The Supreme Administrative Court (NSA) in Poland has passed a significant ruling affecting businesses that have been unjustly removed from the VAT register by tax authorities. The court emphasized that the legislator did not foresee all consequences of such removals, and businesses should not bear the repercussions of actions taken by the tax authorities without adequate justification. This decision could have a profound impact on companies facing financial and operational turmoil due to wrongful VAT deregistration.

The issue began for a civil law partnership when the tax office initiated one of its most severe actions known as STIR (the Transaction Monitoring System). This system, based on risk analysis and available information, suggested that the registered VAT company, active since 2016, might have been exploiting banking operations for fraudulent tax activities. Consequently, the company faced immediate repercussions, including a short, 72-hour account freeze, followed by a prolonged freeze.

Following the account freeze, the appropriate tax office used its powers under Article 96 § 9 point 5 of the VAT Act to remove the company's VAT registration on July 10, 2020, automatically, without prior notification. This ruling asserts the principle that taxpayer protections must be upheld, and tax authorities must act justly, as unjust removals had dire financial consequences for affected businesses, potentially leading to insolvency and loss of livelihood for business owners and employees alike.