Tax interest on arrears has specific functions assigned to it by law, it also has indicated moments when it begins and when it ends. However, practice shows that tax authorities, perhaps looking for additional funds to the state budget, tend to extend the periods for which this interest is calculated, even though in practice the State Treasury already has these funds at its disposal.
Currently, there are no major doubts in situations where, for example, as a result of submitted corrections to the return, the taxpayer should not have accrued interest on the arrears when showing the tax refund for the earlier period and the arrears for the later period, because the State Treasury had the amount of the refund at its disposal in a given period – in whole or in part. (cf. the judgment of the Supreme Administrative Court of 6 March 2012, file reference number I FSK 668/11).
And while the above-mentioned situation seems resolved, our experience shows that sometimes tax authorities still charge taxpayers interest on arrears when they actually have the financial resources, and thus when the State Treasury does not record any real financial damage.
This is the case, for example, in situations where a quarterly VAT taxpayer, mistakenly, omits the period of exceeding the statutory limit allowing him to submit quarterly returns, and thus the need to submit monthly VAT returns. Then, for example, a situation may arise opposite to the one in the above example, i.e. when the person is in arrears for the first month of the quarter, and in the next month there is a surplus of input VAT over the VAT due.
In such situations, the tax authorities calculate interest on tax arrears calculated until the date of submission of the relevant monthly returns, and thus until the date of filing the application for the determination of the overpayment, and not only until the next month in which there was a surplus of input VAT over the due VAT covering de facto in whole (or in part) the arrears from the previous month.
Referring to the above provisions, in principle, there is no doubt that in accordance with Article 59 § 1 point 1 of the Polish Tax Ordinance (hereinafter referred to as: “OP”), the tax liability expires in whole or in part as a result of payment. At the same time, pursuant to Article 51 § 1 of the OP, the tax arrears are tax not paid on the payment date. On the other hand, according to Article 53 § 1 of the OP, interest for late payment is calculated on the tax arrears. Importantly, in accordance with Article 53 § 4 of the Tax Code, interest for late payment is calculated from the day following the date of expiry of the tax payment deadline or the date on which the remitter or collector was obliged to pay the tax to the tax authority’s account.
Taking into account the above, the beginning of the interest calculation period is indicated in the regulations very precisely – it is the day following the date of expiry of the tax payment deadline or the date on which the remitter or collector was obliged to pay the tax to the tax authority’s account.
The rules for determining the end of the interest calculation period are much more extensive and complicated. There is no regulation in the OP that would unambiguously determine the end of the period of calculating them. The lack of this regulation results from the fact that the end of the interest calculation period depends on the type of tax arrears and the manner of its expiration (cf. Etel Leonard (ed.), Tax Ordinance. Volume I. Tax liabilities. Art. 1-119zzk. Updated commentary, Lex 2025).
With regard to interest on arrears, it is also impossible not to point out, in accordance with Article 76 § 1 of the OP, that overpayments and their interest are subject to offsetting ex officio against tax arrears together with interest for late payment, interest for late payment on unpaid tax advances, costs of reminders and current tax liabilities, and in the absence of such interest they are subject to reimbursement ex officio, unless the taxpayer submits an application for crediting the overpayment in whole or in part towards future tax liabilities.
In turn, Article 76a §1 of the OP emphasizes that in matters of crediting an overpayment towards overdue and current tax liabilities, the tax authority, at the taxpayer’s request, issues a decision against which an appeal may be lodged. However, the overpayment is credited to tax arrears on the date of:
- the occurrence of an overpayment;
- submitting an application for confirmation of an overpayment.
Taking into account the above, the final date for calculating interest on arrears remains disputed, i.e. whether it should be the date of filing the application for the determination of the overpayment or de facto the moment when the authority physically disposes of the funds. Moreover, this problem boils down to the question whether interest should be settled for the period of formal existence of arrears and whether, taking into account the principle of proportionality, it should not be omitted to be credited for the period in which, as indicated above, the State Treasury de facto already had funds at its disposal and did not suffer financial damage as a result.
