Circumstances in favor of the lack of a permanent place of business for VAT purposes (judgment of the Supreme Administrative Court of October 22, 2021, reference number I FSK 1519/19).
The foreign company sold goods in Poland through local distributors (subsidiaries). Distributors stored the goods purchased from it in Poland, and then resold their inventories to end users. From 1 January 2012, the company started implementing a new sales model, in which the goods stored in Poland were to remain its property, and were to be sold and distributed to distributors only in connection with specific orders placed by end customers.
On January 1, 2012, the company bought its stocks from distributors. Over the next months, one of them also transferred warehouse lease agreements and for the provision of logistics services to it. Thus, warehousing and logistics services for goods in Poland began to be performed on behalf of the company by a third party.
In the course of a tax inspection, the tax authorities stated that the supplies of goods made by the Company to Polish distributors should be recognized as domestic, and the taxpayer on this account should be the company (i.e. VAT could not be settled by buyers based on the reverse charge mechanism). ), because from the beginning of 2012 it had a permanent place of business in Poland.
The case was referred to the Supreme Administrative Court, which agreed with the company that there could be no question of establishing a permanent place of business in Poland at the beginning of 2012, since contracts related to potential technical facilities were transferred to the company only later. In addition, he noted that the company did not have any human resources in Poland, did not employ or delegate any employee to Poland, did not have any assets in Poland, did not have its own technical or office infrastructure in the territory of the country, and management and strategic activities related to the process of delivering goods to Polish contractors was carried out outside Poland, while the storage and issuing of goods in Poland was an element of a wider sales process coordinated from the company’s headquarters.
In its oral justification, the Supreme Administrative Court also emphasized that since, due to the application of the reverse charge mechanism, the tax due on the disputed transactions had been paid anyway, there was no need to look for a permanent place of business for the company in Poland in the case. The NSA recalled that the aim of the said institution is to avoid irrational situations in which the same transaction would be double taxed or, on the other hand, not taxed.
Source Deloitte
