Poland: Individual ruling denied; tax-deductible costs; R&D income; employment income; taxable permanent establishment

The KPMG member firm in Poland prepared a report that includes summaries of the following recent court decisions.

• The Supreme Administrative Court on 10 October 2023 held (joint case files III FSK 3235/21 and III FSK 3236/21) that the tax authority was entitled to deny an individual ruling under Article 14b § 5b of the Polish Tax Code based on the existence of a justified suspicion that 119a § 1 thereof, regarding the rules of tax liability in the scope of the application of the anti-avoidance clause, may apply. The taxpayer could apply for a clearance opinion instead.
• The Supreme Administrative Court on 11 October 2023 held (case file II FSK 326/21) that the costs of providing food, refreshments, and performances to individuals providing services to the company as part of their business activity, but not actually employed by the company, were not tax deductible because such costs encourage the collaborators to better run their own business and not the business of the company.
• The Supreme Administrative Court on 5 October 2023 held (case file II FSK 870/22) that a company that otherwise satisfied the conditions for treating an activity as research and development (R&D) (i.e., creativity, regularity, increasing knowledge resources and using it to make up new applications) could apply the reduced 5% corporate income tax rate to eligible income from qualified intellectual property (IP) rights even though the company was not the co-owner of the IP rights. 
• The Supreme Administrative Court on 5 October 2023 held (case file II FSK 758/21) that revenue from exercised participation units (as opposed to units that have just been granted) allocated as part of remuneration for work, in line with Article 12(1) of the PIT Act, may be qualified as revenue from employment relationship.
• The Regional Administrative Court in Wroclaw on 10 October 2023 held (case file I SA/Wr 261/23) that a sole proprietorship run by a Ukrainian citizen in Poland did not constitute a taxable permanent establishment. The court found that renting an apartment, hotel room, or even owning programming tools could not be considered as running a permanent establishment, particularly when the sole proprietorship lacked economic ties with Poland.

Read an October 2023 report prepared by the KPMG member firm in Poland