Magdalena Tecław, together with Paweł Kossecki, represented the taxpayer before the Provincial Administrative Court in Lublin in a complex VAT case, which ended with a favourable outcome (at least at this stage). The tax authorities – the Lublin Regional Tax Office and DIAS – accused the taxpayer of tax fraud by claiming input tax deductions on invoices for services that had allegedly not been performed. However, the very fact that the service had been performed – given its nature – was undisputed. Nevertheless, the authorities clung rather stubbornly to Article 88(3a)(4)(a) of the VAT Act, arguing that personal links and the absence of a material basis would indicate that the service had not been performed. Following our line of argument, the Provincial Administrative Court acknowledged that, if there is any room for debate at all, it concerns the pretence of service provision, i.e. which of the related entities was the actual provider of the service. And this falls under a different legal basis – Article 88(3a)(4)(c) of the VAT Act. Furthermore – since we are delving into this alleged pretence – this should have been thoroughly investigated, which the authorities failed to do. Instead, the authorities relied on their own assumptions and a stubborn pursuit of a pre-determined conclusion. What is more, the authorities used the legally highly dubious phrase ‘cannot be ruled out’, which was also criticised by the Provincial Administrative Court in its oral reasoning. The ‘cannot be ruled out’ approach reflects a wishful way of operating on the part of the authorities; it is not based in any way on evidence and therefore breaches the principle of objective truth under Article 122 and a whole host of other articles of the Tax Ordinance. Interestingly, an analysis of the assets of companies operating in the same sector as the taxpayer proved very useful in demonstrating that not every business requires a very substantial asset base, such as property and machinery, as the authorities would have wished. Magdalena Tecław carries out such analyses on a daily basis for transfer pricing purposes, whilst the case in question concerned VAT. This, however, demonstrates just how useful an interdisciplinary approach and a broader perspective can be.  

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We are delighted to have been able to help the taxpayer. We would like to thank everyone who was involved, either directly or indirectly, in the proceedings – Magdalena Tecław, Paweł Kossecki, Marek Rudy and Bożena Zybura – for their emotional support and for championing the cause. We would also like to thank the Ombudsman for Small and Medium-sized Enterprises, and in particular Ms Katarzyna Kazulo-Borkowska and Dr Mateusz Langer for their expert guidance.

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Case numbers: I SA/Lu 268/26 and I SA/Lu 269/26. The cases were joined two years ago.