A tax authority does not ask whether the company's files contain a document entitled "economic justification". It asks what facts existed on the day the management board took its decision and what can be used to establish them today. The economic justification is evidential material, and evidential material comes into being together with the commercial event, not after it. A document drawn up later is not devoid of significance — the authority assesses the material as a whole (Article 191 (art. 191) of the Tax Ordinance (Ordynacja podatkowa)) — but it will not create reasons that did not exist at the time of the decision. Below: the two tests that material has to pass and how to build it.
Two regimes, two independent tests
Proposition. A restructuring goes through two separate tests of business purpose; passing one does not switch off the other.
Statutory basis. The first test consists of the specific restructuring clauses: Article 12(13)–(14) (art. 12 ust. 13–14) of the Corporate Income Tax Act (ustawa o podatku dochodowym od osób prawnych, the CIT Act) and Article 24(19)–(20) of the Personal Income Tax Act (ustawa o podatku dochodowym od osób fizycznych, the PIT Act). In CIT their effect is to switch off the preferences in Article 12(4)(3e)–(3h), (12) and (25)(b) and Article 12(4d); the test is carried out by the tax authority in ordinary assessment proceedings. The second test is the general anti-avoidance rule (GAAR) in Article 119a § 1 of the Tax Ordinance. It is applied by the Head of the National Revenue Administration (Szef Krajowej Administracji Skarbowej) in separate proceedings under Part IIIa, and it may cover a set of connected transactions (Article 119f of the Tax Ordinance).
Practice. The subject matter of the two tests differs: the specific clause examines the purpose of one of the listed transactions and withdraws a particular preference, while the general clause examines in addition whether the benefit is contrary to the purpose of the statute and whether the manner of acting is artificial.
Takeaway. Prepare a single set of evidence, but assess it twice: once against the conditions in the CIT Act or the PIT Act, and once against Article 119a § 1 of the Tax Ordinance. Meeting the neutrality conditions does not close off the second question.
| Criterion | Specific restructuring clause | General anti-avoidance rule | Legal basis |
|---|---|---|---|
| Subject of the assessment | the purpose of a merger, a division, an exchange of shares or a contribution in kind | a transaction or a set of connected transactions, including transactions of different entities | Article 12(13) of the CIT Act, Article 24(19) of the PIT Act; Article 119a § 1 and Article 119f of the Tax Ordinance |
| Conditions | tax avoidance or tax evasion as the main purpose or one of the main purposes | a benefit contrary to the purpose of the statute, a main or one of the main purposes, artificiality — cumulatively | Article 12(13) of the CIT Act; Article 119a § 1 and Article 119c of the Tax Ordinance |
| Statutory presumption | yes — where there are no valid economic reasons | no analogous presumption | Article 12(14) of the CIT Act, Article 24(20) of the PIT Act |
| Competent authority | the tax authority in assessment proceedings | the Head of the National Revenue Administration | Part IIIa of the Tax Ordinance |
| Effect | loss of the preference, revenue in the hands of the participant concerned | the consequences that would follow from an appropriate transaction or from no transaction at all | Article 12(13) of the CIT Act; Article 119a § 2–3 of the Tax Ordinance |
The presumption in Article 12(14) of the CIT Act
Proposition. The presumption in Article 12(14) of the CIT Act shifts to the taxpayer the burden of supplying facts, not of making a statement.
Statutory basis. The provision reads: "Where a merger of companies, a division of companies, an exchange of shares or a contribution in kind has not been carried out for valid economic reasons, it is presumed for the purposes of paragraph 13 that the main purpose or one of the main purposes of those transactions is tax avoidance or tax evasion" (translation by the author). Article 24(20) of the PIT Act provides to the same effect.
Practice. The structure has two stages. The authority first establishes whether the transaction was carried out for valid economic reasons. If it finds that it was not, it no longer has to prove the tax purpose separately — that follows from the presumption. The presumption is rebuttable, but it is rebutted by evidence, not by denial: by documents from the decision-making process, financial data, external correspondence and a comparison of the options. The presumption is not in itself a basis for calculating tax — it is still necessary to identify which preference falls away and what revenue arises in the hands of which participant.
Takeaway. The sentence "the merger will be carried out for valid economic reasons" written into the merger plan does not rebut the presumption. What rebuts it is the project file.
What an individual tax ruling actually confirms
Proposition. The Director of the National Revenue Information Service (Dyrektor Krajowej Informacji Skarbowej, the Director of the KIS) accepts a statement about valid economic reasons as part of the description of the future event and expressly declines to assess it.
