Remote Work In Poland: Beware The Hidden Tax Trap

Foreign companies deciding to employ staff in Poland under a remote work model must be aware of the risk in creating a permanent establishment (PE) in Poland.

If such an establishment arises, the company is obliged to calculate and pay corporate income tax in Poland on the profits attributable to that establishment, which creates additional compliance and administrative burdens for the employer. This issue is further aggravated by the prevailing, unfavourable interpretative approach to PE rules adopted by the Polish tax authorities.

A home office can be a permanent establishment

The Polish tax authorities maintain a consistent interpretative approach regarding remote work and the creation of a PE. According to the tax authorities, "in the era of remote work, the place where an employee performs work for a foreign employer (whether from home or another location) may be regarded as a separate establishment of that enterprise".