In the judgment of 18.02.2025 (case no. II FSK 878/23), the Supreme Administrative Court (hereinafter: “SAC”) confirmed for the first time the possibility of correcting the statement on the choice of the method of settling exchange rate differences submitted in the annual tax return.

The case concerned a company from the leasing industry. The company assessed that in order to ensure greater independence of the tax result from exchange rate fluctuations in individual periods, it is justified to change the method of settling exchange rate differences from the accounting method to the tax method referred to in Article 9b sec. 1 point 1 of the CIT Act. The company assessed that the tax method would be more favourable for it. According to the company, such a change was to allow it to recognize only realized exchange rate differences in the tax result. As a result, in its annual return for 2019, the company declared that it would stop using the accounting method in accordance with Article 9b sec. 4 of the CIT Act (in field 30 of the CIT-8 declaration for 2019, the Company marked the answer “Yes”). In practice, however, it turned out that this was not a good decision, because the change means a significant burden on financial and accounting services. This is due to the large number of contracts in EUR and the limited functionality of the accounting system (no module for automated settlement of exchange rate differences in accordance with the newly selected method). Therefore, the company decided to return to the accounting method. It applied for an interpretation on whether it could correct the CIT-8 for 2019 with regard to the statement on resignation from the use of the accounting method and continue to use this method in 2020 and subsequent years. The Director of the National Tax Information (hereinafter: “Director of the NFI“), in the individual interpretation of 08.08.2022, did not share the company’s position. According to the Director of the NFI, the correction of the tax return: is intended to correct an error – it may concern the amount of tax liability, overpayment or tax refund and other data included in the declaration cannot concern the decision on the choice of method for settling exchange rate differences. Therefore, it is not permissible for the company to retroactively change its decision in this respect.

The Provincial Administrative Court (hereinafter: “PAC“) in Warsaw agreed with the company’s arguments and repealed, in its judgment of 31.01.2023 (case no. III SA/Wa 2221/22), the contested interpretation of the Director of the NFI of 08.08.2022. According to the PAC, the correction is not limited only to errors in the original declaration. According to the PAC, since the statement on the choice of a specific method for determining exchange rate differences is an element of the annual tax return, and a special provision does not limit or exclude the possibility of correcting the declaration in this respect, such a declaration may be subject to correction in accordance with the rules set out in Chapter 10 of the Tax Ordinance, in particular in Article 81 § 1.

The SAC agreed with the court of first instance and unequivocally confirmed the possibility of correcting the statement on the application of exchange rate differences. The SAC emphasised that this type of statement is part of the tax return and can be corrected like all other elements of the declaration (e.g. the amount of revenues or costs). The legislator has not limited the possibility of correcting the declaration only to the errors contained therein. Therefore, it is also possible to correct the declarations of intent contained in the declaration.