Franz Kafka created a world in which guilt precedes accusation, the trial proceeds according to unknown rules, and the verdict arrives independent of the defendant’s actions. The protagonist of “The Trial” never learns what he is charged with—yet he is condemned.
The GAAR clause in Poland has something Kafkaesque about it. You may act in full compliance with the law—and be punished. You may satisfy every formal requirement—and be told your conduct was “artificial.” You may be right—and lose, because your purpose was “contrary to the purpose of the statute,” a purpose no one had previously defined.
This is not hyperbole. This is Article 119a of the Polish Tax Ordinance.
Anti-Avoidance Rules in Poland — A History of Constitutional Failure
Poland had an anti-avoidance clause as early as 2002. Article 24b of the Tax Ordinance permitted authorities to disregard the consequences of transactions from which “no significant benefits other than tax benefits” could be expected.
In 2004, the Constitutional Tribunal ruled the provision unconstitutional. The clause was too vague, failed to meet the standards of “decent legislation,” and violated the principle of trust in the state and its laws.
Twelve years later, the legislature tried again. On July 15, 2016, a new clause—Article 119a—came into force. In 2019, it was tightened. The monetary threshold disappeared. Definitions expanded. The possibilities for “exploitation” of the clause—as legal scholars put it—grew dramatically.
Is the new clause constitutional? Doubts remain. But it is in force—and anyone planning tax-efficient structures in Poland must reckon with it.
The GAAR Clause in Poland — Anatomy of the Prohibition
The Polish anti-avoidance rules consist of three elements, all of which must be present simultaneously:
Tax benefit. Non-occurrence of a liability, deferral of payment, reduction of tax, creation of a loss, increase in overpayment, receipt of a refund. The list is long—it encompasses nearly every positive tax outcome.
Conflict with the purpose of the provision. The benefit must be “contrary, in the given circumstances, to the object or purpose of the tax statute or its provision.” This sounds precise. In practice, it is the authority that decides what the “purpose of the provision” is—often retrospectively.
Artificiality of conduct. The method of operation must be “artificial”—meaning one that “a reasonably acting entity pursuing lawful purposes” would not have chosen. In other words: you did something no reasonable person would do unless it was for tax reasons.
If all three elements are present, the authority determines the tax consequences as though you had performed an “appropriate transaction”—that is, the one the authority believes you should have performed.
Orwell on the Language of Power
George Orwell understood that power controls through language. “War is peace. Freedom is slavery.” When words mean whatever those in power want them to mean, defense becomes impossible.
The GAAR clause operates in language that sounds objective but is radically subjective. “Reasonable entity.” “Artificial conduct.” “Purpose of the provision.” “Primary purpose of the transaction.”
Who decides what is reasonable? The authority. Who decides what is artificial? The authority. Who decides what the purpose of the provision was? The authority. Who decides what your primary purpose was? The authority—on the basis of “existing circumstances and facts.”
This is not law in the classical sense. It is the granting to Polish tax authorities of the power to define what the law is in each particular case.
Anti-Avoidance Rules in Poland — The Invisible Line
Hayek warned against “the rule of men” as opposed to “the rule of law.” The rule of law means that rules are known in advance and applied uniformly. The rule of men means that rules are established ad hoc by those who hold power.
The Polish anti-avoidance rules shift the tax system toward the rule of men. Not because officials are malevolent—but because the clause’s construction requires them to make judgments that the law does not specify.
Is a holding company created to reduce costs “artificial”? Is transforming a company to protect personal assets “contrary to the purpose of the provision”? Does a gift preceding a sale have a “primarily” tax-related purpose?
There are no answers to these questions in the statute. There are only answers from authorities—after the fact, directed at a specific taxpayer, in a specific proceeding.
What Is Permitted Under Polish GAAR
The GAAR clause in Poland does not prohibit tax optimization. It prohibits optimization that is “artificial” and “contrary to the purpose of the provision.”