Statutory basis. A ruling is issued within the limits of the description presented by the applicant (Article 14b § 1 and § 3 of the Tax Ordinance), and its protective function operates only where the actual facts correspond to that description (Articles 14k–14m of the Tax Ordinance).
Practice. In an individual tax ruling of the Director of the KIS of 24 January 2025, no. 0111-KDIB1-1.4010.704.2024.2.SH, concerning a reverse merger, the authority stated: "an examination of the grounds for, and the purposes of, the reverse merger of the Companies being carried out is fully possible only in the course of any tax proceedings, tax audit or audit proceedings of a customs and fiscal audit authority". The same is true of the ruling of 11 June 2025, no. 0111-KDWB.4010.12.2025.2.KP: "the statement that the Merger will be carried out for valid economic reasons, and that the desire to obtain a tax benefit will not be the main purpose or one of the main purposes of the planned merger (…), cannot be subject to assessment by the authority". The authority put it most emphatically in the ruling of 31 August 2026, no. 0111-KDIB2-1.4010.289.2026.3.AS: "The above circumstances have been accepted as a description of the case not subject to legal assessment".
Takeaway. A ruling confirms how the provision is to be read on the assumption that the economic reasons exist. It does not confirm that they do exist. That condition has been referred to the audit stage, and that is where it has to be proved.
Artificiality within the meaning of Articles 119a and 119c of the Tax Ordinance
Proposition. The general clause asks not about a document but about whether a reasonably acting entity would have done the same thing for non-tax reasons.
Statutory basis. Under Article 119a § 1 of the Tax Ordinance, a transaction does not result in a tax benefit being obtained where obtaining that benefit, which in the given circumstances is contrary to the object or purpose of the tax statute or of a provision of it, was the main purpose or one of the main purposes of carrying out the transaction, and the manner of acting was artificial. The conditions are cumulative. Article 119c § 1 adds that a manner of acting is not artificial if a reasonably acting entity would have adopted it predominantly for valid economic reasons; the purpose of obtaining a benefit contrary to the purpose of the statute is not treated as such a reason.
Practice. Article 119c § 2 lists, among other things, the unjustified splitting of an operation, the involvement of intermediary entities with no economic justification, elements leading to a state of affairs close to that existing before the transaction, elements that cancel each other out, and economic risk exceeding the expected non-tax benefits.
Takeaway. For each stage, answer two questions: what economic function does it perform, and what risk does it genuinely transfer? If the answer to both is "none", the stage needs to be redesigned or to be covered by a protective opinion.
The EU source of the test: Directive 2009/133/EC and the judgment in Foggia
Proposition. The Polish restructuring clauses reproduce Article 15 of Directive 2009/133/EC, and the concept of valid reasons is interpreted by the Court of Justice.
Statutory basis. Article 15(1)(a) of the Directive allows the benefits of Articles 4 to 14 to be withdrawn where an operation has as its principal objective or as one of its principal objectives tax evasion or tax avoidance; the absence of valid commercial reasons, such as the restructuring or rationalisation of the activities concerned, may give rise to a presumption of such an objective.
Practice. In its judgment of 10 November 2011 in Case C-126/10 Foggia, ECLI:EU:C:2011:718, the Court held that the fact that, "at the date of the merger, the company acquired does not carry on any activity, does not hold any financial shareholdings and transfers to the acquiring company only substantial tax losses of undetermined origin, may constitute a presumption that the operation was not carried out for 'valid commercial reasons' (…), even though that operation has a positive effect in terms of structural cost savings for that group". The Court pointed out at the same time that the reduction in administrative and management costs that accompanies the disappearance of the acquired company is an inherent consequence of every merger by acquisition. Earlier, in its judgment of 17 July 1997 in Case C-28/95 Leur-Bloem, ECLI:EU:C:1997:369, the Court held that national authorities may not confine themselves to applying predetermined general criteria, but must carry out a general examination of each case.
Takeaway. The argument "we will save on administration" is not in itself an economic reason within the meaning of the test — it describes what happens in every merger. Show the scale and the source of the effect, and what cannot be achieved without the reorganisation.
Proof of business purpose — what to prepare, and when
Proposition. Proof of business purpose consists of several documents bearing different dates, and their chronology is part of the proof.
Statutory basis. The list of forms of evidence is open: anything that may contribute to clarifying the matter and is not contrary to law is evidence (Article 180 § 1 of the Tax Ordinance), and the authority assesses the material as a whole (Article 187 § 1 and Article 191).
