The Holding Exemption and Probatio Diabolica
The Holding Exemption and Probatio Diabolica
When the Tax Authority Ignores the Supreme Court and Demands Knowledge Beyond the Taxpayer’s Reach
Individual Tax Ruling of 26 January 2026 (0114-KDIP2-2.4010.578.2025.1.RK) in light of the Supreme Administrative Court Judgment of 9 July 2025 (II FSK 1425/24)
Robert Nogacki | Kancelaria Prawna Skarbiec
Introduction
When the Polish legislature enacted the holding regime in Chapter 5b of the CIT Act in 2022, the stated objective was to level the playing field with Luxembourg, the Netherlands, and Cyprus. The individual tax ruling of 26 January 2026 reveals that this promise was encumbered by a condition structurally incapable of fulfilment in modern private equity. More remarkably still, the ruling was issued in a context where the Supreme Administrative Court had already addressed the identical legal question—and the applicant had expressly invoked that judgment. The Director of the National Tax Information Service ignored it entirely.
Factual Background
The applicant—a Polish limited liability company (sp. z o.o.) serving as a holding company for renewable energy project companies—sought the exemption under Article 24o(1) for the disposal of shares in domestic subsidiaries to an unrelated party. All substantive conditions were met: genuine economic activity, premises, personnel, advisory services to subsidiaries, two-year holding period. The impediment: Article 24m(1)(2)(e), requiring that ultimate beneficial owners not be established in any listed jurisdiction.
The ownership structure comprised approximately seven to eight tiers across six jurisdictions: Polish joint-stock companies, Luxembourgish S.à r.l. entities, Ontario limited partnerships, Luxembourg SCSp funds, and further LPs in the Cayman Islands, Delaware, and the United Kingdom—over twenty entities in total, including investment funds, natural persons, trusts, and partnerships. The company undertook genuine verification efforts: meetings with the lead investor (K. SCSp (USD)), correspondence, public registry analysis. The fund’s representatives unequivocally stated they could not disclose further data.
The Authority’s Position
The Director of KIS ruled the position incorrect: Article 24m(1)(2)(e) imposes an affirmative obligation to demonstrate that no beneficial owner is established in a proscribed jurisdiction. The authority did not find tax haven entities present—it found the taxpayer had failed to prove their absence. A fundamentally different epistemic operation: the shifting of negative proof.
The authority cited Parliamentary Print 1532, stating the holding regime was intended for “single-tier structures (with relatively simple ownership links).” It dismissed the Supreme Administrative Court judgment of 9 July 2025 (II FSK 1425/24)—which the applicant had expressly invoked—with a formulaic sentence stating that judicial decisions in individual cases are not binding, without engaging its reasoning.
The NSA Judgment the Authority Overlooked
The context of this ruling requires discussion of the judgment the applicant relied upon and the authority ignored.
In case II FSK 1425/24, the Supreme Administrative Court considered a cassation appeal by the Director of the Tax Administration Chamber in Warsaw against a Provincial Administrative Court ruling that had upheld the complaint of a listed company (F. S.A.) denied a CIT overpayment refund for 2022 in connection with the holding exemption. The facts were analogous: a multi-tier holding structure, dispersed shareholding, objective inability to identify all indirect shareholders. The company had applied to the National Depository for Securities (KDPW) for a shareholder list, verified it against the proscribed jurisdiction lists, contacted shareholders lacking a PESEL number—and was unable to go further.
The NSA dismissed the authority’s cassation appeal, formulating a thesis of fundamental importance: “The interpretation of Article 24m(2)(e) of the CIT Act indicates that the requirement to identify all shareholders at indirect levels of the holding structure is disproportionate and contrary to the purposive interpretation of the enacted provisions.” The Court held that provisions cannot be interpreted so as to impose obligations impossible to fulfil, invoking Article 2 of the Polish Constitution (the principle of trust in the state and the law). It also noted that the tax authority had not indicated “in any way what obligations the Company neglected or whether any other steps exist that would enable verification of indirect shareholders.”
