Courts on the side of taxable persons, i.e. an overview of true stories. Did the covid act also extend the deadline for notice of receiving an inheritance or donation?

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Katarzyna STYPA-SADOWSKA
Tax Supervisor at RSM Poland
 

At the start of the pandemic, both the state and local governments took a number of steps to contain the spread of COVID-19. The decisions taken had an impact on the operation of state institutions and the consideration of citizens’ affairs. Under the so-called covid act (and the number of its subsequent amendments), some time limits stipulated in administrative law have been suspended. This provision, although in force for only a few months, raised many doubts. One of them has recently been dispelled by the Supreme Administrative Court.

Acquisition of inheritance – who should submit a declaration to the office?

The Act on inheritance and donation tax provides for tax exemption for inheritance (and donation) received from immediate family. However, this exemption can only be claimed if certain conditions are met. One of them is the notice of the inheritance (or donation) submitted within 6 months from the date of the court ruling confirming the acquisition of the inheritance (or from the date of receiving the donation). The registration is made with a special SD-Z2 form.

How much time is there for the submission of SD-Z2 and has the time limit for doing so also been suspended due to the pandemic?

Due to the provisions of the covid act, the time limit for submitting SD-Z2 was unclear, as taxable persons were not sure whether it was suspended, along with other time limits. This was finally resolved by the Supreme Administrative Court.

A taxable person who received her husband’s inheritance was in dispute with the tax office on this issue. The court’s ruling declaring the acquisition of the inheritance became final in November 2019, and the heiress reported the receipt of the inheritance to the office only in June 2020. Therefore, it happened after the statutory time limit of 6 months.

According to the head of the tax office, the delay in submitting the form meant that receiving the inheritance was not exempt, so the taxable person should pay the inheritance and donation tax. The woman, however, did not agree with this decision and decided to appeal against it, and when that did not help – challenge the ruling before the administrative court.

How did the administrative courts assess the delay in submitting the SD-Z2?

The dispute with the tax office was transferred to the Provincial Administrative Court in Bydgoszcz, which, upon reviewing the factual and legal status, ruled on 25 May 2021 (ref. I SA/Bd 147/21) that it cannot be concluded that the purpose of introducing the disputed provision (Art. 15zzr (1) of the COVID-19 Act of 2 March 2020) was to provide legal protection to only certain participants of legal transactions in the field of public law, and to deprive others of such protection.

The court agreed with the taxable person that the provisions in question were not only about administrative law in the strict sense of the word, but also about tax law. At the same time, it emphasised that the authority refused the taxable person the right to claim the above-mentioned tax exemption solely due to the explanation of this provision applied by the tax office.

The SAC agreed with the emerging jurisprudence

The tax office did not agree with the judgement of the Provincial Administrative Court in Bydgoszcz and filed an appeal against the sentence. However, it did not convince the SAC, as the SAC in its judgement of 9 December 2021 (ref. III FSK 4485/21) supported the position that the concept of administrative law also includes provisions of tax law. The suspension of certain time limits introduced by the covid act also includes the regulation of a 6-month time limit for reporting the receipt of the inheritance to the tax office.

Is the tax office always right?

In the opinion of the SAC, protecting the health of citizens during a pandemic is a priority, and the regulations contained in the Act on counteracting COVID-19 cannot be interpreted and applied narrowly in the way the tax authorities tried to do so.

In the opinion of the SAC, the provisions of the covid act governed not only the so-called strict time limits, i.e. those which, in principle, cannot be extended and whose expiry may cause negative effects for the taxable person. They also meant time limits for the taxable person to perform certain activities related to his or her rights and obligations.