Poland: permanent place of business on the example of toll manufacturing arrangement

In brief

According to a recent judgement from Polish Supreme Administrative Court (NSA) dated 15 February 2017, the term “permanent place of business” has been defined, on the example of toll manufacturing arrangement between Polish and Swiss companies, together with the VAT taxation obligations.

The Swiss company requested interpretation, regarding the transactions` treatment of tax on goods and services. In the proposal, the entity indicated its core business activities: acquisition, sale, trade and distribution of products. The company intended to import to Poland, make intra-Community transactions as well as purchases on the territory of Poland. The raw materials are delivered directly to the Polish firm. Through the toll manufacturing arrangement with the Polish company, the Swiss company outsources its production. The Polish company produces at its request and provides available resources on the Polish territory. This relates to rental of the warehouses, external administration, logistics and freight.

It`s worth to emphasize, that no workers will be employed by the Swiss entity in Poland, all the services will be provided by external companies. The Swiss firm was registered as taxpayer in Poland via its fiscal representative.


Judgement from Polish Supreme Administrative Court (NSA)
Judgement from Polish Provincial Administrative Court (WSA)

Statement of the Court

The constant and organized usage of the infrastructure on Polish territory, together with making taxable supplies indicate that the fixed establishment of business is in Poland. In addition to the above, the independence of Swiss entity on Polish territory has been previously confirmed by the Polish Provincial Administrative Court (WSA).

Conclusion and recommendation for taxation

The taxation treatment has been clarified regarding two types of transactions: domestic and intra-Community.

  1. The Swiss company with the fixed establishment in Poland is obliged to account for Polish VAT in case of domestic supplies of products;
  2. Import and intra-Community acquisitions of services, which are directly associated with the production of products in Poland, have to be reported in the Polish VAT statements. This especially concerns intra-Community acquisitions of services, in connection with the design and transportation of the products based on the fixed establishment. However, those services have to be closely related to the manufacturing process. For further information, please contact your usual PwC advisor.

For further information, please contact Zsolt Tenczer on +41 58 792 4560 or zsolt.x.tenczer@ch.pwc.com.


Bildquelle: Dachkammer  / pixelio.de

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