The NSA did, however, introduce a material qualification: “the above considerations should be referred only to the present case, in a situation of dispersed shareholding. The thesis advanced by the tax authority regarding the necessity of obtaining data on all indirect entities participating in the holding company may prove effective in a different (verifiable) ownership structure of a specific entity.” This qualification is central to the analysis of the ruling under review.
Critical Analysis
1. Probatio Diabolica
Requiring proof of nonexistence is the classical devil’s proof. The applicant undertook genuine efforts—meetings, correspondence, partial documentation, public registry searches. Representatives of K. SCSp (USD) unequivocally indicated they could not disclose further data. The authority demands knowledge the taxpayer objectively cannot possess. Ultra posse nemo obligatur.
2. The Authority Against the NSA—Silent Disregard of Binding Jurisprudence
The most significant aspect of this ruling is what it does not contain. The applicant expressly cited the NSA judgment of 9 July 2025 (II FSK 1425/24), quoting the case number, date, and ratio decidendi. The Director of KIS dismissed that judgment with a boilerplate formula (“judicial decisions in individual cases are not binding”) without engaging its substance. He did not distinguish the facts, did not challenge the ratio, did not justify departing from the jurisprudential line. He used a procedural platitude to avoid confrontation with a final judgment of the highest administrative court on an identical legal question.
It should be noted, however, that the applicant’s situation is not identical to the facts of the NSA case. In II FSK 1425/24, the complainant was a listed company with dispersed shareholding—and the NSA expressly limited its reasoning to that scenario. The applicant in the ruling under review is a sp. z o.o. within a PE/VC fund structure. The problem arises not from stock-exchange dispersion but from the multi-tiered nature of fund structures, where fund managers do not disclose their investors’ data.
This, however, does not weaken the argument—it strengthens it. If the NSA held it disproportionate to require full verification from a listed company that could only apply to the KDPW, then a fortiori the same standard should protect a company that undertook more extensive efforts—meetings, correspondence, registry analysis—and received a formal refusal of further disclosure. The ruling of 26 January 2026 tests the boundary of the NSA judgment, and the Director of KIS implicitly declines to extend its ratio to fund structures, without advancing any argument to justify that distinction.
3. Systemic Dysfunction—the Holding Regime Foreclosed for PE/VC
The consequences extend beyond the individual case. In light of this ruling, every Polish company with a global PE/VC fund as indirect shareholder faces a fundamental obstacle to the holding exemption. The NSA judgment opened a door for listed companies with dispersed shareholding, but expressly limited it to that scenario. PE/VC structures—where stock-exchange dispersion is absent but an analogous impossibility of identifying ultimate fund beneficiaries exists—remain in a grey zone.
The problem extends to listed companies as well: as the ruling of 5 January 2026 concerning a stock-exchange-listed parent demonstrates, no public company with an international shareholder base will satisfy the condition under subparagraph (e) in the Director of KIS’s view—notwithstanding the NSA’s contrary position in II FSK 1425/24. The legislature created a holding regime from which—in the authority’s interpretive practice—the most common forms of holding activity worldwide cannot benefit.
4. Comparative Perspective
The Dutch deelnemingsvrijstelling imposes its jurisdictional condition on the subsidiary (a low-taxed passive income test), not the holding’s ownership structure. Luxembourg Article 166 L.I.R. operates similarly. Cyprus’s participation exemption likewise directs the jurisdictional condition at the subsidiary. Poland’s approach—imposing a cleanliness condition on the entire ownership chain including entities beyond the holding’s control—is a legislative unicum. The comparison is not perfectly symmetrical—the Dutch participation exemption carries its own restrictions—but the directional point holds: jurisdictional scrutiny is applied to the subsidiary, not to the chain above the holding.
