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)

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), and
  • 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, provided such person holds and exercises a power of attorney to enter into contracts on its behalf (dependent agent concept),

unless a relevant 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 Organisation for Economic Co-operation and Development (OECD) Commentary, and international practice.

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 from a DTT perspective

In general, the provisions of DTTs concluded by Poland are based on the 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).