This is the result of a tax interpretation (ref. 0114-KDIP2-1.4010.131.2020.1.JS of 26 June 2020) issued for a German company which hires an employee in Poland.
This employee works in the IT area. He/she performs his/her official duties only within the territory of Poland, is a Polish tax resident and all his/her income earned from employment with a German employer is taxed in Poland, in accordance with art. 44 section 1a point 1 of the PIT Act. This employee is also subject to compulsory social insurance in Poland, and the German company is registered in the Social Insurance Institution (ZUS) as a payer of contributions for this insurance.
The employee is responsible under his duties for the development and maintenance of applications used by the clients of his employer, and in addition:
In accordance with the above mentioned tax interpretation, the fulfillment of all the above conditions in connection with the employment of an employee in Poland will not result in the establishment of a plant of the German employer in Poland, within the meaning of the provisions of Article 4a(11) of the CIT Act, as well as within the meaning of Article 5 of the Agreement of 14 May 2003 between the Republic of Poland and the Federal Republic of Germany for the avoidance of double taxation with respect to taxes on income and on capital.
The consequence of the lack of a permanent establishment will be the non-taxation of profits of the German company in Poland.
Contact our expert
Global Mobility Services