Tax advisors exempt from reporting tax schemes: Constitutional Tribunal ruling

23 July 2024, the Constitutional Tribunal issued a highly significant ruling (case ref. K13/20), in which it declared that the provisions imposing on tax advisors the obligation to report tax schemes are unconstitutional.

These provisions concern regulations effective from 1 January 2019 within the Tax Ordinance Act, implementing EU legislation, namely the DAC6 directive, which imposes on advisors the duty to report tax schemes to the Head of the National Revenue Administration.

The Tribunal sided with the argumentation of the National Council of Tax Advisors, which filed a complaint in this matter, indicating that these regulations violate the professional secrecy of tax advisors and fail to meet the requirements arising from Articles 2 and 17(1), as well as Articles 49 and 51(2) in connection with Articles 31(3) and 47 of the Constitution.

The provisions regarding the reporting of tax schemes were deemed imprecise and not compliant with the principle of legal certainty, which contradicts Article 2 of the Constitution. The principle of legal certainty requires that provisions be clear, precise, and understandable, enabling their correct application and predictability for citizens. In the case of tax schemes, the lack of unambiguous definitions and clear criteria led to legal uncertainty and difficulties in their application.

According to Article 17(1) of the Constitution, tax advisors are to act in the interest of protecting the public good as well as the welfare and security of their clients. The obligation to report tax schemes placed advisors in a conflict of interest situation, forcing them to choose between loyalty to the client and duties towards tax authorities. The Tribunal held that such provisions prevent tax advisors from effectively performing their professional duties and protecting their clients’ interests.

Furthermore, the Constitutional Tribunal clearly emphasised that any explanations, interpretations, or informational documents issued by the government administration cannot replace the legal text, because, pursuant to Article 217 of the Constitution, the taxpayer has the right to clearly determine their tax obligations directly on the basis of the law, and not based on documents that are not official sources of law. The Tribunal made it clear that provisions must be clear and precise, and any attempts to “fix” them through governmental explanations are insufficient.

The Constitutional Tribunal’s ruling in case K13/20 represents an important step towards protecting civil rights and ensuring that tax law provisions comply with the Constitution of the Republic of Poland. Restoring full professional secrecy for tax advisors not only increases client trust but also enables advisors to act more effectively in protecting public and private interests.

It should, however, be emphasised that the Tribunal’s verdict does not imply the necessity to eliminate all provisions regarding the reporting of tax schemes.