Tax Treaty Case Law around the Globe 2020
1. Aufl. 2021
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S. 193Chapter 17 Poland: Royalties as Compensation for the Unlawful Violation of Design Rights
Karolina Tetłak
17.1. Introduction
This chapter will discuss the decision of the Polish Supreme Administrative Court (SAC) on 7 March 2019 in case No. II FSK 490/17. The issue in this case was whether a company established in Poland should withhold tax on a payment made to a company established in Germany under a settlement agreement for the unlawful use of an unregistered design and whether such payment should be considered a royalty under the Germany-Poland Income and Capital Tax Treaty (2003).
Pursuant to Article 3 of the Corporate Persons’ Income Tax Act of 26 July 1991 (CPITA), taxpayers are subject to corporate income tax on all of their income, regardless of the location of its source, if they have their registered seat or management board in the territory of Poland. Nonresidents are liable to corporate tax only on income derived from the territory of Poland. A company is not resident in Poland if it is not incorporated or managed in Poland.
Business income is taxed at the rate of 19%. The withholding tax rate applicable to interest and royalties received by non-residents in Poland is 20% of ...