Tax Treaty Case Law around the Globe 2023

1. Introduction

The issue in the case decided by the Polish Regional Administrative Court in Gliwice on 31 January 2022 (I SA/Gl 1340/21) concerned whether employees working remotely from home using computer equipment provided by a foreign employer create a permanent establishment (PE) of the enterprise in the territory of Poland under Article 4a(11) of the Polish Corporate Income Tax Act (CITA) and Article 5 of the Poland-Denmark Income and Capital Tax Treaty (2001).

Article 4a(11) of the CITA defines the term PE in a similar way as Article 5(1) of the Poland-Denmark Treaty which stipulates that the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

Pursuant to Article 5(2), the term “permanent establishment” especially includes an office or a place of management. However, notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include the maintenance of a fixed place of business solely for the purpose of carrying on any other activity for the enterprise that is of a preparatory or auxiliary character (Article 5[5][e] of the OECD Model Co...