The nature of the dispute: performance vs. acceptance

The case concerned a taxpayer providing IT implementation and system upgrade services. The projects were delivered in stages, with each stage subject to formal acceptance by the client. Acceptance was documented through protocols signed after the client had verified the work and had the opportunity to raise objections.

The contractual model included:

• clearly defined stages with allocated remuneration,
• a client-side review and acceptance process,
• invoicing conditional upon the signing of an acceptance protocol.

The taxpayer argued that, in such a model, a service (or part of it) is only performed once it has been accepted by the client. The tax authority took the opposite view, maintaining that performance occurs earlier (when the work is actually completed and submitted for acceptance) and thus the protocol serves merely as evidence of a taxable event that had already happened.

The position of the administrative courts

The courts of both instances (cases III SA/Wa 2823/22 and I FSK 1353/23) rejected the authority’s position.

The courts held that the key issue is whether the acceptance process:

• forms part of the agreed scope of the service,
• has genuine economic significance,
• affects the existence or enforceability of the right to remuneration.

Where these conditions are met, acceptance cannot be regarded as a purely formal step. In such cases, the signing of an acceptance protocol may determine when the service is performed for VAT purposes under Polish law.

The relevance of CJEU case law (Budimex, C-224/18)

The Supreme Administrative Court also confirmed that the principles established by the Court of Justice of the European Union in case Budimex (C-224/18) are of general application and are not limited to construction services.

According to that case law:

• the timing of service performance must reflect economic reality,
• formal acceptance may be relevant if it confirms the actual completion of the service,
• and, crucially, if it determines the right to payment or its enforceability.

The Court expressly rejected the view that these principles apply exclusively to the construction sector.

Broader context in case law

This judgment forms part of a broader trend in Polish VAT jurisprudence, moving away from a strictly formal interpretation of “service performance” towards a more economic, substance-based approach.

A similar conclusion was reached in the judgment of the Supreme Administrative Court of 4 March 2026 (I FSK 1367/23), concerning dealer bonus schemes. In that case, the Court held that VAT liability arises only once the amount of the bonus has been finally determined and approved, rather than at the stage when the underlying activities are carried out.

Practical implications

This matter is particularly relevant for taxpayers operating under staged delivery models, especially in the IT sector.

However, it does not mean that signing an acceptance protocol automatically determines the timing of VAT liability. The following factors are critical:

• contractual provisions – the contract should clearly state that acceptance determines the completion,
• actual performance – the acceptance process must be substantive (e.g. testing, possibility to raise objections),
• link to remuneration – acceptance should determine the right to payment or its amount,
• consistency of documentation – contracts, project schedules, acceptance protocols and invoicing rules should form a coherent framework.

Failure to meet these conditions may lead to disputes with the Polish tax authorities.

Tax risk and administrative practice

Despite the increasingly taxpayer-friendly approach in Polish jurisprudence, the practice of Polish tax authorities often remains more restrictive. As a result, taxpayers applying acceptance-based models should be prepared for potential disputes.

Each case should be preceded by an individual assessment, taking into account both the contractual arrangements and how they are implemented in practice.

Advance payments — unchanged rule

Importantly, advance payments remain subject to the standard VAT rules. Any payment received before the service is performed (including those before acceptance) triggers VAT liability at the time of receipt – as a gross amount, comprised of both net and VAT.

Conclusion

The judgment of 31 March 2026 (I FSK 1353/23) confirms that, under Polish VAT law, the moment a service is performed may – in certain contractual models – be linked to its formal acceptance.

However, this is not an automatic rule. The decisive factor is whether acceptance constitutes a genuine element of the service and whether, without it, the service could be regarded as economically complete.

In this context, an acceptance protocol may move beyond a purely evidentiary function and become a key factor in determining the timing of VAT liability.