The recent ruling by the Constitutional Tribunal on July 23, 2024 (Case No. K13/20), has had widespread repercussions in the tax advisory community and among taxpayers. The Tribunal determined that the provisions obliging tax advisors to report tax schemes (MDR) are unconstitutional as they violate the professional secrecy of tax advisors.
Key consequences of the ruling
1. Protection of Professional Secrecy
The Tribunal confirmed that the professional secrecy of tax advisors is inviolable, and advisors are obligated to maintain it under all circumstances. The ruling clearly indicates that not even the client can release the advisor from the duty of maintaining professional secrecy. This is a fundamental change that strengthens the trust between advisors and their clients.
2. Unconstitutionality
The provisions introduced in 2019, which imposed the obligation to report tax schemes, were deemed unconstitutional. The Tribunal pointed out that they violate Article 17, paragraph 1 of the Constitution, which states that the performance of a profession of public trust must be in line with the public interest and the protection of the client’s welfare. Additionally, the retroactive reporting of schemes violates the principle of non-retroactivity of law (lex retro non agit).
3. Impact on MDR (tax scheme) Provisions
Although the ruling primarily concerns tax advisors, it has broader implications for MDR provisions in Poland. These provisions also impose the obligation to report tax schemes on other promoters, such as lawyers and legal advisors. While this obligation has not been completely abolished, the ruling may set a precedent for further legislative changes.
4. Legislative Response
The ruling necessitates a legislative response to align the provisions with constitutional requirements. Changes will be needed to equalize the protection of the professional secrecy of tax advisors with that of lawyers and legal advisors. This process may involve both changes in national law and adjustments to comply with EU directives.
4. International Context
Similar MDR provisions have previously been challenged in other countries, such as Belgium, where they were also found unconstitutional. These rulings, including the judgment of the Court of Justice of the EU, emphasize the importance of protecting communication between lawyers and their clients at an international level.
Summary
The Constitutional Tribunal’s ruling is a significant step towards protecting the professional secrecy of tax advisors. It enhances clients’ trust in advisors and underscores the need for high legal standards in protecting confidential information. We now await appropriate legislative actions that will fully align Polish law with constitutional requirements, eliminating ambiguities and uncertainties related to the reporting of tax schemes.
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