Banks will pay penalty for delays in STIR reporting – important NSA resolution

On Monday 21 October 2024, the Supreme Administrative Court [hereinafter: NSA] adopted a resolution by a panel of seven judges (ref. III FPS 1/24) concerning the right of the Head of the National Tax Administration [hereinafter: KAS] to impose penalties on banks and other institutions obliged to submit reports within the STIR system. The NSA ruled that failure to submit data in a timely manner violates the obligations under Article 119zzh § 1 of the Tax Ordinance and is subject to administrative sanctions.

What are the information obligations of banks?

Pursuant to the provisions of the Tax Ordinance, banks and other financial institutions are obliged to provide data concerning, inter alia, settlement accounts opened and maintained and daily statements of transactions. This information is provided to the clearing house and the Head of KAS.

Entities that fail to comply with the obligations imposed are subject to sanctions. Article 119zzh § 1 of the Tax Ordinance provides for the possibility of imposing a fine when banks and other financial institutions:

• fail to fulfil their information obligation towards the clearing house or the Head of KAS,
• fulfil this obligation, but provide false data,
• conceal source data.

In light of this provision, the question was raised as to what about entities that, although they fulfil the obligations imposed on them and provide true data, but do so after the deadlines specified in the Act?

Background of the dispute resolved by the NSA resolution

The case concerned a bank on which the Minister of Finance, Funds and Regional Policy imposed a fine for submitting STIR information after the deadline specified in the Tax Ordinance.

The decision imposing the fine was appealed by the bank to the Provincial Administrative Court in Warsaw, which, in a judgement of 17 February 2022, case file III SA/Wa 1411/21, overturned the said decision. The court found that, although the Tax Ordinance obliges selected entities to provide STIR information within the appropriate deadlines, the provision regarding financial penalties does not extend to cover late submission of information.

The authority disagreed with this decision and filed a cassation appeal against the Provincial Administrative Court’s ruling.

When considering the case, the NSA raised doubts about the essence of the provisions on financial penalties. In the court’s view, it is not the formal circumstances (inclusion of the scope of the sanction in the act), but the actual circumstances of the failure to fulfill the obligation.

Key decisions in resolution III FPS 1/24

Finally, on 21 October 2024, the NSA adopted a resolution, according to which Article 119zzh § 1 of the Tax Ordinance provides the basis for imposing a penalty for failure to submit STIR data on time. In doing so, the NSA referred to the linguistic, functional and systemic interpretation of the provisions.

In the court’s view, a fine should not be imposed only if two prerequisites are jointly met: (1) the provision of the relevant type of information and (2) the provision of this information within the time limit indicated in the law.

The NSA pointed out that the STIR provisions were introduced to prevent extortion, and their fundamental element is the speed and precision of the information provided. Delays in the implementation of these obligations can distort the results of risk analyses, making the prevention of financial crime less effective. For this reason, any delay in the implementation of information obligations is treated as a breach of the rules, which justifies the imposition of a fine.

What does this mean in practice?

The resolution of the 7 judges clearly defines the necessity of timely STIR reporting by banks and other financial institutions, which is crucial for countering tax frauds.

At the same time, this is another obligation for which due diligence must be exercised. Particular care is therefore no longer required only with regard to the content of the information provided, but also with regard to the timing of this transmission. Failure to comply with these obligations can be acute due to the possibility of a fine provided for in the legislation.