What does the revocation of individual interpretations regarding R&D relief mean for taxpayers?

This article will answer the following questions:

• Why is the Head of NRAIC mass-revoking individual interpretations regarding research and development tax relief?
• Is it possible to apply for the re-issuance of a revoked individual interpretation?

In recent months, the Head of the National Revenue Administration Information Centre (NRAIC; Pol. KIS) has begun a mass revocation of individual interpretations concerning the research and development tax relief (so-called R&D relief). Although this action taken by the Head of NRAIC is directly related to the issuance of a general interpretation by the Polish Ministry of Finance, it nevertheless raises a serious problem, because the process of revocation of individual interpretations also applies to those decisions that in their scope go beyond the subject of the general interpretation. What does this mean for taxpayers whose interpretation of the R&D tax relief has been revoked and what can they do in this situation?

General interpretation regarding the Polish research and development tax relief

At the outset, let us recall that on 13 February 2024, the Ministry of Finance issued a general interpretation with reference number DD8.8203.1.2021. It specifies the possibilities of including expenses incurred by taxpayers for remuneration for the period of leave and sickness in the eligible costs of the research and development relief. 

The general interpretation covers a relatively narrow thematic scope and refers only to part of the eligible expenses of the R&D relief. 

Revocation of individual interpretations by the Head of NRAIC

In connection with the issuance of the above-mentioned general interpretation, the Head of the National Revenue Administration Information Centre began to mass-revoke earlier individual interpretations that addressed the issue of the R&D relief. 

The most controversial fact, however, is that the Head of NRAIC decided to declare the revocation in their entirety of even those individual interpretations that also covered other issues related to the R&D relief, not addressed in the general interpretation. The revoked interpretations often concerned, for example, the classification of other eligible costs or decided whether a given taxpayer conducted research and development activities. 

Consequences of the revocation of the individual interpretations regarding the R&D tax relief

The Head of NRAIC, through her wide-ranging actions, is causing taxpayers who have so far benefited from the protection guaranteed by an individual interpretation in the field of R&D to now lose this protection. 

This is due to the fact that – as we have already emphasised – the revoked individual interpretations cover a much wider scope of issues than that indicated in the general interpretation published by the Ministry of Finance. Taxpayers may indeed re-apply for an individual interpretation to be issued in the scope of those issues raised in the revoked individual interpretation that were not covered by the general interpretation, however, the taxpayer cannot be certain that the position of the Head of NRAIC will not change in relation to the original interpretation.

What to do if you receive a decision confirming the revocation of an individual interpretation?

Any taxpayer who receives a decision from a tax authority on a revocation of an individual interpretation may (within 7 days) file a complaint with the Head of NRAIC. Compliance with the deadline is extremely important in this case – after 7 days, filing a complaint will not be possible. 

If the Head of NRAIC rejects the taxpayer's appeal, the next step is to file a complaint with the court. 

The good news for complainants may be that many courts side with taxpayers. We currently know of judgments stating that although the legislator, on the one hand, did not introduce a regulation enabling the revocation of an individual interpretation "in part", on the other hand, it did not introduce a ban on declaring its partial revocation. The courts also indicate that it would be irrational if every time an individual interpretation loses its relevance only to a certain extent, the body were to declare its expiration in its entirety. 

The dispute resolutions to date give great hope for the taxpayer to win the court case and maintain the protection guaranteed by the individual interpretation in that part that is not resolved in the general interpretation.

If you have any questions, wish to file a complaint against a decision to declare an individual interpretation revoked or need to analyse the impact of a general interpretation on your settlements regarding the R&D relief, we encourage you to contact our experts.