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Taxation of athletes’ income - precedential resolution


There has been a breakthrough in a long-standing dispute with tax authorities over taxation of income from practicing a sport in which DZP’s Tax Practice represented a professional athlete.

On 22 June, the extended bench of the Supreme Administrative Court (SAC) issued resolution no. II FPS 1/15 in which it confirmed that where a taxpayer obtains income from practicing a sport while statutory prerequisites of a non-agricultural business activity are met, income obtained by the taxpayer in such conditions should be treated as income from non-agricultural business activity. Thus, an athlete who carries on business may tax his income from practicing a sport as income from non-agricultural business activity.

Such resolution is the product of a long-standing dispute between our client, a professional speedway rider, with tax authorities that challenged his right to classify his income from practicing a sport as originating from business activity and apply flat tax to it.

Tax authorities of both instances and the Voivodship Administrative Court in Bydgoszcz maintained that as income from practicing a sport was included on the list of incomes from activity pursued personally, then under the applicable laws it could not be classified as income from non-agricultural business activity even if the taxpayer obtained such income in conditions that had features of such activity. Significantly, such disadvantageous position was commonly accepted by administrative courts, including the SAC, which largely impeded defending rights and interests of the taxpayer.

It was only the SAC bench composed of seven judges that abandoned the existing negative ruling practice because it saw arguments for the possibility of taxing income of professional athletes conducting business activity as income from non-agricultural business activity.

The above resolution undoubtedly marks a fundamental break and is crucial for athletes whom administrative courts denied the right to tax their income in accordance with principles applicable to business activity (including with flat tax). The resolution also confirms that it is worth defending one’s rights and interests until the end, using the appeal measures available, even contrary to the existing negative ruling practice.

The client was advised by Artur Nowak, Partner, and Paweł Suchocki, Senior Tax Consultant from DZP.

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