Tax consequences of remote work. When the kitchen chair and table become a permanent establishment
Digitisation and the legacy of the COVID-19 pandemic have normalized remote work, with many foreign enterprises now employing staff in Poland who work exclusively from home. However, this model carries significant tax risks. A home office can inadvertently create a Permanent Establishment (PE), triggering unexpected Corporate Income Tax obligations. This summary explores the evolving stance of Polish tax authorities, conflicting international approaches, and the risk of double taxation.
Tax consequences of remote work. When the kitchen chair and table become a permanent establishment
Digitisation and the legacy of the COVID-19 pandemic have normalized remote work, with many foreign enterprises now employing staff in Poland who work exclusively from home. However, this model carries significant tax risks. A home office can inadvertently create a Permanent Establishment (PE), triggering unexpected Corporate Income Tax obligations. This summary explores the evolving stance of Polish tax authorities, conflicting international approaches, and the risk of double taxation.
The Concept of the Home Office as a Permanent Establishment
The convenience of remote work creates a complex tax dilemma for foreign entities. If an employee’s home office in Poland is deemed a Permanent Establishment (PE), the profits attributable to that establishment become taxable in Poland.
For a PE to arise, a place of business must be fixed and used to conduct business that is not merely preparatory or auxiliary. The critical condition regarding home offices is whether the location is "at the disposal" of the enterprise. The 2017 OECD Commentary update clarified this by introducing the criterion of having the "effective power to use" the location. Generally, if a home office is used continuously and the enterprise requires the individual to use it (e.g., by not providing an office), it may be considered at the enterprise's disposal.
The Evolving Polish Perspective
Polish interpretative practice has shifted significantly. Prior to 2018, authorities generally accepted that home offices did not create a PE. However, since 2018, the trend has reversed, with tax authorities increasingly classifying home offices as PEs.
Recent rulings highlight this uncertainty:
The Strict Approach (2022): Tax authorities argued that providing laptops and IT equipment to employees working permanently in Poland creates a fixed place of business, even if the company rents no premises.
The Favorable Court Ruling (2024): A recent judgment by the Voivodship Administrative Court in Gliwice offered relief. The Court ruled that merely providing a laptop and phone does not create a PE. Crucially, if the company has no legal right to dispose of the apartment and remote work is the employee's choice, no PE exists.
Activity Matters: While auxiliary roles (e.g., an accountant with no decision-making power) may not create a PE , core business activities (e.g., lawyers providing advisory services) likely will.
International Divergence and Double Taxation Risks
The interpretation of PE varies across borders, creating dangerous mismatches.
Sweden: The Swedish Tax Agency considers a home office "at the disposal" of a foreign company if the company pays rent for the space. However, simply reimbursing equipment costs does not create a PE.
Germany: German authorities generally do not recognize a home office as a PE unless the employee exercises management functions or the employer has actual disposal rights over the premises.
This divergence leads to a specific risk: if Poland recognizes a PE and taxes the income, but the home country (e.g., Germany) views the activity as purely domestic and denies the existence of a foreign PE, the home country may refuse to grant a tax credit. This results in effective double taxation of the same income.
Compliance
If a PE is recognized in Poland, foreign entities must prepare for NIP registration, local CIT filings, maintaining local accounting books, and preparing transfer pricing documentation.
Note: Two days before the presentation, the OECD published changes to the Model Convention which clarify this issue and will be applicable from 1 January 2026.
If you need details from this article you can contact:
Mariusz Jabłoński /Tax Advisor
KPKF dr Piotr Rojek sp. z o.o.
ul. Konduktorska 33
40-155 Katowice
Poland
Kancelaria Porad Finansowo-Księgowych dr Piotr Rojek Sp. z o.o. (KPFK dr Piotr Rojek) is a Polish audit and advisory firm providing professional audit, accounting, and tax services to a diverse client base. With many years of experience supported by strong academic and practical expertise, the firm delivers tailored and reliable solutions to private companies, SMEs, non-profit organizations, and entities operating in regulated and international environments.
As a member of the global JPA International network, KPFK dr Piotr Rojek combines in-depth local expertise with international reach. The firm’s service portfolio includes statutory and voluntary audits, accounting and financial reporting, tax advisory and compliance, transaction and restructuring support, as well as guidance on cross-border matters. KPFK also offers specialized expertise in advisory services for family-owned and growing businesses.
