CJEU - Recent Developments in Direct Taxation 2025

1. Introduction

The Court of Justice of the European Union (CJEU) is set to resolve a significant question regarding Poland’s civil law activities tax (podatek od czynności cywilnoprawnych, PCC). In a pending preliminary reference in Case C-197/25, the Polish Supreme Administrative Court (Naczelny Sąd Administracyjny, NSA) has asked whether the PCC imposed on the transformation of a limited partnership into a general partnership is compatible with EU law. Specifically, the NSA inquiry focuses on whether Article 9 of Directive 2008/7/EC (the Capital Duty Directive) - which allows Member States to exclude certain entities from the definition of “capital company” - grants Poland discretion to levy a capital tax such as PCC on partnerships that are not treated as capital companies.

Under Polish law, PCC is a tax on civil-law transactions and applies, inter alia, to amendments to a company’s articles of association or partnership agreement. A transformation of a company - whether a partnership or a capital company - is treated as such an amendment and is subject to PCC if it results in an increase in the partnership’s assets or, in the case of a capital company, an increase in share capit...