The transaction concerned a Danish insurance company with its registered office and management in Denmark, which planned to employ individuals residing in Poland to perform administrative support tasks under employment contracts. The work was to be carried out remotely in a home office model, with employees free to choose their place of work and without any office space or other premises being made available or controlled by the company in Poland. The Polish employees were to perform back office, financial support, and data analysis tasks exclusively in support of insurance activities carried out in Denmark and Sweden, using IT systems provided by the company and supervised remotely from abroad.
The tax authorities issued an individual interpretation taking the view that the planned employment of staff working remotely from Poland could lead to the creation of a permanent establishment in Poland under domestic law and the Poland Denmark tax treaty. They considered that the continuous performance of work by employees located in Poland could amount to a fixed place of business or other form of taxable presence, despite the absence of formal premises or a branch in Poland.
The Danish company challenged the interpretation before the Provincial Administrative Court in Gliwice. The court annulled the interpretation, holding that an employee’s private home used for remote work does not constitute a permanent establishment where the foreign employer does not have the premises at its disposal or under its control. The court also found that the Polish activities were auxiliary in nature and that the company did not derive income in Poland.
Both the tax authorities and the company filed cassation appeals.
Judgment
The Supreme Administrative Court dismissed both appeals and upheld the first instance judgment. It confirmed that the lack of disposal or control over the employees’ homes and the absence of income attributable to Poland precluded the existence of a permanent establishment. Accordingly, the employment of staff working remotely from Poland under the described conditions did not create a permanent establishment of the Danish company in Poland, and the outcome at both instances was in favour of the taxpayer.
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