Tax Settlement Agreement – A Real Opportunity for Resolution or Just an Illusory Alternative?
18.05.2026
The planned amendments to the Polish Tax Ordinance Act provide for the introduction of a new legal institution into the Polish legal system – the tax settlement agreement. This solution is intended to address the growing number of tax disputes and the need for faster and more efficient resolution mechanisms.
The idea and nature of a tax settlement agreement
The essence of this solution lies in partially moving away from the confrontational model based on audits and lengthy court proceedings towards a model focused on dialogue and reaching an agreement between the parties.
At the same time, it should be emphasized that the proposed solution does not change the fundamental principle of tax law: the amount of a tax liability will still result directly from statutory provisions and will not be subject to negotiation. The scope of negotiations may only concern the manner in which the tax obligation is performed, in particular the terms and schedule of repayment.
Scope of application
The draft legislation provides for a relatively narrow but precisely defined scope of application of this institution.
A tax settlement agreement:
- applies exclusively to tax liabilities whose payment deadline has already expired, i.e. tax arrears,
- concerns only receivables constituting revenue of the state budget, which excludes its application to local taxes,
- does not apply to non-tax budgetary receivables.
At the same time, the mechanism is excluded in cases involving, among others, suspected tax crimes or abuses, aggressive tax optimization schemes, or where enforcement or security proceedings regarding tax arrears are already pending.
The proposed solutions clearly demonstrate that the settlement agreement is intended primarily as an instrument for taxpayers acting in good faith who seek to regularize their tax situation.
It is also significant that the conclusion of a tax settlement agreement is strictly linked to the assessment of the public interest. Such an agreement may only be concluded where it not only prevents a tax dispute from arising but also leads to outcomes more beneficial for the State Treasury than continuing standard actions by tax authorities, particularly through reducing tax collection costs.
Procedure for concluding a settlement agreement
According to the draft assumptions, the mechanism leading to the conclusion of a tax settlement agreement is intended to be multi-stage and partially formalized.
However, this is not a fully symmetrical procedure, as the tax authority retains a significant decision-making role, particularly in verifying whether the agreement complies with the public interest and whether it is economically justified.
Importantly, the draft legislation does not provide for the participation of a mediator, which may prove significant for the practical application of this solution.
What benefits does a settlement agreement offer taxpayers?
From the taxpayer’s perspective, the institution of a tax settlement agreement may offer several benefits.
The most important include:
- the possibility of reducing late-payment interest, with the degree of reduction depending on the stage at which the taxpayer applies for the settlement agreement,
- payment of tax arrears in instalments or deferral of payment deadlines,
- definitive resolution of the dispute within the scope covered by the agreement.
At the same time, it should be noted that the proposed solution has largely been designed to increase the efficiency of tax administration. In practice, this means that the key objective of the institution is to reduce the number of disputes and the costs of conducting them, while also improving the effectiveness of collecting public-law receivables.
Risks and limitations
Despite its potential advantages, the proposed institution is also associated with certain risks that taxpayers should take into account before deciding to use this solution.
In particular, attention should be paid to:
- the lack of full guarantees regarding the protection of information disclosed during negotiations,
- the broad discretionary powers of the tax authority,
- the lack of the possibility to appeal the settlement agreement before an administrative court,
- the risk of the agreement expiring in the event of non-compliance with its terms and the resulting loss of benefits.
In practice, this means that the decision to conclude a settlement agreement should be preceded by a detailed analysis of both the taxpayer’s situation and the proposed terms of the agreement.
In conclusion, the tax settlement agreement has the potential to become a useful instrument in relations between taxpayers and tax authorities, although within limited boundaries. At the same time, it should be remembered that this solution will neither replace traditional procedures nor allow for the arbitrary shaping of tax liabilities.
Ultimately, it will be the practical application of the new regulations that determines whether the tax settlement agreement becomes a genuine tool for dialogue or, given the continued dominant role of the tax authority and the limited role of the taxpayer, remains a solution of rather narrow and limited significance.
