Remote work is used by many employers, especially those recruiting employees abroad. Many of them are unaware of the tax risk involved. In the opinion of the tax authorities, hiring employees who work remotely from their locations in Poland, may lead to the establishment of a permanent establishment on its territory. Such position was presented, i.a., by the Director of the National Tax Information in the tax ruling of 17th February 2022 (no. 0111-KDIB1-2.4010.655.2021.2.BD).


According to the facts presented, a company based in Germany, providing i.a. the support to organizations in recruitment processes, employed employees in Poland. Their responsibilities included administrative activities, such as ongoing support for clients from outside Poland, ensuring uninterrupted access to the services provided, as well as project management. The employees performed their tasks from their locations in Poland, which were not designated as the seat of the German company or the place of meeting with customers. The company asked whether it will lead to the permanent establishment status in Poland, which will entail the obligation to pay the corporate income tax in Poland.

The position of the Director of the National Tax Information

According to the Article 5(1) of the double tax treaty signed with Germany (hereafter: DTT), the term „permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. With reference to the Article 5(4) of the DTT, the term mentioned shall be deemed not to include the maintance of a fixed place of business for the activities of a preparatory or auxiliary character.

In the tax ruling issued it was concluded that the locations of the employees are permanent establishments of the German company in Poland, and the activities performed are not of a preparatory or auxiliary nature.

The Director of the National Tax Information, referring to the Commentary to the OECD Model Convention, indicated that for the permanent establishment to exist, a geographic bond between the establishment and the place understood as a specific room, flat or separate space is necessary, even if the entrepreneur has no legal title to this space. The Director pointed out that the activities performed by employees in Poland are not only of a preparatory or auxiliary nature, as they perform activities without which the applicant would not be able to provide its basic services.


According to the position presented, a permanent establishment is established even when employees provide work from their own locations and the employer does not have a legal title to this place. Moreover, given that the individual flats did not constitute the company's headquarters or meeting place with clients, the employer did not have the right to enter the space indicated. 

The presented argumentation raises significant doubts in terms of its correctness and compliance with the OECD Commentary as well as seems to differ from the position presented in the jurisprudence.

The above indicates, the submission of complaints to the administrative courts for tax rulings, in which such argumantation was presented, is fully justified.

Given the above,  we recommend a verification of the risk of creating a permanent establishment in each and every case.