Judgment on the VAT rate for pet supplements may help many taxpayers

Disputes between taxpayers and tax authorities concerning the correct VAT rate have for years been one of the recurring problems of the Polish tax system. They are often triggered by verification activities or tax audits, and their consequences for businesses can be severe, both financially and organisationally. In practice, many taxpayers abandon the fight at an early stage of the dispute. Experience shows, however, that it is worth consistently defending one’s position. This has been confirmed by the victory secured by RSM Poland’s tax advisers before the Voivodship Administrative Court in Poznań (judgment of 22 April 2026, case no. I SA/Po 446/26), demonstrating that even a lengthy dispute with the tax authorities can ultimately end in the taxpayer’s favour.

The beginning of the dispute: the tax office rejected the reduced VAT rate for certain pet supplements

In the case, which ended in a victory for both the taxpayer and our Tax Litigation team, the taxpayer was a company manufacturing supplements (complementary feeds) for companion animals. When selling the products in dispute, the company applied the reduced 8% VAT rate pursuant to Article 41(2) in conjunction with item 10c of Appendix 3 to the VAT Act.

The tax authority disagreed with this approach and concluded that, due to their composition, the products should be classified as medicinal products and, consequently, taxed at the standard 23% VAT rate. The tax authorities’ key argument was an opinion issued by the Office for Registration of Medicinal Products, Medical Devices and Biocidal Products, according to which the products in question exhibited medicinal and therapeutic properties, which, in the authority’s view, justified applying the higher rate of tax.

Furthermore, the tax office refused to accept the credibility of evidence submitted by the company, including expert opinions confirming the correctness of the applied classification and VAT rate. It also attempted to use against the taxpayer the fact that the company had previously submitted and subsequently withdrawn applications for Binding Rate Information rulings concerning these products.

The company, represented by RSM Poland’s VAT specialists, could not accept either this position or the reasoning presented in the tax office’s decision and therefore lodged a complaint with the Voivodship Administrative Court in Poznań, which, as it turned out, approached the case in a far more rational manner.

Not every opinion issued by a public authority is binding

In the case under discussion, the tax office based a significant part of its reasoning on an opinion issued by the Office for Registration of Medicinal Products, Medical Devices and Biocidal Products, treating it as key evidence that the products in dispute should be classified as medicinal products due to their composition. At first glance, such an approach might appear reasonable, and one could assume that the taxpayer would have to accept the unfavourable outcome.

However, the situation changed because of a single sentence included at the end of the opinion. The authority that had issued it expressly stated that the document could not be regarded as a binding determination.

This gave the taxpayer genuine hope of securing a favourable outcome, particularly as RSM Poland’s tax advisers repeatedly emphasised the non-binding nature of the opinion throughout their arguments. At the same time, our team drew attention to other favourable expert opinions submitted by the taxpayer and referred to inspection reports issued by the District Veterinary Officer, which raised no concerns whatsoever regarding the correctness of the classification of the products in dispute.

The tax office nevertheless maintained its position, arguing that even a non-binding opinion should be treated as decisive. Fortunately, the Court agreed with our arguments and clearly stated that a non-binding opinion cannot serve as the sole and decisive basis for a ruling.

The Court further emphasised that only competent authorities are authorised to issue binding decisions in specific matters, such as determining whether a particular product constitutes a medicinal product. Therefore, where a tax authority has doubts as to the classification of a product, it should seek an expert assessment from the relevant institutions, particularly where a change in classification would subject the product to specific regulatory requirements, such as the need to obtain a special distribution licence.

Tax authorities: the expert opinion is not independent because the expert later began working with the taxpayer

During the proceedings, the taxpayer submitted to the tax office an expert opinion prepared by a recognised veterinary specialist regarding the products in dispute. One might reasonably expect that the position of such a respected expert would be taken into account by the tax authority. The tax authorities, however, took a different view. Their objection stemmed from the fact that nearly a decade later the expert joined the company’s organisation.

Although the taxpayer repeatedly demonstrated that the expert had no connection whatsoever with the company at the time the opinion was prepared, the tax authority persistently challenged the opinion’s credibility. Ultimately, the Voivodship Administrative Court ruled in favour of the taxpayer, holding that the tax authorities’ allegation of a lack of objectivity was unfounded.

Withdrawal of a WIS application as an argument against the taxpayer? The Court: it cannot be used that way!

The reasoning of the judgment issued in the case involving the company represented by RSM Poland’s advisers contains another passage that may be particularly encouraging for other taxpayers.

The company had initially submitted applications for Binding Rate Information rulings relating to the products in dispute to the Head of the National Revenue Administration Information Centre (the Head of NRAIC). During the proceedings, the Head of NRAIC asked additional questions and set a short deadline for responding, which was objectively impossible for the taxpayer to meet. In these circumstances, the company decided to withdraw its WIS applications, a fact that the tax authority subsequently attempted to use against the taxpayer.

Upon examining this allegation, it is difficult to agree with the authority’s position because a WIS ruling is an administrative decision issued at the taxpayer’s request. This means that it is entirely voluntary, and a taxpayer may withdraw from the process at any stage without suffering any adverse consequences. The Court shared this view, correctly and reasonably endorsing that interpretation.

The Voivodship Administrative Court in Poznań therefore stated that a taxpayer cannot be penalised for exercising a right available to them, and that such circumstances cannot be regarded as an argument operating to the taxpayer’s detriment.

The tax authorities are not always right when it comes to VAT rates

At first glance, it may appear that a judgment concerning animal supplements is unlikely to generate broader conclusions that could be useful in other disputes relating to VAT rates and beyond. However, both the favourable outcome and the Court’s reasoning may also prove relevant in many similar cases.

In this case, the Court demonstrated considerable common sense by critically assessing the position adopted by the tax authority and restraining its overly expansive interpretations. The tax authorities attempted to base their arguments on premises that should have been regarded as flawed, while consistently dismissing the position presented by RSM Poland’s experts in a manner that was neither persuasive nor logical – a fact clearly recognised by the Voivodship Administrative Court in Poznań.

This judgment deserves recognition because it is clearly beneficial not only for taxpayers but also for their animals, which may continue to benefit from supplements subject to the lower VAT rate.