The following remain lawful:
- Choosing a legal form that generates lower burdens—provided it has economic justification
- Restructuring operations to limit business risk
- Transformations for succession purposes
- Creating holding structures to reduce operational costs
- Actions that increase book value for financing purposes
The Supreme Administrative Court has repeatedly confirmed: “an entity always has the right to choose a form of transaction that results in the lowest tax burden”—provided the conduct “was not artificial but had economic justification.”
The line runs between tax efficiency and artificiality. The problem is that the line is invisible until the authority draws it.
GAAR Defense in Poland — The Head of KAS as Judge
Proceedings concerning tax avoidance are conducted by the Head of the National Revenue Administration (Szef KAS). He may initiate them himself or take over an ongoing audit.
The Head of KAS may seek the opinion of the Council for Counteracting Tax Avoidance (Rada do Spraw Przeciwdziałania Unikaniu Opodatkowania). May—not must. The Council is an advisory body, not a decision-making one.
From the Head of KAS’s decision, an appeal lies, then a complaint to the administrative court. But that takes years. And years of uncertainty—wondering whether the structure you built will survive scrutiny. Effective GAAR defense in Poland requires preparation long before the proceedings begin.
GAAR Protective Opinions in Poland
An individual tax interpretation does not protect against the clause. The Director of National Tax Information may refuse to issue one if he determines that “the anti-avoidance clause may apply” to the matter.
The only protection is a protective opinion (opinia zabezpieczająca)—issued by the Head of KAS upon application. If the Head of KAS determines that the clause does not apply to the described tax benefit, you have protection.
The cost of the application: PLN 20,000. The waiting period: up to six months. But GAAR protective opinions in Poland are the only shield the law offers against retroactive challenge of your structures.
Bastiat on What Is Not Seen
Frédéric Bastiat wrote of the invisible costs of regulation. You can see what the law prohibits. You cannot see what entrepreneurs refrain from doing out of fear of the prohibition.
The GAAR clause in Poland generates enormous invisible costs. Transactions that never close because the risk is too high. Structures that are never built because no one knows whether they will survive. Restructurings postponed because fear paralyzes.
This is not abstraction. This is the daily reality of Polish entrepreneurs since 2016.
The GAAR Clause in Poland — What We Do
We analyze structures. Before you build—will this construction survive the GAAR test? Does it have economic justification that can be documented?
We prepare GAAR protective opinions. An application that persuades the Head of KAS requires legal precision and familiarity with Polish authorities’ practice. We have prepared successful applications across multiple industries.
We provide GAAR defense in Poland. When the Head of KAS initiates or takes over a case—we defend your structure, your purposes, your justifications.
We document economic rationales. The best defense against Polish anti-avoidance rules is proof that the action made business sense independent of its tax consequences.
We challenge decisions. When the authority applies the GAAR clause improperly—appeals, complaints to administrative courts, cassations to the Supreme Administrative Court. The fight for your right to legal efficiency.
A Survival Strategy
Document your rationales. Every transaction should have a recorded business purpose—independent of tax consequences. Minutes, resolutions, analyses, correspondence.
Avoid purely tax-driven structures. If the sole reason for a transaction is a tax benefit—you are in the risk zone under Polish anti-avoidance rules.
Test structures before implementation. An adviser’s opinion, analysis of case law, in critical cases—a GAAR protective opinion.
Maintain proportionality. The larger the tax benefit relative to the economic benefit, the greater the risk of challenge.
Be prepared to defend. If the authority challenges—you must prove you acted reasonably. Documentation is your line of GAAR defense.
In Closing
Magna Carta, the document of 1215, contained a principle: “No free man shall be deprived of his property except by the lawful judgment of his peers or by the law of the land.”
Eight centuries later, the question remains current: can you be deprived of property on the basis of a law whose content you learn only when the authority decides you have violated it?
The GAAR clause in Poland is a line that you draw together with the authority—in the course of proceedings, post factum, without certainty as to the outcome.
We do not claim that anti-avoidance rules are inherently bad. Aggressive tax avoidance exists and requires a response. But we do claim that in its current form, the Polish GAAR clause gives too much to power and too little to the taxpayer.
And that is why we do what we do: we help navigate through uncertainty, build structures that will survive, defend the right to legal tax efficiency.
Because the right to pay no more than the law requires—that is still a right.
