Under Polish VAT regulations, the concept of a fixed establishment (FE) plays a decisive role in determining the place of supply of services. Yet, the Polish VAT Act itself does not explicitly define what constitutes a fixed establishment. Instead, it provides a general rule: when services are provided to a taxpayer, the place of supply is normally the business seat of the recipient.
However, where the services are provided for a fixed establishment located in Poland, the place of taxation shifts to that fixed establishment. This seemingly technical rule can create significant VAT implications, particularly for foreign companies and foreign entities supplying services or goods into Poland. If their presence in Poland is classified as a fixed establishment for VAT purposes, they may have to register for VAT, charge Polish VAT, and comply with additional reporting and invoicing obligations.
EU Legal Basis: VAT Directive and Implementing Regulation
Because the Polish VAT Act does not define fixed establishment, the term is interpreted based on EU VAT law. The key provisions are:
- Article 44 of the VAT Directive 2006/112/EC, which governs the place of supply of services.
https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32006L0112
- Article 11 of Implementing Regulation No. 282/2011, which defines a fixed establishment as:
Any place, other than the taxpayer’s place of establishment, that is characterized by sufficient permanence and a suitable structure in terms of human and technical resources to enable it to receive and use the services supplied for the own needs of that establishment.
This EU-wide concept ensures that the definition of FE is consistent across all Member States, including Poland, and provides a crucial reference for taxpayers and Polish tax authorities when applying Polish VAT law.
https://eur-lex.europa.eu/eli/reg_impl/2011/282/oj/eng
Polish Tax Authority Perspective
Although there is no explicit statutory definition, the Polish tax administration has developed criteria to assess whether a fixed establishment exists in Poland.
The following elements are key:
| Key Criterion | Description | VAT Implication |
| Sufficient degree of permanence | The establishment must be stable and cannot operate merely on a transient or periodic basis. | Temporary projects rarely qualify. Long-term offices, warehouses, or service centers often do. |
| Human and technical resources | There must be personnel and infrastructure capable of performing or receiving taxable activities. | Resources may be internal or contracted but must be available on an ongoing basis. |
| Operational autonomy | The FE must not only use goods and services but also carry out business activities itself. | The entity must be able to operate as more than a passive recipient of services. |
| Control over resources | It is irrelevant whether the staff or infrastructure are directly employed or owned; what matters is whether the taxpayer can use them as if they were its own. | Outsourced teams and rented premises may still create an FE if controlled by the foreign taxpayer. |
This structured approach allows Polish tax authorities to evaluate each case individually and to decide whether a foreign taxpayer is subject to VAT in Poland.
Jurisprudence of the Court of Justice of the EU (CJEU)
The CJEU has issued several important rulings refining the concept of FE, which directly affect Polish practice.
- Berlin Chemie A. Menarini (C-333/20), judgement of 7 April 2022:
The Court clarified that an FE exists only if a company has the power to dispose of human and technical resources in another Member State as if they were its own. Merely having a subsidiary or using third-party contractors is insufficient if the foreign company does not exercise control over those resources. - Cabot Plastics Belgium SA (C-232/22), judgment of 29 June 2023:
Reinforced that the place of supply of services depends on where the resources enabling the supply are located, not where the goods themselves are situated. The CJEU confirmed that ownership is irrelevant; what matters is effective control and ability to use the resources.
These judgments, now widely applied in Poland, underscore that substance prevails over form. The existence of a fixed establishment in a given country is determined by real, economic factors such as permanence and suitable structure in terms of human and technical resources.
Impact on Foreign Entities and VAT in Poland
For foreign companies and foreign taxpayers engaged in business in Poland, determining whether a fixed establishment exists is critical. The presence of an FE has wide-ranging VAT consequences:
- VAT Registration:
A foreign company with a fixed establishment in Poland must register for Polish VAT purposes and charge Polish VAT on taxable transactions. - Place of Taxation:
Supplies of services are deemed to take place at the location of the fixed establishment rather than the foreign head office, which directly influences whether the reverse charge mechanism applies. - Right to Deduct VAT:
An FE may entitle the foreign taxpayer to deduct input VAT in Poland, improving cash flow but also increasing compliance obligations. - Reporting and Documentation:
The existence of an FE means that Polish VAT compliance rules apply, including the need to issue Polish VAT invoices and to submit JPK_V7 electronic VAT returns. In the future it will trigger KSEF obligation as well.
In practice, typical risk areas include logistics centers, warehouses, service hubs, and long-term outsourcing arrangements that provide a permanent structure in terms of human and technical resources.
Practical Guidance for 2025 and Beyond
Given that the existence of a fixed establishment is determined by facts and circumstances, each case requires a detailed legal and tax analysis.
To mitigate risk and ensure full VAT compliance, foreign businesses operating in Poland should:
- Review their operations and contracts to identify potential elements of permanence and control.
- Examine their use of local service providers—for example, shared IT infrastructure or exclusive staff assignments—to see if these arrangements create a presence of a fixed establishment.
- Seek an official tax ruling (interpretacja indywidualna) from the Polish tax administration for certainty in complex cases.
- Monitor new CJEU judgments and guidance from the Supreme Administrative Court of Poland, as these may further refine the definition of a fixed establishment for VAT purposes.
Professional tax advice is particularly important when planning new investments, entering long-term outsourcing contracts, or establishing a subsidiary or permanent place of business in Poland.
Conclusion
The question of whether a fixed establishment exists in Poland remains complex.
Polish VAT law does not define the concept, so both taxpayers and the Polish tax authorities rely heavily on EU VAT regulations and the evolving case law of the European Court of Justice.
The existence of an FE directly determines the place of supply of services, the ability to receive and use services, and the right to deduct VAT. Foreign companies must therefore carefully evaluate whether their business presence—whether through human and technical resources, subsidiaries, or outsourced staff—constitutes a fixed establishment under EU and Polish VAT law.
Because each situation is unique and fact-driven, detailed analysis and, where necessary, a formal tax ruling are essential to manage VAT risks effectively and to ensure compliance with 2025 VAT requirements in Poland.