The never-ending story about Fixed Establishment (FE) in Poland

We have already written about the FE issue in Poland on our website! (Read the article here).

As proof of the existing problem about the FE in Poland, please find the new facts below.

In June 2020 one of our foreign clients with the 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 headquarter 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 the 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 an 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.
  • The 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. The occasional entry of the Company 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 on the contractor’s premises.

In the Company’s opinion, in light of the presented facts, there are no cumulatively meet the requirements to conclude that the Company has got FE in Poland.

Tax authorities decision

The tax authorities decided differently. It was stated that our customer the FE in Poland however has got, due to the fact of the possession 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 client has got control over the contractor’s personnel and technical facilities – assumed that the level of this control is similar to 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 logical arguments. Moreover, the arguments were adapted to the thesis made in advance. Nevertheless, it is always a possibility to complaint the tax ruling to the administrative courts, where a positive judgment can be obtained.

For more information on the current approach of tax authorities in Poland to the FE, please feel free to contact us:

Anna Szafraniec
CEE VAT Compliance Manager

Łukasz Woźniak
Senior Tax Consultant

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