Overseas companies are increasingly establishing a presence in Poland – often through individual employees, representatives, or local support teams. What starts as limited business activity can, in some circumstances, lead to corporate profits tax obligations in Poland. Polish tax authorities have started taking a more assertive stance in identifying taxable permanent establishments (PEs), sometimes focusing on even limited forms of local presence.
Recent court rulings, including by the Supreme Administrative Court, show how fact-specific and nuanced PE assessments have become. In some cases, the authorities have treated common business operations – such as using office space or employing local staff – as enough to establish a PE. But the courts have not always agreed.
This article reviews several Polish judgments that shed light on how foreign companies should assess their exposure when operating in Poland.
What constitutes a PE?
Under Polish tax law and most double tax treaties (DTTs), a PE may arise in two ways:
A fixed place of business, such as an office, branch, factory, workshop, construction site, or installation project; or
A dependent agent PE, where a person acts in Poland on behalf of a foreign enterprise and has authority to negotiate or conclude contracts in its name.
These definitions may be modified by applicable DTTs. While the legal framework follows OECD standards, its application – especially with regard to dependent agents – has become a point of dispute between taxpayers and the Polish tax authority.
The role of local employees
In a final verdict from February 13 2025 (II FSK 610/22), the Supreme Administrative Court reviewed a case involving a Hungarian company that employed a sales manager based in Poland. The employee developed client relationships and supported the sales process but lacked the authority to negotiate or sign contracts.
The tax authorities claimed this to be a dependent agent PE. The court disagreed. It found that being involved in pre-contractual activity does not meet the treaty requirement for a PE – which focuses on legal authority, not commercial influence.
The court also looked at the office space used by the employee. It confirmed that a PE may only arise from a fixed place of business if core business functions – not just support or preparatory tasks – are carried out there. This case underlines the difference between the court’s approach and the tax authority’s more expansive interpretation.
An employee’s home as a fixed place of business
A similar issue was considered in another verdict issued the same month (II FSK 609/22), this time involving a Danish company whose Polish staff worked remotely from their homes, while the company’s income was generated outside Poland.
The tax authorities argued that the employees’ remote work locations qualified as fixed places of business. The court rejected this position, ruling that a location cannot be treated as a PE unless the company has a certain degree of control or access to the space. Regular remote work, even with employer-provided equipment, is not sufficient.
The court also noted that the Danish company had no income sourced in Poland (attributable to the employees) under the DTT, and therefore could not be taxed there as a PE – regardless of the employees’ location.
Consistent view from a regional level
In another case (I SA/Gl 631/24), the Voivodship Administrative Court in Gliwice examined the activity of Polish employees working for a Luxembourg-based investment firm. Their work focused on maintaining relationships with distributors and attending industry events, but they did not have authority to conclude contracts or act on the company’s behalf.
Despite this, the tax authority again argued that the employees’ home workspaces could constitute a PE. The court ruled against that interpretation. It noted that the company did not have any right to use the premises and that the employees’ work was limited to marketing and support – not core business operations. Although the ruling is not final, it reflects a broader trend in court approach.
Stricter approach in selected judgments
Although recent judgments have generally supported a more balanced, taxpayer-friendly view of PE status in Poland, some decisions in recent years have taken a stricter direction. In its judgment of December 6 2022 (I SA/Gl 674/22, non-final), the Voivodship Administrative Court in Gliwice adopted a more expansive interpretation.
The court found that even in the absence of leased or owned premises, employing staff on open-ended contracts – working remotely or from shared office space – may create a fixed place of business if the company has regular and effective use of that space. It also emphasised that the use of employer-provided equipment and the continuous nature of the work could satisfy both the permanence and business activity criteria under OECD standards. This ruling shows that courts may, in some cases, lean towards a broader reading of PE in the context of remote work and digital business models.
Practical considerations for foreign companies
The difference between the tax authority’s position and the courts’ more balanced view is becoming increasingly visible. That said, many companies may be forced to defend their tax position in court to avoid being treated as having a PE in Poland.
To reduce risk, foreign companies should carefully review their set-up in Poland. In particular, they should assess:
What authority local staff actually have, especially when dealing with clients or commercial matters;
Whether any physical space, rented or private, is under the company’s control or merely used by the employee;
What types of activity are performed locally, and whether they only support the core business or go beyond that and become part of the company’s main operations; and
Where the income comes from, because even if a fixed place of business exists, taxation requires that profits be attributable to it, which may not be the case, especially when a remote employee plays only a supporting role and primarily generates costs.
As the discussed cases show, even a single employee or occasional access to office space can raise questions.
Final thoughts on PE risk in Poland
The definition of a PE in Poland remains open to interpretation – and increasingly a matter of legal dispute. While courts are largely aligned with international OECD standards, the tax authority continues to pursue an expansive reading of domestic and treaty PE rules.
Foreign companies with recurring or regular activity in Poland – even in a limited form – should not treat PE risk as a theoretical concern. Clear job scopes, carefully managed authority, and consistent documentation are important to ensuring that local presence does not result in unexpected corporate tax exposure.
