By Dr Robert Lewandowski, attorney at law (radca prawny) at Derra, Meyer & Partners in Warsaw
The Polish Supreme Court recently issued a quite controversial judgment (III CZP 97/16, dated 27th July 2017 ) regarding the issue as to whether or not the bailiffs are entitled to increase their fees for enforcement by charging Value Added Tax (VAT) or whether their fees already include VAT. This question is relevant as currently applicable Polish statutory tax provisions do not regulate this matter specifically. In the past, bailiffs have tended to add VAT, which is at the level of 23% here in Poland, to their invoices including fees for enforcement and this seemed to be a common practice to date. On the one hand, seven judges of the Polish Supreme Court, being in charge of this issue were of the opinion focusing on the nature of the fee for enforcement that this fee is similar to a court fee from the perspective of a debtor and shall be deemed as a kind of receivable under public law. On the other hand, VAT is also a public receivable, however, according to Supreme Court, it is not justifiable to add VAT to any fees if this add-back is not stipulated by law. In the past the Polish Finance authorities treated actions undertaken by bailiffs differently representing the position for many years that bailiffs’ action is not subject to any VAT and at other times stated that bailiffs conduct business activities and therefore should act as VAT payers. The recent decision of the Polish Supreme Court will in consequence impose on the bailiffs the economic burden of enforcement proceedings and may affect many bailiffs offices in Poland because of the shortage of their revenues. According to disappointed bailiffs this controversy in the treatment of their fees for enforcement can only be resolved with the help of the Polish legislator who should introduce new legal provision regulating the financing system of judicial enforcement. There is every likelihood that this matter may also be subject to assessment of the Court of Justice of the European Union one day.
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