, December 11, 2024, I SA/Ol 385/24).
• Holding structures: “The establishment of an organizational structure employing a holding company does not, in se, constitute tax avoidance […] a holding company is not, as a general proposition, an artificial intermediary” (Warsaw VAC, September 30, 2020, III SA/Wa 2377/19).

TEST 5: Temporal Scope

Statutory basis: Article 7 of the 2016 Amending Act (ZmOrdPU16)

Inquiry: When did the tax advantage crystallize, and does it fall within the temporal ambit of the GAAR?

Settled lines of SAC authority:

1. Personal and corporate income tax for the 2016 fiscal year — the GAAR does NOT apply: “Articles 119a through 119f of the Tax Ordinance may not be applied to taxpayers of the personal income tax for the 2016 fiscal year” (SAC, May 6, 2025, II FSK 2071/23). The same holding obtains with respect to corporate income tax (SAC, July 5, 2024, II FSK 2119/23; SAC, November 9, 2023, II FSK 620/22, II FSK 1293/23, II FSK 1227/23 — a consolidated series of over a dozen judgments).
2. Tax advantages from 2017 onward — the GAAR DOES apply, even to transactions executed before July 15, 2016: “Even where the transactions that gave rise to the tax advantage were undertaken prior to the entry into force of Articles 119a et seq., if the tax advantage itself materialized after their entry into force, those transactions may be examined in the light of those provisions” (SAC, August 22, 2023, III FSK 492/23). Notably, however: “the GAAR may thus be applied to transactions effected prior to July 15, 2016, provided that the tax advantage was obtained commencing from 2017” (Warsaw VAC, February 5, 2025, III SA/Wa 2189/24, ratio 2).
3. Pre-GAAR period — no instrument for challenging optimization: “Prior to the introduction of Articles 119a et seq. of the Tax Ordinance, no provisions existed that would permit the disregard or modification of the tax consequences of taxpayer conduct bearing the hallmarks of tax avoidance” (SAC, April 15, 2025, II FSK 1024/22, II FSK 258/24). The authorities may not invoke Article 15(1) of the CIT Act as a de facto anti-avoidance clause (SAC, May 24, 2022, II FSK 1291/21), nor may they deploy Article 199a of the Tax Ordinance to that end (SAC, May 23, 2024, II FSK 1066/21).

TEST 6: Statutory Exclusions

Statutory basis: Article 119b § 1 of the Tax Ordinance

Inquiry: Does any statutory ground of exclusion obtain?

No GAAR assessment may be issued against an entity that holds a protective opinion (opinia zabezpieczająca), to the extent covered by that opinion; in matters concerning value-added tax and non-tax budgetary charges; or against an entity that has concluded a tax accord or an investment agreement (porozumienie podatkowe, porozumienie inwestycyjne), to the extent covered thereby.

The subsidiarity principle: The Head of the National Revenue Administration may decline to initiate or to assume GAAR proceedings where the application of other provisions of tax law suffices to counteract tax avoidance (Article 119gb § 1). As the Warsaw VAC observed, “the general anti-avoidance clause constitutes a measure of last resort for the tax authorities” (September 30, 2020, III SA/Wa 2377/19).

TEST 7: Composite Transactions

Statutory basis: Article 119f § 1 of the Tax Ordinance

Inquiry: Does the transaction form part of a series of interconnected transactions — carried out by the same or by different entities — such that their aggregate assessment alters the characterization of individual steps?

Governing judicial principle: “This does not mean, however, that within a series of interconnected transactions motivated by the attainment of economic objectives […] one cannot identify individual steps that were executed solely with a view to a tax advantage. […] The omission of those steps from the series of transactions undertaken would not have impaired in the slightest the attainment of the stated economic or commercial objectives” (SAC, August 9, 2024, II FSK 1903/23).

Jurisprudential patterns:

• Investment fund — bond issuance by special-purpose vehicles to reclassify revenue from taxable to exempt sources — the chain of entities evaluated in the aggregate (Warsaw VAC, February 23, 2024, III SA/Wa 2570/23).
• Circular trademark transfers: Ownership of the mark returns to the original company at an updated valuation, enabling renewed amortization — “there is no doubt that both the conditions and the objectives of the GAAR application have been satisfied” (Warsaw VAC, April 17, 2024, III SA/Wa 274/24).
• Leveraged buyout (LBO): Bond issuance → acquisition → debt consolidation → deduction of interest — the authority justifiably identified both the fragmentation of operations and the engagement of intermediary entities (SAC, December 5, 2019, II FSK 114/18).

TEST 8: The GAAR–Sham Transaction Demarcation

Statutory basis: Article 119a versus Article 199a of the Tax Ordinance

Inquiry: Has the authority correctly identified the applicable legal instrument — distinguishing between the GAAR (Article 119a) and the sham transaction doctrine (Article 199a)?

