Poland

Corporate - Corporate residence

Last reviewed - 10 June 2022

A company is considered to be a resident in Poland if its registered office or management is located in Poland.

Permanent establishment (PE)

Taxation of non-residents

Tax non-residents are subject to CIT in Poland exclusively on their income derived in the Polish territory (sourced in Poland). Income sourced in Poland is i.a. income from business activities carried out in Poland (including via a permanent establishment).

As of 1 January 2022, it is understood that the taxpayer has a management board in the territory of Poland, inter alia, when in the territory of Poland current activities of that taxpayer are conducted in an organised and continuous manner, in particular on the basis of: an agreement, decision, court judgement or other document regulating the establishment or functioning of this taxpayer, or granted powers of attorney, or connections.

PE under Polish CIT law

According to the Polish CIT Act, definition of permanent establishment covers:

  • a fixed place of business through which the entity whose seat or management office is on the territory of one state pursues its activities, in whole or in part, within the territory of another state, in particular a branch, agency, office, factory, workshop or place of extraction of natural resources (fixed place of business concept);
  • a construction site, construction, assembly  or installation work carried on within the territory of one state by the subject whose seat or management office is on the territory of another state (construction site concept);
  • a person who, on behalf and for the benefit of a subject whose seat or management office is on the territory of one state, operates on the territory of another state, if such person holds and exercises a power of attorney to enter into contracts on its behalf (dependent agent concept);

unless a relevant double taxation treaty (DTT) to which Poland is a party provides otherwise.

Note that Polish CIT law:

  • does not encompass any provisions concerning the period required for construction works to create a PE
  • does not include provisions indicating that an independent agent does not create a PE, and
  • does not include provisions indicating that actions of an auxiliary or preparatory character do not lead to creation of a PE in Poland.

The above mentioned standard PE existence triggers should be interpreted taking into account wording of a specific DTT, the provisions of the OECD Commentary and international practice. 

PE from a DTT perspective

In general, the provisions of DTTs concluded by Poland are based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention on Income and on Capital (OECD Model), except for provisions related to taxation of royalties, which are based on the United Nations (UN) Model Double Taxation Convention.

As a principle, treaties based on the OECD Model provide for the following concepts, which determine whether activities of a foreign entrepreneur constitute a PE (usually in Article 5):

  • Fixed place of business concept.
  • Dependent agent concept.
  • Construction PE concept.

Note that some DTTs concluded by Poland also encompass other PE concepts (e.g. service PE concept or offshore PE concept).

As of 1 January 2022, PE is also subject to minimum income tax.

Exit tax

As of 1 January 2019, exit tax (i.e. taxation of unrealised capital gains in the case of transfer of assets, change of tax residence, or taxpayer's PE outside the territory of Poland, including in connection with a cross-border transformation) has been introduced. The exit tax rate has been established at 19%. Under certain conditions, taxpayers may be able to apply for payment in instalments for a period not exceeding five years.