How to protect yourself from the negative consequences of incorrect tax law interpretation? It is worth considering a request for the issuance of an advance tax ruling. Find out what it will protect you from, and how to obtain it.
What is an advance tax ruling?
An advance tax ruling is an official letter from the Head of the National Tax Administration. It contains a detailed description of a specific action requested by the taxpayer. It also involves, a legal assessment of this action. This evaluation focuses on provisions regarding:
- Avoiding taxes or
- tax evasion.
Based on the advance tax ruling from the National Tax Administration, the taxpayers will obtain information on whether their actions affecting the amount of tax will not be classified as an attempt to avoid or reduce the tax due.
Benefits of obtaining an advance tax ruling
Obtaining an advance tax ruling can bring many benefits to the taxpayer. It guarantees, among others:
- Certainty and security. The advance tax ruling from the authority protects against the negative consequences of incorrect interpretation of tax regulations.
- Saving time and money. It allows for avoiding the risk of disputes with tax authorities. Consequently, you can avoid long-term and costly proceedings.
- Effective tax strategy planning. The advance tax ruling enables conscious and effective planning of actions.
Procedure for obtaining an advance tax ruling
The procedure for obtaining an advance tax ruling is regulated by the Tax Ordinance Act. Any interested party (taxpayer, tax advisor, etc.) may apply for it to the National Tax Administration. The application should be submitted to the competent head of the Tax Office.
An application for advance tax ruling can be submitted in relation to actions:
- planned, i.e., before commencing the specific action, to ensure its compliance with tax law,
- ongoing, i.e., during the execution of the specific action, to dispel doubts about its legality,
- completed, i.e. after the specific action has been completed, to get protection against its classification as tax avoidance or evasion.
What should the application for an advance tax ruling contain?
In the application for the advance tax ruling, it is necessary to include, among others:
- Identifying data of the applicant. For example: PESEL number, tax identification number, company name.
- Specification of entities performing the activities. For example: providing tax identification number (NIP) of all entities involved,
- Detailed description of the factual and legal state of the matter. Include the type of activity (e.g. sale, contract, donation), date and value of the subject.
- Description of existing capital, personal, and functional connections,
- Explanations regarding the unresolved tax position,
- Specification of the tax purposes of the activity defined in the application. This should involve its economic or business justification,
- Determination of the tax consequences of the activity. Include tax benefits, even those possible to obtain indirectly.
- Presentation of an individual standpoint on the matter.
The application should include documentation regarding the related activity. You can enclose original contracts or copies.
Fees for issuing an advance tax ruling
Proceedings for issuing an advance tax ruling are subject to a fee. The applicant should pay a 20 000 PLN fee. It must be paid within 7 days from the date of submitting the application.
The application fee increases by 500 PLN for the fifth applicant and beyond.
Incorrectly paid fees are subject to refund no later than 7 days from the completion of proceedings on the issuance of advance tax ruling.
Deadline for considering the application for an advance tax ruling
The authority should review the application for advance tax ruling. The head of the National Tax Administration verifies it as soon as possible. The maximum deadline for issuing the opinion is 6 months from the date of receiving the application.
Extension of the deadline is possible in justified cases. For example, when the case is complex or it requires an expert opinion. The head of the National Tax Administration can extend the deadline by a maximum of 9 months.
Method of recognizing the application for an advance tax ruling
The authority, as part of the procedure for issuing advance tax ruling, may:
- Issue an advance tax ruling when the conditions specified in the Tax Ordinance are met.
- Request the correction of formal deficiencies in the application if:
- the application for advance tax ruling does not meet formal requirements,
- the deadline for correcting formal deficiencies is 14 days,
- the summons state that not meeting this condition will leave the application unprocessed.
- Request clarification of doubts about the data contained in the application. This may happen:
- in the written form or
- in person.
- Refuse to issue an advance tax ruling. In this case, the Head of the National Tax Administration informs the applicant:
– that Art. 119a § 1 of the Tax Ordinance may apply to the specific factual situation,
– that he has the right to submit a complaint to the administrative court.
Providing an advance tax ruling
The advance tax ruling’s status, whether issued or refused, must be immediately published in the Public Information Bulletin (Polish: BIP). The information is available on the website of the relevant office serving the Minister of Public Finances. The content of the information is subject to anonymization. This means that it cannot contain any identifying data of the involved entities.
The information includes in particular:
- a concise description of the activity subject to the opinion,
- an explanation of the reasons for the decision made.
Publishing information in the Public Information Bulletin ensures transparency in the operation of tax authorities. This facilitates taxpayers’ understanding of the interpretation of tax law in specific cases.
Advance tax ruling – summary
The advance tax ruling is an extremely valuable tool for taxpayers. It helps to avoid the negative consequences of incorrect interpretation of tax regulations. The procedure for obtaining it is formalized but relatively simple. Understanding the procedure of requesting advance tax ruling may help you to interpret tax regulations consciously.
The issue of advance tax ruling is complex. If you have more questions, our experts will gladly provide answers. Contact our law firm to find out more.
FAQ – Questions and Answers about: Advance tax ruling
Who can apply for issuing an advance tax ruling?
Any taxpayer can apply for an advance tax ruling. This solution is available for individuals, legal entities and unincorporated organizational units. It is also available for non-taxable entities if they submit a request for a taxable transaction.
How much does issuing an advance tax ruling cost?
The fee for issuing an advance tax ruling is 20 000 PLN. In the case of a joint application by interested parties, the fee may be higher. It increases by 500 PLN for the fifth and each subsequent interested party.
What is the deadline for reviewing an application for issuing advance tax ruling?
The Head of the National Tax Administration issues a tax security opinion as soon as possible. It cannot be later than within 6 months from the date of receiving the request.
What are the types of advance tax rulings?
There are two types of advance tax rulings:
– General opinion – concerning a future event that has not yet occurred.
– Individual opinion – concerning an event that has already occurred.
What are the benefits of having an advance tax ruling issued?
Such tax decision provides the taxpayer with several benefits, including:
– Protection against applying the clause on tax avoidance
– Certainty and security in conducting business activities.
– Ability to effectively plan tax strategies.
– Saving time and money.
Where can I find more information about advance tax rulings?
More information available on the website of the National Tax Administration.
