Tax Treaty Case Law around the Globe 2020

S. 177Chapter 16 Poland: Data Centre Renting Fees Are Not Royalties for the Use of Industrial Equipment

Karolina Tetłak

16.1. Introduction

The issue in this case was the meaning of the term “industrial equipment” referred to in article 21(1)(1) of the Polish Corporate Income Tax Act (CITA) and article 12(3) of the Belgium-Poland Income and Capital Tax Treaty (2001), in particular, whether it should also include the term “data centre”.

Pursuant to article 12(1) of the Belgium-Poland Income and Capital Tax Treaty (2001), royalties arising in a contracting state and paid to a resident of the other contracting state shall be taxable only in that other state if the resident is the beneficial owner of the royalties. Such royalties, however, may also be taxed in the contracting state in which they arise and in accordance with the laws of that state. If the recipient is the beneficial owner of the royalties, the tax shall not exceed 5% of the gross amount of the royalties (article 12(2)). Article 12(3) of the Belgium-Poland Income and Capital Tax Treaty (2001) explains that the term “royalties” means, inter alia, any payments for the use of or the right to use industrial, commercial or scientific eq...