Ruling description

The Provincial Administrative Court in Warsaw, in its ruling of November 20, 2014 (case file no. III SA/Wa 1694/14) ruled that the term “performances of similar nature”, as referred to in Article 21 section 1 point 2a of the CIT Act, does not refer to all intangible services. The classification of a given service of non-material nature as “performances of similar nature” and consequently charging income tax requires justification of the grounds on which a given service can, by its nature, constitute a performance similar to, among others, consultancy, accounting, market research or legal services. The tax authority should examine the nature of the performance in detail. In addition, the Provincial Administrative Court found that the Polish source of revenue applies to the situation in which the remuneration for the services rendered by a non-resident is paid by the Polish entity.


In the analyzed case, the tax authorities found that the computer software implementation services and the support services relating to the operation of the business applications are, in view of their intangible nature, included in the list of “performances of similar nature”, as referred to in Article 21 section 1 point 2a of the CIT Act, and in consequence the Polish company acquiring the said services is required to withhold tax  at source. The Provincial Administrative Court was right not to support the stance presented by the tax authority. The tax authority should specify its stance in detail while interpreting the term “performances of similar nature”. Please note that in similar cases, the tax authorities also presented their stance in favor of the taxpayer and indi- cated that the term “performances of similar nature” should be interpreted as including legally equivalent services to the ones specified in the CIT Act. The content of the provisions of the agreement concluded with a foreign entity and, first and foremost, the nature of what was actually performed are of crucial importance.

At the same time the Provincial Administrative Court in Warsaw found the stance presented by the tax authority to be right in maintaining that it is irrelevant whether the place of rendering the service was abroad in view of the fact that it is the Polish taxpayer who benefits from the effect of the service performed by the foreign entity. Consequently, the Provincial Administrative Court in Warsaw followed the current tendency in court rulings (see the rulings of the Supreme Administrative Court  of August 21, 2014, case file nos.: II FSK 2120/12, II FSK 2121/12, II FSK 2122/12 and the ruling of the Provincial Administrative Court in Cracow dated September 5, 2014, case file no. I SA 866/14).

Bearing in mind the above, if the Polish companies plan to acquire from foreign contractors intangible services rendered abroad and do not have the contractors’ certificate of residence which may be a condition to tax exemption on the basis of a relevant double tax treaty, it is advisable to analyze the said service from the perspective of Article 21 section 1 point 2a of the CIT Act. If the acquired service does not constitute a performance of similar nature, the Polish companies will not be required to withhold tax at source even if there is no contractor’s certificate of residence.