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Warehousing in relation to fixed establishment in Poland

If the activities of foreign companies in Poland come down to the purchase of goods, their storage and processing, and after carrying out the work on them, the goods are exported to the territory of another country, such services do not generate a fixed establishment in Poland.

The above standpoint was presented by the Director of the National Tax Information in an individual ruling of March 5, 2019 (0115-KDIT1-2.4012.8. 2019.1.AW).

This ruling is important and, above all, advantageous for the taxpayer in the light of previous months’ debatable matter of fixed establishment, which was the result of the judgment of the Court of Justice of the European Union in case C-605/12 – Welmory.

Since then, the Polish tax authorities have been overinterpreting the assessment of prerequisites, the fulfilment of which is associated with the possession of a fixed establishment by foreign entities in Poland, i.e. the criterion of business continuity and possession of a minimum personnel and technical facilities. The increasingly restrictive approach of Polish authorities in this area often resulted in an absurd position that even the infinitesimal activity of a foreign entity in Poland meant the creation of a fixed establishment in the territory of the country. This, in turn, gave rise to equally absurd consequences in practice, such as difficulties in determining the address of a permanent place of business and, accordingly, the jurisdiction of the local tax office.

The quoted interpretation presents a gentler and more rational approach to the matter, which raises hope for a positive change in the future.

In the case at hand, the authorities pointed out that the mere fact of using warehousing and processing services on the entrusted material does not automatically determine the existence of a fixed establishment in Poland. What is more, this decision is reflected in verdicts of administrative courts that present a similar position. The verdict of the Voivodship Administrative Court in Gliwice of January 7, 2019, ref. no III SA/Gl 912/18.

It seems that the interpretative and judiciary line is timidly moving in the right direction, but there is still a lack of clearly defined definition of a fixed establishment, which would allow the development of a unified practice by the Polish tax authorities.

Therefore, it would be advisable to appeal against tax rulings which confirm having a fixed establishment in relation to the aforementioned fact, in order not to leave such defective interpretations in the legal circulation and to lead to the formation of a correct interpretation line.

Joanna Kamola

VAT Manager 

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