Winning in a VAT dispute

Winning in a VAT dispute

In 2017, the Head of the Tax Office initiated a tax audit at our Client-Entrepreneur conducting real estate development activities. In the course of the audit, his right to reduce output tax by input tax resulting from an invoice documenting the acquisition of a database was questioned. The acquired data were used by him for market research and searching for potential customers.

Our Client disagreed with the findings of the audit, so tax proceedings were initiated in this case, which ended with a decision unfavourable to the Taxpayer in 2019. In this decision, the tax authority, upheld its position on the irregularities found during the audit. As a result, the Tax Office refused the Entrepreneur a VAT refund.

As a result of an appeal prepared by attorney Krzysztof Topolewski and Wojciech Jankowski of the firm’s Tax Department, the Director of the Tax Administration Chamber in Poznań overturned the decision of the tax authority of first instance. The appellate authority upheld the argument in the appeal that under the VAT Act, in order to be entitled to reduce output tax by input tax, it must be possible to use the goods or services purchased for taxable transactions. This right cannot be made contingent upon the fulfilment of additional criteria, such as the occurrence of a specific effect, i.e. in the case at hand, e.g. the purchase of goods offered by our Client.

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