Big event and huge VAT money. The organizer underestimated the tax by over PLN 100 million

The company inspected by KAS officers underestimated VAT by over PLN 100 million when implementing a subsidy for organizing a sports event, the National Tax Administration reported. This is about the European Games 2023 company – according to the judgment of the Provincial Administrative Court in Krakow.

Spokeswoman of the Head of the National Tax Administration, Senior Asp. In a statement sent to PAP, Justyna Pasieczyńska informed that the company, controlled by the Olsztyn branch of KAS, received “subsidies from the state budget and the budgets of local government units in the total amount of approximately PLN 570 million” for organizing the sports event. According to the auditors' findings, the company did not include the subsidies received in the VAT tax base. This resulted in “an understatement of tax due by approximately PLN 106 million.”

She added that the inspection also revealed other irregularities in tax returns. It was established, among other things, that the company controlled by the Olsztyn KAS understated its tax liabilities and overstated the amount of VAT refund, which resulted in irregularities totaling approximately PLN 146 million.

“Additionally, as a result of the proceedings, a VAT liability (sanctions) was established in the amount of nearly PLN 16 million,” Pasieczyńska pointed out.

The KAS spokeswoman said that the director of the National Tax Information (KIS) issued an individual interpretation for this company, in which he clearly indicated that the subsidies received were subject to VAT. This position was confirmed by the judgment of the Provincial Administrative Court, which dismissed the taxpayer's complaint.

Pasieczyńska refused to indicate which company and which sporting event she was referring to.

PAP, however, got acquainted with the judgment of the Provincial Administrative Court in Krakow, which in May 2024 dealt with the issue of VAT settlement by the European Games 2023 company. The company appealed against the individual tax interpretation issued by the director of the National Tax Chamber, in which he stated that the company acted incorrectly by not taxing with VAT the earmarked subsidies obtained from the State Treasury and local governments. The description of the case is consistent with the information provided by the KAS spokeswoman.

According to the company, the subsidies had no direct impact on the price of the services it provided, and were only used to organize the event and cover expenses, therefore they should not be subject to VAT. However, the KIS director found that the subsidies were part of the remuneration for the broadly understood service of organizing the Games provided by the company to the State Treasury and the hosts, and therefore should increase the VAT tax base.

Last July the court dismissed the company's complaint, finding that the individual interpretation of KIS was correct. In the justification, he indicated, among other things, that the subsidies constituted remuneration for the service and had an impact on the price of the services.

In addition, the website of the Ministry of Finance contains information about the audit of the European Games 2023 company. There is also a note there that, as a result of the audit, the Olsztyn National Audit Office submitted two notifications to the prosecutor's office regarding the activities of this company – in July 2024 and in August 2025. They concerned irregularities in the management of public funds, including tax violations.

The European Games 2023 company is in liquidation. It was established by the Marshal of the Małopolska Voivodeship in November 2021, its second shareholder is the city of Kraków, which joined it in November 2022. The Supreme Audit Office reported on irregularities in the company's operations in February 2025.

PAP is waiting for a comment from the Marshal's Office of the Małopolska Voivodeship and the city authorities on this matter.

The third edition of the European Games, officially hosted by Kraków and Małopolska, although the competition was also held at the Silesian Stadium in Chorzów, lasted from June 21 to July 2, 2023. 6.4 thousand competitors competed for 253 sets of medals in 29 disciplines. athletes from 48 countries. In 12 disciplines, the titles of European champions were also at stake, and in 19 – qualifications for the Olympic Games in Paris. According to the Supreme Audit Office's report, published in February this year, at least PLN 1.7 billion was spent on organizing the event from public funds, of which almost 65 percent. came from the state budget and government funds, approximately 35 percent. from the budgets of local governments, and 0.5 percent from other sources. (PAP)

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