Where Cleverness Ends and Crime Begins
There is an old legal maxim: everything not forbidden is permitted. 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 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.
Two Sides of the Same Coin
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.
Mises on 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 anti-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.
What the Head of KAS Does
When the Head of the National Revenue Administration suspects tax avoidance, he may:
Initiate proceedings concerning the anti-avoidance clause—from scratch, against you.
Take over ongoing proceedings—a tax audit, customs-fiscal inspection, 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.
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.
Nozick on the Minimal State
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 anti-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 is an argument that the clause 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.
Three Conditions
The clause applies when all of the following are 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.
What We Can Do for You
We verify transactions. Before you proceed—will this structure survive the clause test? Do you have an economic justification that can be documented?
We conduct tax audits. Past transactions, settlements, structures. Where are the weak points? What might attract the authority’s attention?
We document business purposes. The best defense 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 interpretation may not protect against the clause—but it demonstrates good faith and reduces the risk of penalties.
Rothbard on the Ethics of Taxation
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.
The anti-avoidance clause stands in tension with these intuitions. It says: you may act in compliance with the law and still be penalized if we disapprove of your motive.
This is a tension we cannot resolve—but one through which we can help you navigate.