In the literature and case law, it is determined that the function of interest, on the one hand, is compensation (compensation), i.e., as an ancillary benefit to the main benefit, it is treated as remuneration for the use of someone else’s capital (cf. the judgment of the District Administrative Court in Warsaw of 6 July 2018, file reference number III SA/Wa 3407/17). In other words, interest in tax law is a consequence of the occurrence of tax arrears: as long as it exists, there is also interest on it (cf. Babiarz Stefan, Tax Ordinance. Commentary. LexisNexis 2013). On the other hand, they have a guarantee function (cf. Babiarz Stefan et al., Tax Ordinance. Commentary, ed. XII, WKP 2024).
Thus, they can be treated as a form of payment closely related to the fact that the funds due to the authority are not settled on time (cf. B. Brzeziński, et al. Tax Ordinance. Commentary, WKP 2002).
Importantly, however, as the case law indicates, a taxpayer may not bear negative tax consequences in a situation, for example, when he overstates the surplus of value added tax in the settlement for one month, and in the settlement for another month he overstates the tax liability (in the same amount). Imposing such consequences on the taxpayer would constitute a violation of the Community principle of proportionality (cf. the judgment of the Supreme Administrative Court of 24 February 2010, file reference number I FSK 2035/08; the judgment of the Supreme Administrative Court of 14 May 2014, file reference number I FSK 832/13).
The above may lead to the fundamental conclusion that the provisions of the OP should not constitute, de facto, the basis for the State Treasury to achieve unjustified benefits. Such an understanding would make fiscal goals significantly dominate the tax system. And there is no doubt that the principle of fairness of taxation should be taken into account in the process of applying the law (cf. R. Mastalski, Tax Law – General Part, Warsaw 1998, p. 50).
Thus, the interpretation of the provisions of the OP concerning overpayments and interest should be interpreted in such a way as to maintain symmetry between the interests of the State Treasury and taxpayers. Therefore, there can be no legal regulation of the situation where the taxpayer, despite having in fact paid the tax due, still has interest on arrears accrued, despite the fact that the State Treasury has already been credited and does not suffer any financial damage (cf. the judgment of the District Administrative Court in Gliwice of 27 February 2020, file reference number I SA/Gl 1315/19).
Taking such an interpretation into account, a situation would arise in which the State Treasury is the beneficiary of interest, not in order to compensate for the loss, as there is no such loss, but in fact “as a penalty” (see the judgment of the District Administrative Court in Warsaw of 6 July 2018, file reference number III SA/Wa 3400/17).
It also seems to be crucial to indicate that the mere occurrence of an overpayment means that, regardless of the reason for this state of affairs, the taxpayer has fulfilled its obligations in a way that exceeds its obligation. In the situation of simultaneous occurrence of a tax arrears equivalent in value, it cannot be assumed that there has been an economic damage to the State Treasury (cf. the judgment of the Supreme Administrative Court of 30 October 2012, file reference number I GSK 787/11).
In principle, the courts seem to hinder the pro-fiscal interpretation of the tax authorities, which, in our opinion, should also extend to the case where the overpayment relates to a period later than the period in which the tax arrears arose, and the State Treasury ultimately disposed of the funds resulting from the overpayment earlier than it actually credited them to the tax arrears that arose. (cf. the judgment of the Supreme Administrative Court of 6 March 2012, file reference number I FSK 668/11).
To sum up, at the moment when the tax authorities, having de facto funds at their disposal from the overpayment of tax resulting from the correction of the return, even as a result of the taxpayer’s mistakes, act contrary to the provisions of both the tax return and one of the basic principles of the Community legal order, i.e. the principle of proportionality. The use of such sanctions ultimately does not protect any legitimate interest of the State, and ensures an unjustified impact on the state budget. In such cases, it is justified to pursue one’s cases both before the tax authorities and, as a last resort, before the courts.
