Publication date: December 02, 2025
Planning, analysis, and software design; work on program development and its implementation; integration of the software with other systems and support for the implementation of system updates – taxation issues
The complainant ran a business whose primary purpose was to produce computer programs and implement programming projects. As part of this business, based on his knowledge of information technology and experience in developing solutions related to computer program development, he accepted programming assignments for his clients. He requested an individual tax ruling from the Director of the National Tax Information Service regarding personal income tax. For the purposes of describing the factual circumstances, the complainant divided his business into individual stages, including: planning, analysis, and software design; work on program development and its implementation; integration of the software with other systems and support for the implementation of system updates. As a result of this work, computer programs were created, understood as works under Article 1 of the Polish Copyright and Related Rights Act. Considering the broad definition of a computer program, the complainant stated that each of the indicated results of the work constituted a work and was protected (Article 74 of the Copyright and Related Rights Act). According to the complainant, the software he produced was based on individual, original ideas, thus creating new applications.
The complainant raised questions regarding the classification of his activity as research and development, the classification of the paid transfer of copyright to a computer program as the sale of a qualified intellectual property right, the recognition of expenses as costs of calculating the Nexus indicator for the purposes of calculating qualified income from a qualified intellectual property right, and the applicability of the 5% tax rate to income from intellectual property rights.
Subsequently, the Director of the National Tax Information Service requested the complainant to supplement the application for an individual tax ruling, and the complainant responded by submitting written explanations. In its decision, the Director of the National Tax Information Service dismissed the application due to the complainant’s failure to address all the deficiencies in the application, upholding this decision despite a subsequent appeal. The authority indicated that the complainant had not sufficiently individualized the description of the factual circumstances and future events, covering an overly broad and open-ended period (both temporal and material). The authority also found the claim that the complainant had equated the programming assignment with a computer program incomprehensible. Furthermore, the authority emphasized that, on the one hand, the complainant expected an interpretation to be issued regarding the recognition of a portion of the services provided, systematically conducting creative work involving software development, as research and development activities.
On the other hand, however, the complainant failed to provide comprehensive information about the computer programs being created, particularly regarding a future event and providing an evaluative reference to information about their development. According to the authority, these issues prevented an assessment of the position with respect to the questions posed in the application. The complainant intended to effectively apply the application to its entire software development activity and, through an individual interpretation, to extend the “protection” provided for in the Tax Ordinance regarding preferential taxation of income (currently and likely in the future). However, the idea and function of an individual interpretation is to extend this “protection” to the interested party in relation to the specific factual situation that has arisen or will arise for them. Ultimately, the authority found that, taking into account the regulations in question and the circumstances of the case, the authority had rightly found that the application for an individual interpretation did not meet the legal requirements and that the complainant had not properly supplemented the deficiencies in the application in response to the request – in particular the factual background and a future event – in a way that would have enabled the issuance of the requested individual interpretation.
The main issue in this case is whether the Director of the National Tax Information was right to find that the complainant’s application did not contain a comprehensive description of the factual circumstances of the case and future events, and these deficiencies were not remedied in response to the request – and therefore there were grounds to consider that since the application did not meet certain requirements, it should have been left without consideration?
The Provincial Administrative Court found the complaint justified. Pursuant to Article 30ca sec. 1 of the Personal Income Tax, a reduced rate applies to income earned from business activities in the scope of income from qualified intellectual property rights. According to Article 30ca sec. 2 of the Personal Income Tax, a qualified intellectual property right may be a copyright to a computer program subject to legal protection under separate provisions, created, developed, or improved as part of research and development activities. Therefore, the 5% rate may be applied to computer copyrights only when they are subject to copyright protection as a computer program. Pursuant to Article 5a sec. 38 of the Personal Income Tax, this activity may take two forms: scientific research or development work. In relation to Article 5a sec. 40 of the Personal Income Tax, the court applied the definition of development work within the meaning of Article 4 sec. 3 of the Law on Higher Education and Science, which covers the acquisition, combination, development, and use of currently available knowledge and skills. According to the case law of the Supreme Administrative Court, the body is bound by the factual circumstances or future events presented in the application. The factual circumstances provided are “binding” on the interpreting body, and they cannot be verified or modified. In the matter of issuing an individual interpretation, the body issuing the interpretation “operates” solely within the framework of the factual circumstances presented by the applicant and the legal assessment expressed by them.
Therefore, the body issuing the interpretation is, in a sense, bound by the scope of the legal issue presented by the party in the application. This is also binding on the administrative court reviewing such an administrative act.
At the same time, the applicant is obligated to comprehensively present the factual circumstances or future events (Article 14b §3 of the Tax Ordinance), so that the body can respond to the party’s position by assessing its correctness (Article 14c §1 of the Tax Ordinance). If the aforementioned description is insufficient, the authority is obligated to request the applicant to supplement it (Article 14h §1 and Article 169 §1 of the Tax Ordinance). Only if the applicant fails to supplement the deficiencies within the specified timeframe is the authority authorized to leave the application without consideration (Article 14g §1 and Article 169 §4 of the Tax Ordinance). The Court found that the allegation of infringement by the Director of the National Tax Information violated the above-mentioned provisions. According to the Court, the authority was wrong to consider the application as not individually identified, because its content clearly indicates that the Applicant precisely defined what he understood by “activity consisting in creating computer programs” and “computer program,” referring to the provisions of the Copyright Act, tax explanations, and legal literature. The authority’s statement that the activities described in the application do not always lead to the creation of a computer program is unfounded – as the Applicant assumed that each effect of his work constitutes a computer program protected under Article 74 of the Copyright and Related Rights Act. The prohibition on the authority modifying and challenging the factual circumstances described by the applicant was violated. Under Article 14k § 1 of the Tax Ordinance, the authority cannot refuse an interpretation solely because it suspects the description of the factual circumstances to be inconsistent with reality – the risk of such inconsistency is borne by the applicant. The authority wrongly expected the applicant to decide whether their activity constitutes research and development within the meaning of Article 4, Section 3 of the Law on Higher Education and Science, whereas the authority should make a legal assessment based on the description. Individualizing the factual circumstances does not require the identification of specific programs or contractors if the description of events is precise enough to identify them. The requirement to provide detailed data exceeded the limits specified in Article 14b § 3 of the Tax Ordinance and was not necessary to issue an interpretation.
Therefore, since the applicant clearly assumed in the factual circumstances that he was creating computer programs, the authority had no basis to question these claims in any way.