D., a company registered in Germany, provides human resources consultancy services, including conducting simulations to assess employee aptitudes, delivering training and coaching sessions for managers in soft skills such as communication and delegation. The company’s core services — training programmes and client consultations — are conducted by specialist consultants based in Germany. D. employs individuals residing in Poland under employment contracts to perform administrative tasks remotely from their homes. These Polish-based employees carry out duties such as data entry into management systems, sending project status reports, creating projects in internal systems, coordinating printed and digital training materials, providing technical support for training participants, and uploading content to internal platforms. The employees have no authority to sign contracts, negotiate terms, or influence service pricing, and they do not physically meet clients. D. owns no property or office space in Poland and the employees’ home addresses are not designated as business premises of the company.
D. applied for an individual tax interpretation, taking the position that its activities in Poland would not constitute a permanent establishment under Article 4a(11) of the Polish CIT Act or Article 5 of the Poland-Germany double taxation convention, and consequently D. would have no corporate income tax obligation in Poland. The Director of the National Tax Information Service disagreed, concluding that all conditions for recognising a permanent establishment in Poland were met.
The Provincial Administrative Court in Gliwice set aside the tax authority’s interpretation, finding that none of the cumulative conditions for a permanent establishment were satisfied. The Director of the National Tax Information Service filed a cassation appeal with the Supreme Administrative Court.
Judgment
The Supreme Administrative Court dismissed the cassation appeal and upheld the Provincial Administrative Court’s judgment in favour of D. The court confirmed that four cumulative conditions must be met for a permanent establishment to exist:
(1) a fixed place of business,
(2) permanence of that place,
(3) business activities carried on through that place, and
(4) those activities not being merely preparatory or auxiliary in nature.
The court held that since D. had no right to dispose of or control the employees’ workspace in Poland, no fixed place of business existed. The mere provision of computer equipment for remote work did not create a separate establishment at D.’s disposal. Accepting the tax authority’s position would mean that employees would constitute a permanent establishment wherever they happened to perform their duties.
Furthermore, the court found that even if a fixed place of business had existed, the employees’ activities were purely administrative and auxiliary in nature. These tasks — providing access to software, sending reminders, distributing materials, and ensuring deliveries met agreed specifications — did not overlap with D.’s core business of delivering HR consultancy, training, and assessment services. Referencing Article 7(1) and (2) of the convention and the OECD Model Convention Commentary, the court emphasised that a permanent establishment must carry on actual economic activities and be capable of earning profits as if it were an independent enterprise. Since the administrative support activities performed in Poland did not generate revenue and did not constitute a substantial part of D.’s overall operations, no permanent establishment arose and D. had no corporate income tax obligation in Poland.
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