Tolling and Interruption of the Statute of Limitations on Tax Obligations: When the Fisc Buys Time
When the Fisc Buys Time
The statute of limitations on tax obligations constitutes one of the most elemental safeguards against the indefinite exposure of taxpayers to fiscal claims. Yet the ostensibly straightforward five-year limitation period prescribed by Article 70(1) of the Polish Tax Ordinance is anything but absolute. The legislature has furnished the tax authorities with a sophisticated arsenal of tolling and interruption mechanisms capable of extending—sometimes dramatically—the temporal horizon within which liabilities may be assessed and enforced. The practical operation of these provisions, and the controversies they engender, are vividly illustrated by the judgment of the Voivodeship Administrative Court in Opole of 15 December 2023 (Case No. I SA/Op 247/23).
The Computational Framework
A tax obligation expires upon the lapse of five years, calculated from the end of the calendar year in which the tax payment fell due. This rule applies with equal force to obligations arising by operation of law—such as value added tax and income taxes—and to those crystallizing through the service of an assessment decision, as in the case of property tax levied on natural persons.
The implications of this computational method warrant careful attention. A VAT obligation for January 2019 (payment due 25 February 2019) would expire on 31 December 2024. By contrast, an obligation for December 2019 (payment due 25 January 2020) would not expire until 31 December 2025—a full year later, notwithstanding that both obligations relate to the same fiscal year. This asymmetry, far from being merely academic, proved dispositive in the Opole proceedings.
Tolling Versus Interruption: A Distinction of Fundamental Consequence
Although both mechanisms serve to extend the period during which the fisc may pursue a tax claim, their legal effects diverge in ways that are critically important for practitioners and taxpayers alike.
Tolling (zawieszenie) operates by adding the period of suspension to the underlying five-year term. If the limitation period is tolled for two years, the obligation expires seven years from the end of the year in which payment fell due. Upon the cessation of the tolling event, the clock resumes precisely where it stopped—the remaining portion of the original period continues to run.
Interruption (przerwanie) produces a materially more severe consequence: the entire five-year period recommences de novo. In theory, successive interruptions could reset the limitation clock indefinitely, rendering the institution of limitation effectively illusory. The Constitutional Tribunal has, somewhat controversially, declined to find this feature unconstitutional, holding in its judgment of 21 June 2011 (P 26/10) that there exists no impediment to multiple interruptions of the same limitation period—a position that, it must be said, has attracted considerable scholarly criticism.
Grounds for Tolling the Limitation Period
The Tax Ordinance enumerates several independent grounds upon which the running of the limitation period may be suspended.
Deferral and Installment Arrangements
The issuance of an administrative decision granting a deferral of payment or permitting payment by installments under Article 67a(1)(1) or (2) of the Ordinance tolls the limitation period from the date of the decision through the date on which the deferred amount or the final installment falls due. The rationale is one of symmetry: where the taxpayer obtains the benefit of temporal relief, it follows that the fisc should not be penalized by the concurrent running of the limitation period.
This ground assumed particular salience in the Opole proceedings, where the tax authority maintained that the limitation period for obligations from 2012 onward remained tolled by virtue of installment decisions issued by the competent Tax Office, with the final installment not yet having fallen due at the time of the contested decisions.
Initiation of Fiscal Penal Proceedings
In practice, this is at once the most frequently invoked and the most bitterly contested ground for tolling. The limitation period is suspended from the date of initiation of proceedings concerning a fiscal offense or fiscal misdemeanor, provided two cumulative conditions are satisfied: first, the taxpayer must have been notified of the initiation of such proceedings; and second, the suspicion of a criminal act must bear a nexus to the nonperformance of the specific tax obligation in question.
Critically, the notification required under Article 70c of the Tax Ordinance must be properly served. The Opole court reaffirmed the settled jurisprudential position established by the resolution of the Supreme Administrative Court of 18 March 2019 (I FPS 3/18): where the taxpayer has appointed a representative in the course of tax proceedings, the Article 70c notification must be served upon that representative, not upon the taxpayer directly. Service effected in circumvention of the appointed representative is without legal effect and fails to trigger the tolling mechanism.
It was precisely this procedural deficiency—the direct service of notification upon the taxpayer rather than her duly appointed representative—that proved determinative in the Opole case with respect to the obligations for January through November 2011. Only the subsequent notification, properly served upon the representative on 10 November 2017, produced a valid tolling effect.
Filing of a Complaint Before the Administrative Court
The lodging of a complaint against a tax decision before a voivodeship administrative court likewise tolls the limitation period. The suspension persists until the day following the service upon the tax authority of a certified copy of the court’s final and binding judgment.
The Opole court articulated an important doctrinal proposition regarding the concurrence of tolling grounds: upon the final conclusion of fiscal penal proceedings (thus extinguishing the first tolling ground), the second ground—the pending administrative court proceedings—”revives” and continues to suspend the running of the limitation period. Put differently, tolling grounds may overlap temporally, and the cessation of one does not automatically restart the limitation clock where another ground remains operative.
Additional Tolling Grounds
The limitation period is further subject to tolling upon the service of a decision accepting a security on the taxpayer’s assets or the issuance of a security order under administrative enforcement procedures; upon the filing of a civil action to establish the existence or nonexistence of a legal relationship or right; and upon a request by the Head of the National Revenue Administration for an opinion from the Council for Counteracting Tax Avoidance regarding the application of the general anti-avoidance rule.
Grounds for Interruption of the Limitation Period
The Tax Ordinance recognizes two distinct events capable of interrupting—rather than merely tolling—the limitation period.
