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Poland - update on Fixed Establishment (FE)

In a continuation of the FE issue in Poland published in the IVA newsletter in March 2020, please find the new facts below.


In June 2020 one of our foreign clients with a Polish VAT registration has received a negative tax ruling regarding FE for the manufacturing services which have been commissioned on entrusted materials to the Polish contractor.



The Company with the headquarters in the Netherlands specializes in the production and marketing of tires for agriculture, forestry, construction and industry business. There is no branch, representative office or any permanent presence in Poland.

The Company has signed a framework agreement with a Polish independent and non-affiliated contractor, which is not under its control, which manufactures assembled products (wheels) for the Company.

The contractor's employees do not have a power of attorney to conclude agreements and conduct other business activities on behalf of the Company in Poland.

The Company is the owner of the goods (tires) for all the time, and the remaining elements (rims and other elements) necessary for the production of assembled products (wheels) are provided by the Polish contractor.

A part of the contractor's warehouse space is used for goods / assembled products, but the contractor does not rent the warehouse to the Company.

The Company does not have free access to the contractor's premises and machines. Has the right to inspect and view documentation related to the production of assembled products. Occasional entry of the Company’s employees to the contractor's premises is under the supervision of the contractor.

The contractor has full responsibility for the management and control of his staff who are solely his responsibility. The Company is not entitled to give orders or control over the contractor's staff, it does not employ any personnel who perform work for it in the contractor's premises.


In the Company's opinion, in the light of the presented facts, there do not cumulatively meet the requirements to conclude that the Company has an FE in Poland.


Tax authorities’ decision

The tax authorities decided differently. It was stated that the Company has an FE in Poland, due to the fact of the possession of the tires and the agreement for the production on the entrusted material with the Polish contractor and the ability to view the documents and conduct an inventory in Poland. What's more, he emphasized that the Company has got the control over the contractor's personnel and technical facilities – assumed that the level of this control is similar as in the Company's own production plant. In addition, the tax authorities indicated that in the analysed case it is irrelevant that all decisions regarding the Company's operations are taken at the Company's headquarters, in the Netherlands.


The presented in a short form tax ruling is another proof that in Poland tax authorities have adopted a negative interpretation line. The interpretation was issued without any logic arguments. Moreover, the arguments were adapted to the thesis made in advance. Nevertheless, it is always possible to complain against the tax ruling to the administrative courts, where a positive judgment should be obtained.


For more information on the current approach of tax authorities in Poland to the FE, please feel free to contact: Anna Szafraniec, CEE VAT Compliance Manager, and Łukasz Woźniak, Senior Tax Consultant,

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Disclaimer:  The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.