Governing judicial principles:

1. Distinct prerequisites: “The sham transaction provision (Article 199a § 2) may be applied both to events that occurred before the introduction of the GAAR and to events that occurred thereafter, inasmuch as the prerequisites for the application of the sham transaction provision are distinct from those governing anti-avoidance measures” (SAC, December 12, 2025, II FSK 512/23).
2. Article 199a does not substitute for the GAAR: “Article 199a of the Tax Ordinance does not constitute an anti-avoidance clause. That provision does not empower the tax authorities to disregard […] the consequences arising from valid and effective legal transactions undertaken for the purpose of evading taxation” (SAC, September 30, 2024, II FSK 1483/21). “Article 199a § 1 does not afford the possibility of disregarding the tax consequences of valid and effective legal transactions (e.g., donations) on principles analogous to those derived from the provisions governing the GAAR” (SAC, January 30, 2024, II FSK 571/21).
3. Pre-2016 — no available instrument: “A challenge to the taxpayer’s optimization scheme must rest upon an explicit legal basis; the tax authorities may not employ other provisions (e.g., Article 199a §§ 1 and 2) as a functional equivalent of an anti-avoidance clause” (Poznań VAC, August 11, 2023, I SA/Po 245/23; SAC, February 2, 2024, II FSK 582/21). “Even upon a showing that the restructuring of the group was designed to yield a tax advantage, in 2013 there existed no basis upon which to derive tax consequences from that fact” (ibid.).

Synthesis: A Sequential Algorithm for GAAR Risk Assessment

The assessment of GAAR exposure should proceed in the following sequence:

Step 1 — The Tax Advantage Test. Does the transaction generate a tax advantage? If the transaction is tax-neutral, the inquiry terminates. The GAAR is inapplicable.

Step 2 — The Purpose Test. Was the tax advantage the principal purpose, or one of the principal purposes, of the transaction? Does an economic purpose “more than of minor significance” exist? If so, the GAAR cannot be invoked. If the tax advantage was the sole purpose, Article 119a § 5 applies (disregard of the transaction).

Step 3 — The Conflict Test. Is the advantage contrary to the object or purpose of a specific provision of the tax statute? The authority must identify a concrete provision — generalized assertions are insufficient.

Step 4 — The Artificiality Test. Would a rationally acting entity have adopted the same course of conduct for sound economic reasons? The satisfaction of the indicia enumerated in Article 119c § 2 does not automatically establish artificiality — the determinative inquiry is that under § 1.

Step 5 — The Temporal Test. Did the advantage crystallize after July 15, 2016? For income taxes, only from the 2017 fiscal year onward. The GAAR does not apply to the 2016 fiscal year (settled SAC authority).

Step 6 — The Exclusions Test. Protective opinion, VAT, tax or investment accord, the subsidiarity principle (Article 119gb § 1).

Step 7 — The Composite Transaction Test. Does the transaction form part of a broader chain in which discrete steps that are superfluous to the commercial objective may be identified?

Step 8 — The Demarcation Test. Has the authority correctly classified the factual matrix — as a GAAR matter (Article 119a) rather than a sham transaction (Article 199a)? The two instruments rest upon distinct prerequisites and are not interchangeable.

In the planning of tax-efficient structures — particularly multi-step reorganizations, transactions involving family foundations, trademark-lease arrangements, elections of the Estonian CIT regime coupled with intra-group property leases, or corporate transformations — GAAR risk assessment conducted in accordance with the foregoing algorithm should constitute an integral element of the advisory process. As the administrative courts have repeatedly emphasized, the purpose of the GAAR “is not to deprive taxpayers of the possibility of lawfully minimizing the taxes they pay” (Lublin VAC, March 15, 2023, I SA/Lu 22/23). The frontier of permissible optimization lies, however, precisely where artificiality of conduct begins.

Expert guidance in this regard (see: tax advisory) will enable the development of structures in which the economic rationale is not merely asserted but demonstrable in the event of a dispute with the revenue authorities — and in which each of the eight tests yields a result favorable to the taxpayer.

Robert Nogacki

Robert Nogacki – licensed legal counsel (radca prawny, WA-9026), Founder of Kancelaria Prawna Skarbiec.

There are lawyers who practice law. And there are those who deal with problems for which the law has no ready answer. For over twenty years, Kancelaria Skarbiec has worked at the intersection of tax law, corporate structures, and the deeply human reluctance to give the state more than the state is owed. We advise entrepreneurs from over a dozen countries – from those on the Forbes list to those whose bank account was just seized by the tax authority and who do not know what to do tomorrow morning.

One of the most frequently cited experts on tax law in Polish media – he writes for Rzeczpospolita, Dziennik Gazeta Prawna, and Parkiet not because it looks good on a résumé, but because certain things cannot be explained in a court filing and someone needs to say them out loud. Author of AI Decoding Satoshi Nakamoto: Artificial Intelligence on the Trail of Bitcoin’s Creator. Co-author of the award-winning book Bezpieczeństwo współczesnej firmy (Security of a Modern Company).

Kancelaria Skarbiec holds top positions in the tax law firm rankings of Dziennik Gazeta Prawna. Four-time winner of the European Medal, recipient of the title International Tax Planning Law Firm of the Year in Poland.

He specializes in tax disputes with fiscal authorities, international tax planning, crypto-asset regulation, and asset protection. Since 2006, he has led the WGI case – one of the longest-running criminal proceedings in the history of the Polish financial market – because there are things you do not leave half-done, even if they take two decades. He believes the law is too serious to be treated only seriously – and that the best legal advice is the kind that ensures the client never has to stand before a court.