C 562/19 P



On March 16, 2021 the Court of Justice of the European Union (CJEU) issued a judgment (Judgment) in favor of the Polish government, dismissing the appeal of the European Commission (Commission) and sustaining the judgment of the European Court from May 16, 2019. According to the Judgment, our local regulations on retail sales tax do not breach the European Union’s law.


CJEU Judgment

The retail sales tax was the subject of proceedings by the Commission against Poland for breach of EU law. According to the Commission, the structure of the tax constituted State aid incompatible with the internal market. This led the Commission to issue a decision ordering Poland to suspend tax collection.

As a result of the Commission's decision, Poland lodged a complaint with the European Court. On May 16, 2019 the Court issued a judgment in relation to the complaint of the Polish government against the Commission's decision, according to which the Commission's decision was invalid and Poland was entitled to introduce a new tax. However, this judgment was appealed against by the Commission to the CJEU.

Considering the case, the CJEU stated that, taking into account the tax autonomy granted to Member States outside the areas subject to harmonization of EU law, these countries are free to establish the taxation system they deem most appropriate, adopting, in a given case, progressive taxation. In particular, EU law in the field of State aid does not, in principle, prevent Member States from choosing progressive rates of taxation to take account of the taxpayers' ability to pay tax, nor does it oblige Member States to restrict the application of progressive rates to taxation of profits only, excluding taxation of turnover.



Finally, CJEU’s judgment ends the court proceedings and dispute between the Commission and the Polish government, whether the retail sales tax provisions are compliant with the EU law. The state of uncertainty as to the future of the new tax has ended and taxpayers should consider introducing solutions to their financial and accounting systems to improve the process of calculating the tax on retail sales.