5. Legislative Purpose vs. Regulatory Effect
Article 24m(1)(2)(e), as applied by the authority, penalises the ownership structure rather than the transaction. The applicant was not channelling profits to a tax haven—it was selling shares in a Polish company to an unrelated party in a transaction with a purely commercial purpose. The letter of the law detaches from the ratio legis. The legislature itself stated in the explanatory memorandum (Parliamentary Print 1532) that the regime’s purpose was to “create a favourable environment for foreign investors to locate holding companies (e.g., regional ones) in Poland”—thus also for entities in multi-tier structures. The authority’s position is also at odds with the declared objectives of the general anti-avoidance rule (GAAR), which is designed to combat aggressive tax planning, not to deny preferences to entities conducting genuine economic activity.
6. Litigation Prospects
The taxpayer has a strong basis for judicial review before the administrative courts. In light of the NSA judgment, the argumentation encompasses: violation of Article 2 of the Constitution (principle of trust in the state and the law), the principle of impossibilium nulla obligatio, pro-business and pro-competitive interpretation of legislation, and disproportionality of the requirement relative to the institution’s purpose. All of these arguments have already been endorsed by the NSA in case II FSK 1425/24.
The pivotal argument will be the a fortiori reasoning: if a listed company that could only apply to the KDPW satisfied the due diligence standard in the NSA’s assessment, then all the more so should a company in a PE/VC structure that held meetings with the investor, conducted correspondence, analysed public registries, and received a formal refusal of further disclosure. Compare the favourable ruling of 8 January 2026, where a simple ownership structure enabled the exemption—the decisive variable in these tax disputes is structural complexity, not transaction quality.
Doctrinal support is provided by B. Brzeziński, K. Lasiński-Sulecki, and W. Morawski, Indirect Holding of Shares in a Polish Holding Company by a Tax Haven Entity: Sherlock Holmes and St. Jude Thaddaeus on the Trail in 80 Days Around the Stock-Exchange World (Przegląd Podatkowy 2024, No. 1, pp. 6–17), cited by the Provincial Administrative Court in the judgment upheld by the NSA.
Conclusions
The ruling of 26 January 2026 exposes a fundamental defect in Poland’s holding regime—and illustrates an equally fundamental defect in interpretive practice: the authority disregards final NSA jurisprudence on the identical legal question without engaging with its reasoning.
Until the legislature revises the ownership-transparency condition or introduces a due diligence safe harbour, Polish holding companies in PE/VC structures will remain disadvantaged relative to their Luxembourg and Dutch counterparts. Not because of aggressive planning—but because the statute demands knowledge the taxpayer cannot possess, and the authority refuses to accept that the attempt to obtain that knowledge suffices. Taxpayers in analogous situations should also consider pre-emptive ownership restructuring at least two years before the planned transaction, as well as securing their position through an individual tax ruling application.
The taxpayer did not fail. The provision failed the taxpayer. And the authority—failed both.
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Robert Nogacki is a Polish attorney at law (radca prawny), the founder and managing partner of Kancelaria Prawna Skarbiec (Skarbiec Law Firm), which has operated continuously since 2006.
The law is equal for everyone, but the parties rarely are: on one side stands an organization with time, money, and lawyers, on the other a person with one business, one nest egg, and one life.
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He advises entrepreneurs and families from more than a dozen countries, including those whose accounts the tax office has just seized and who do not know what to do tomorrow morning. He defends them in tax audits, customs and fiscal inspections, disputes with the tax authorities, and criminal tax proceedings. He represents victims of investment fraud and Ponzi schemes. He helps families set up family foundations and plan succession, so that a life’s work outlasts a single generation.
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Kancelaria Prawna Skarbiec is listed in the rankings of Poland’s largest tax advisory firms published by Dziennik Gazeta Prawna and Rzeczpospolita, and it is a four-time recipient (2015 to 2018) of the European Medal awarded by the Business Centre Club and the European Economic and Social Committee. Robert Nogacki publishes regularly, in the press and on the firm’s website, for people who have a problem rather than a law degree, because a legal opinion the client cannot understand protects only the lawyer.
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