Practice. The schedule below reflects the typical sequence of a merger or division project.
| Document | What it has to establish | When it is prepared | Who is responsible |
|---|---|---|---|
| Resolution of the management board or the shareholders setting the direction | that the problem was identified and an analysis commissioned | before work on the options begins | the management board, the shareholders |
| Decision memorandum of the management board | the problem, the non-tax objectives, the recommendation and the reasons for it | before the resolution adopting the plan | the management board, the adviser |
| Analysis of the options, with the alternatives rejected | what other routes were considered, including the status quo, and why they were rejected | before the option is chosen | the CFO, the adviser |
| Financial model and business plan | the scale and source of the effects: costs, margins, cash flows, capital expenditure | before the decision choosing the option | the CFO, controlling |
| Valuations of assets and of shares | that the exchange ratio and the issue value have an economic basis | before the plan is drawn up | the management board, a valuer, an expert |
| Correspondence with a bank or an investor | that the requirement comes from outside and is not of a tax nature | from the first discussions onwards | the management board, the CFO |
| Tax analysis: specific clauses, the GAAR, MDR, transfer pricing | that the tax consequences were named rather than concealed | before the resolutions and before implementation | the tax adviser |
| Merger or division plan and the resolutions | that the description of the purpose is consistent with the tax documentation | in accordance with the procedure in the Commercial Companies Code | the management board, corporate services |
| Implementation and integration timetable | that the objectives have dates and people assigned to them | before the merger or division date | the project manager |
| Post-restructuring report | that the objectives were achieved, or why the assumptions changed | 6–12 months after registration | the management board, controlling |
Takeaway. Each of these documents has a date and an author. A set in which every date falls later than the entry in the register says something quite different.
Protective instruments and their actual reach
Proposition. Three official instruments give protection of differing scope, and none of them replaces the others.
Statutory basis. The individual tax ruling — Article 14b and Articles 14k–14n of the Tax Ordinance. The protective opinion — Article 119w et seq. Tax explanatory notes — Article 14n, with protective effect corresponding to that of a ruling for anyone who has acted in accordance with them.
Practice. A ruling gives no protection against the general clause: under Article 14na § 1(1) of the Tax Ordinance, Articles 14k–14n do not apply where the facts or the future event covered by the ruling form part of transactions covered by a decision issued under Article 119a. The authority may also refuse to issue a ruling as regards elements covered by a reasonable presumption that a clause decision will be issued. A protective opinion is issued by the Head of the National Revenue Administration where the circumstances indicate that Article 119a does not apply to the transaction (Article 119y § 1); the application carries a fee of PLN 20,000, payable within 7 days of filing, and on a joint application it increases by PLN 5,000 for the fifth and each subsequent interested party (Article 119zc). The time limit for dealing with the application is 6 months, extendable in complex cases by not more than 9 months, that is up to 15 months in total (Article 119zb).
Takeaway. Build the timetable backwards from the time limit in Article 119zb, not from the date of the planned resolution. If the heart of the doubt is how a provision is to be read, a ruling is enough. If the heart of it is the purpose, the sequence and the scale of the benefit, the right instrument is a protective opinion.
A multi-stage project — assessing the whole sequence
Proposition. In a multi-stage project it is the sequence that is assessed, not a single resolution.
Statutory basis. Article 119f § 1 of the Tax Ordinance allows a set of connected transactions, carried out by the same or by different entities, to be treated as a single transaction.
Practice. Typical sequences are an exchange of shares before a sale, a division by spin-off before the acquiring company is disposed of, or a conversion before historical profits are paid out. The assessment then also covers the stage that generates no benefit of its own. What matters is whether the successive steps were planned from the outset, the intervals between them, and whether the effect of the whole differs from the starting position.
Takeaway. Describe the whole project — including in an application for a ruling and in an application for a protective opinion. Splitting applications by stage does not limit the authority's assessment; it limits the scope of protection.
The most common mistake
The most common mistake is to draw up the economic justification only in order to answer a summons from the authority — bearing a date later than the shareholders' resolutions and the entry in the register. Such a document is not excluded as evidence, because the authority assesses the material as a whole. The difficulty lies elsewhere: it describes objectives that no document from the decision-making period confirms, and sometimes formulates them differently from the merger plan, the management board's report or the notes to the financial statements. The question then arises why the arguments said to have determined the choice of option did not appear earlier.
How to avoid this: before the first resolution setting the direction, open a separate project file and put documents into it as they are created — including those that were rejected. A rejected option, one that was more expensive or harder to run, is among the best evidence that the decision was a commercial choice. If the analysis is produced after the transaction, separate the historical data from the later assessments and identify the source of every figure.
