The NSA and holding company exemptions – a strict interpretation, but not the end of purposive interpretation

On 22 July 2025, the Supreme Administrative Court (NSA) issued a judgment (ref. II FSK 280/25) concerning the interpretation of the provisions of Article 24m(1)(2)(e) of the CIT Act. Although unfavourable to the taxpayer, this ruling is not contrary to the earlier favourable ruling of the NSA of 9 July 2025 (II FSK 1425/24). The key point is that they concerned different situations: the first ruling concerned the interpretation of the provisions, while the second concerned their application in a specific case.

Facts

The case concerned a Polish capital company operating in the renewable energy sector (RES), investing in wind and photovoltaic farms through subsidiaries. The business model assumed the sale of shares in these companies after the completion of the construction of energy farms. The company was owned by a Polish limited liability company and a French company operating as an SLP – a tax-transparent entity with a complex ownership structure, including stock exchange investors.

The company argued that the requirement to verify the ownership structure should be limited to the level of information available. The inability to examine the full structure of shareholders listed on stock exchanges would mean that a literal interpretation of the regulations would impose an impossible obligation. In turn, the director of the National Tax Information Service rejected the company’s position, arguing that the regulations require the exclusion of shareholders from tax havens at all levels of the ownership structure, noting that since the company cannot identify all indirect shareholders, the presence of entities from countries unwilling to cooperate in tax matters cannot be ruled out.

The position of the Supreme Administrative Court – interpretative rigour versus a pragmatic approach

The Supreme Administrative Court emphasised that, in the context of interpretative proceedings, there are no grounds for disregarding the linguistic interpretation of Article 24m(1)(2)(e) of the CIT Act.

The court pointed out that the taxpayer’s argument regarding the inability to verify all indirect shareholders (in particular in the case of stock exchange investors) cannot result in a departure from the literal understanding of the provisions. However, as the court emphasised, a purposive interpretation could possibly be taken into account at the stage of applying the law, i.e. in the assessment proceedings, provided that the taxpayer demonstrates that he exercised due diligence and yet was objectively unable to identify the owners of all shares or stocks. This means that the judgment II FSK 280/25 does not preclude the application of purposive interpretation.

Why does judgment II FSK 280/25 not contradict judgment II FSK 1425/24?

Judgment II FSK 280/25 does not contradict the earlier judgment of the Supreme Administrative Court (II FSK 1425/24), which was favourable to the taxpayer, as it concerned a completely different stage of the application of the provisions. In the previous case, the Supreme Administrative Court assessed the facts in proceedings concerning overpayment of tax and found that the company had taken all possible steps to verify the ownership structure. Thus, the application of purposive interpretation was justified. The court held that the impossible cannot be required and pointed out that provisions should not be interpreted in a way that leads to absurdity. The NSA clearly distinguished between the interpretation of the law and its application. In the former case, in accordance with the provisions, it is not possible to ‘look into the future’ and examine the facts, but only to refer to the interpretation of the provisions. Thus, it was not possible to adopt a flexible approach, as in the specific case of the taxpayer concerning the refund of the overpayment.

What does this mean for taxpayers?

The Supreme Administrative Court’s ruling shows that obtaining a favourable individual interpretation in holding exemption cases may be difficult. It is crucial to prove due diligence at the stage of the event itself, e.g. the sale of shares or the payment of dividends.

In practice, this means:

– The need to document verification activities in detail,

– A realistic approach to identifying owners – especially in complex structures,

– The possibility of invoking constitutional arguments (proportionality) where obligations are impossible to fulfil,

– Greater importance of designing transactions taking into account the risk of a lack of full ownership transparency.