Declaration of Bankruptcy
The declaration of a taxpayer’s bankruptcy interrupts the running of the limitation period. Following the interruption, the full five-year period recommences from the day following the date on which the order concluding or discontinuing bankruptcy proceedings becomes final and binding. Where bankruptcy is declared prior to the commencement of the limitation period, the period begins to run only upon the final conclusion of the bankruptcy proceedings—an important clarification introduced by the 2016 amendment to the Ordinance.
Application of an Enforcement Measure
The second ground for interruption is the application of an enforcement measure of which the taxpayer has been duly notified. For the interruption to be effective, both conditions—the actual application of the measure and the service of notification upon the taxpayer—must be fulfilled prior to the expiration of the limitation period. This requirement was authoritatively established by the resolution of the Supreme Administrative Court (panel of seven judges) of 3 June 2013 (I FPS 6/12).
Where the taxpayer is represented by counsel, the notification of the enforcement measure must be served upon the representative rather than the taxpayer personally—a rule that mirrors the notification requirements under Article 70c.
A further point of considerable practical significance concerns the retroactive annulment of the interruption effect. The revocation of a tax decision that formed the basis for the issuance of the enforcement title extinguishes the substantive legal effect of the interruption. This principle was established by the Supreme Administrative Court (panel of seven judges) in its resolution of 26 February 2018 (I FPS 5/17). The consequence is that where the underlying decision is vacated and the matter remanded for reconsideration, the limitation period is computed as though no interruption had ever occurred.
The Problem of Instrumental Initiation of Fiscal Penal Proceedings
Among the most contentious issues at the intersection of tax law and fiscal penal law is the practice whereby fiscal penal proceedings are initiated for the sole or predominant purpose of tolling the limitation period on a tax obligation. The resolution of the Supreme Administrative Court (panel of seven judges) of 24 May 2021 (I FPS 1/21) confirmed that administrative courts possess jurisdiction to examine whether the initiation of fiscal penal proceedings was instrumentally motivated.
In the Opole proceedings, the court assessed the question of instrumentality by reference to two salient considerations: first, that the fiscal penal proceedings had been initiated more than twenty-two months before the expiration of the limitation period—well in advance of what one might expect in a case of eleventh-hour manipulation; and second, that the proceedings culminated in a final conviction—lending substantial credibility to the proposition that their initiation was grounded in a genuine suspicion of criminal conduct rather than a cynical exercise in procedural gamesmanship.
Cumulative Operation in Practice: The Anatomy of a Decade-Long Proceeding
The Opole judgment provides a striking case study of how the cumulative operation of tolling and interruption mechanisms can extend the effective lifespan of a tax obligation far beyond any period that the statutory five-year term might initially suggest. A tax audit was commenced in May 2014, encompassing VAT settlements for the period 2010–2014. The first-instance decisions were vacated on three separate occasions, the matter was adjudicated by administrative courts at both levels, and the Supreme Administrative Court referred a preliminary question to the Court of Justice of the European Union. The contested decisions were ultimately issued in June 2023—more than nine years after the initiation of the audit.
The obligation for December 2011, which under ordinary circumstances would have expired on 31 December 2017, remained alive by virtue of successive tolling events: fiscal penal proceedings, administrative court litigation, and installment payment decisions. According to the authority’s calculations, endorsed by the court, the limitation period for that obligation would not expire until 15 January 2025—more than seven years beyond the “baseline” expiration date.
Practical Considerations for Taxpayers
Any taxpayer confronting proceedings concerning obligations approaching the limitation horizon should attend to several critical matters.
First, it is imperative to scrutinize the procedural regularity of notifications regarding the tolling of the limitation period. As the Opole case powerfully demonstrates, service effected in circumvention of a duly appointed representative is a nullity and fails to produce the requisite substantive legal effect.
Second, the question of whether the initiation of fiscal penal proceedings was instrumentally motivated merits close examination. Although the administrative courts have approached this inquiry with understandable caution, the 2021 resolution of the Supreme Administrative Court furnishes taxpayers with a meaningful doctrinal basis upon which to challenge proceedings initiated for the predominant purpose of forestalling limitation.
Third, taxpayers must appreciate that the various tolling grounds operate independently and may run concurrently. The cessation of one tolling event does not restore the running of the limitation period where another ground remains in force—a principle that the Opole court articulated with particular clarity.
In disputes with the tax authority involving limitation questions, the speed and quality of the taxpayer’s response is frequently dispositive. A rigorous analysis of all circumstances bearing upon the running of the limitation period—including the dates of service, the legal basis for the initiation of penal proceedings, and the existence of any security measures imposed upon the enterprise’s assets—is indispensable.
Conclusion
The statute of limitations on tax obligations, though superficially uncomplicated in its architecture—a five-year period running from the end of the year in which payment fell due—is, in operation, a mechanism of formidable complexity. The multiplicity of tolling and interruption grounds, their capacity for concurrent application, and the persistent jurisprudential tensions surrounding their proper scope combine to render the determination of the actual expiration date of any given obligation an exercise requiring exacting, case-specific legal analysis. The Opole judgment of December 2023 serves as a compelling reminder that in matters where the stakes involve prolonged exposure to fiscal liability, procedural precision—on both sides of the dispute—is not merely advisable but decisive.
Author: Robert Nogacki — Legal Counsel (radca prawny), Managing Partner at Skarbiec Law Firm, one of the largest tax advisory practices in Poland, specializing in tax advisory services and representation in tax disputes.
Legal basis: Article 70 of the Act of 29 August 1997—Tax Ordinance (consolidated text: Journal of Laws of 2023, item 2383, as amended); Judgment of the Voivodeship Administrative Court in Opole of 15 December 2023, Case No. I SA/Op 247/23.
This article is provided for informational purposes only and does not constitute legal advice. Readers are encouraged to seek the counsel of a qualified tax advisor or legal professional in relation to their specific circumstances.
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.