Summary
- Build a single set of evidence and test it twice: against Article 12(13)–(14) of the CIT Act or Article 24(19)–(20) of the PIT Act, and against Article 119a § 1 of the Tax Ordinance.
- Rebut the presumption in Article 12(14) of the CIT Act with facts: a decision memorandum, an analysis of the options, a financial model, a valuation and external correspondence — not with a statement in the merger plan.
- Do not treat an individual tax ruling as confirmation of the economic reasons; the Director of the KIS accepts them as a description of the case, and Article 14na § 1(1) of the Tax Ordinance switches off protection where a clause decision is issued.
- Support the argument about saving administrative costs with figures and establish what cannot be achieved without the reorganisation — on its own, in line with the judgment in C-126/10 Foggia, it is not enough.
- Describe the whole sequence of transactions, and where the tax benefit is material, plan for a protective opinion: a 6-month time limit extendable to 15 months, and a fee of PLN 20,000 payable within 7 days of filing the application.
Sources cited
All quotations from Polish-language sources — statutes, tax rulings and court judgments — are given here in the author's translation; the Polish wording is authoritative.
- Individual tax ruling of the Director of the National Revenue Information Service of 24 January 2025, no. 0111-KDIB1-1.4010.704.2024.2.SH (cross-border reverse merger; the economic reasons accepted as part of the description of the future event). https://eureka.mf.gov.pl/informacje/podglad/624031
- Individual tax ruling of the Director of the National Revenue Information Service of 11 June 2025, no. 0111-KDWB.4010.12.2025.2.KP (merger by acquisition of a subsidiary; refusal to assess the statement about valid economic reasons). https://eureka.mf.gov.pl/informacje/podglad/643735
- Individual tax ruling of the Director of the National Revenue Information Service of 31 August 2026, no. 0111-KDIB2-1.4010.289.2026.3.AS (reverse merger and merger of debt and claim; the circumstances concerning purpose accepted as a description of the case not subject to legal assessment). https://eureka.mf.gov.pl/informacje/podglad/707789
- Judgment of the Court of Justice of the European Union of 10 November 2011 in Case C-126/10 Foggia – Sociedade Gestora de Participações Sociais SA v Secretário de Estado dos Assuntos Fiscais, ECLI:EU:C:2011:718 (CELEX 62010CJ0126).
- Judgment of the Court of Justice of the European Union of 17 July 1997 in Case C-28/95 A. Leur-Bloem v Inspecteur der Belastingdienst/Ondernemingen Amsterdam 2, ECLI:EU:C:1997:369 (CELEX 61995CJ0028).
The figures for the fee and the time limit in proceedings for the issue of a protective opinion were established from the wording of Articles 119zb and 119zc of the Tax Ordinance.
E-book references
Selected restructuring topics are discussed at greater length in the e-book series Biblioteka Restrukturyzacji (Restructuring Library; Zbyszko Pora, JTWPOLAND): converting a sole trader into a sp. z o.o., the division of a company by spin-off or by separation, and the test for an organised part of an enterprise. The PDF files are available free of charge in the e-book section; the series is currently published in Polish.
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Get in touch →Legal basis: Act of 15 February 1992 on corporate income tax (consolidated text: Dz.U. z 2026 r. poz. 554, as amended) — Article 12(1)(8ba), (8c), (8d) and (8f), Article 12(4)(3e)–(3h), (12) and (25)(b), Article 12(4d) and Article 12(13)–(16).; Act of 26 July 1991 on personal income tax (consolidated text: Dz.U. z 2026 r. poz. 592, as amended) — Article 21(1)(109), Article 24(8) and (8a) and Article 24(19)–(20).; Act of 29 August 1997 — Tax Ordinance (consolidated text: Dz.U. z 2026 r. poz. 622, as amended) — Article 14b, Articles 14k–14n, Article 14na, Article 180 § 1, Article 187 § 1, Article 191, Articles 119a–119f and Articles 119w–119zf.; Act of 15 September 2000 — Commercial Companies Code (consolidated text: Dz.U. z 2024 r. poz. 18, as amended) — Article 491 et seq., Article 499, Article 501, Article 528 et seq. and Article 536.; Act of 29 September 1994 on accounting (consolidated text: Dz.U. z 2026 r. poz. 522, as amended) — Articles 44a–44d, Article 49 and Article 54.; Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States (Dz.Urz. UE L 310 z 25.11.2009, s. 34) — Articles 4, 8 and 15.