The 70% PIT tax on severance payments was intended as a tool to curb excessive payouts in companies controlled by the state. In practice, however, it is collected far more often than it should be—sometimes even from people who are not top-level executives. And when a taxpayer asks for an individual tax ruling, the tax authority refuses to issue it, suspecting actions aimed at circumventing the law. In the judgment of 15 October 2025, ref. no. I SA/Gd 626/25, the Regional Administrative Court (WSA) in Gdańsk criticised this practice. A recent article published on Prawo.pl includes Piotr Sekulski’s PhD commentary on the matter.
70% tax for lower-level managers – is it possible?
The provision in force since 2016 imposing a 70% PIT tax on benefits related to the termination of an employment contract continues to raise controversy. The regulation was meant to prevent abuses involving severance payments for members of management boards in companies controlled by the State Treasury.
In practice, it has worked quite differently. In “difficult” (or potentially contentious) cases, the Director of the National Tax Information (KIS) has increasingly relied on a mechanism from the Tax Ordinance Act: Article 14b § 5b point 1 of the Tax Ordinance. This provision allows the authority to refuse to issue an individual ruling by way of an order if there is a “reasonable suspicion” that elements of the factual description / future event may constitute an act or an element of an act covered by the general anti-avoidance rule, i.e. Article 119a § 1 of the Tax Ordinance.
In practice it looks like this: the taxpayer asks for an interpretation of the provisions (e.g. whether their company meets the criterion under point 15, whether their activities qualify as “management”, etc.), and instead of giving a clear answer, the authority issues an order refusing to issue a ruling, citing “suspicion”. Fortunately, a judgment has now appeared that puts a brake on these practices.
70% tax for lower-level managers – what’s new?
In this case, the WSA in Gdańsk set aside the orders of the Director of KIS refusing to issue an individual ruling, stating that the authority may not alter the factual description presented by the taxpayer or “add” circumstances that are not included in the application to support its thesis.
If the authority has doubts about key elements of the description, it should request clarification/supplementation, instead of building a refusal on assumptions. A “reasonable suspicion” must be based on arguments and arise from the realities of the application—it cannot be the result of free speculation.
In the circumstances of this case, the court noted, among other things, that the authority went beyond the description in the application and assumed (without grounds) that a key condition regarding a “company with a majority of votes” was met, relying on the fact that the withholding agent collected the 70% tax “as a precaution”.
A recent article published on Prawo.pl includes our commentary on this issue. The full text of the article is available at this link.
tax advisor Piotr Sekulski, PhD
– The judgment is a breakthrough not only in cases concerning severance payments, but also for the individual ruling procedure. It is an important signal for people from whom a former employer withheld the 70% tax as a precaution. At the same time, the court reminds authorities of a basic rule: the Director of KIS may not arbitrarily change elements of the factual description, nor ‘add’ information that is not included in the application. The authority must operate within the realities described by the taxpayer, and if something is unclear, it should request supplementation instead of refusing to issue a ruling. The court questioned the practice whereby, instead of giving a clear ‘yes’ or ‘no’ answer to the taxpayer’s question, the authority washes its hands by invoking suspicion of aggressive tax optimisation. I would like to remind you that refusal to issue an individual ruling under Article 14b § 5b of the Tax Ordinance is exceptional in nature and requires a convincing justification, based on the circumstances resulting from the application, and not on the authority’s discretionary judgment. The problem is that for some time now the authority has been reaching for this mechanism increasingly often instead of providing a clear answer. Equally important, the court emphasised the continued relevance of the line of case law which, in practice, says that an opinion of the Head of the National Revenue Administration (KAS) is not absolutely binding and that ultimately it is the Director of KIS who makes the decisions on the outcome(…)
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