Fixed Establishment: Tax ruling clarifies location for providing comprehensive maintenance services

Summary of Individual Tax Ruling on VAT for Maintenance Services

Context and Application: On 12 February 2025, the Director of the National Tax Information issued an individual tax ruling (file no. 0114-KDIP1-2.4012.11.2025.1.RST) regarding the place of supply for comprehensive maintenance services provided by a limited liability company (referred to as “the Applicant”) to foreign contractors. The ruling confirmed that the Applicant’s assessment of the tax consequences under the Value Added Tax (VAT) law was accurate.
Description of Services and Client Relationships: The Applicant specializes in providing maintenance services for fleets of motor vehicles, including the coordination of repairs and ongoing efficiency maintenance. The clients include transport companies that are also active VAT taxpayers. The ruling outlines five distinct scenarios of service provision, focusing on the jurisdictional and tax implications of each.
- Case 1: Services provided to a Polish transport company with a registered office in Poland, where services and settlements are conducted in Polish currency (PLN).
- Case 2: Maintenance services for a foreign transport company (EU VAT taxpayer) operating in Europe, where the vehicles are frequently in transit. Settlements may be in PLN or EUR, with verification of the client’s lack of a fixed establishment in Poland.
- Case 3: Services provided to a Polish VAT-registered customer whose operations are conducted across Europe, with maintenance services performed outside Poland.
- Case 4: Maintenance provided to a foreign contractor based in another EU country, with services performed outside Poland, and payments made in EUR.
- Case 5: Transaction involving the sale of parts or consumables, without comprehensive maintenance services.
Verification Process for Fixed Establishment: The Applicant conducts due diligence by sending a questionnaire to foreign clients, asking specific questions to determine if they have a fixed establishment in Poland. Questions include inquiries about the presence of subsidiaries, tax identification numbers, accounting practices, and technical facilities. The applicant relies on the clients’ responses to ascertain their tax obligations.
Ruling on VAT Place of Supply: The ruling establishes that if the Applicant receives only “NO” answers on the questionnaire regarding the client’s fixed establishment, the Applicant may conclude that the foreign client does not have a fixed establishment in Poland. Consequently, according to Article 28b of the VAT Act, the place of supply for services will be the location of the client’s registered office, thus not subject to Polish VAT.
Legal Framework and Justification: The ruling cites relevant provisions of the VAT Act, including Article 28b, which specifies that the place of supply for services to VAT taxpayers is where the recipient has its registered office, unless the services are provided at a fixed place of business located elsewhere. The ruling confirms that the general rules for determining the place of supply apply to maintenance services provided to VAT-registered clients, reinforcing that such services are taxed based on the client’s location.
Precedents and CJEU Judgments: The ruling references CJEU case law defining a “fixed establishment” and clarifies that merely sharing facilities or being part of the same corporate group does not constitute a fixed establishment. This legal clarity is crucial in determining VAT obligations and ensuring compliance with EU regulations.
Conclusion and Implications: The ruling validates the Applicant’s approach and provides clarity on the VAT treatment of maintenance services provided to foreign clients. It emphasizes the importance of proper verification of clients’ tax statuses and establishes a framework for determining the place of supply based on the absence of a fixed establishment in Poland.
Legal Protection and Appeal Process: The ruling outlines the protective function of individual interpretations under Polish tax law and explains the rights of the Applicant to appeal the decision if circumstances change or if there are grounds for contesting the interpretation. The ruling serves as a legal safeguard, provided that the actual circumstances match those described in the application.

This comprehensive interpretation of the VAT implications for maintenance services ensures that the Applicant remains compliant with tax regulations while minimizing liability for VAT in Poland.

Source inforlex.pl

Unofficial translation in English

Individual tax ruling of 12 February 2025, Director of the National Tax Information, file no. 0114-KDIP1-2.4012.11.2025.1.RST

Place of providing comprehensive maintenance services to a foreign contractor.

Individual tax ruling – correct position

Dear

I hereby declare that your position on the assessment of the tax consequences of the described facts in the value added tax is correct.

Scope of the application for an individual interpretation

On 9 January 2025, you received an application for an individual interpretation via ePUAP, which concerns the place of provision of comprehensive maintenance services to a foreign contractor. The content of the application is as follows:

Description of the factual situation

A. (hereinafter referred to as the “Applicant”) is a limited liability company conducting business activity including the provision of comprehensive maintenance services for fleets of motor vehicles. The scope of services provided, which includes broadly understood coordination of the repair process and ongoing maintenance of the efficiency of car fleets. The Applicant is an active taxpayer of the value added tax (VAT). The Applicant’s clients are owners or operators of car fleets, also being active taxpayers for VAT purposes.

As part of the provision of services by the Applicant, 5 basic transaction schemes can be distinguished.

In case 1, the Applicant provides maintenance services to a customer (an active VAT taxpayer) with a registered office and place of business in Poland. The Client is a transport company that carries out the transport of goods entirely in Polish, therefore the Applicant receives an order for a maintenance service to be performed in Polish. As part of the maintenance service, the Applicant purchases repair services from garages and delivers parts to the customer. The Client is invoiced by the Applicant for a comprehensive maintenance service covering both working time (“labour”) and goods used during the provision of the maintenance service. Settlements with the client are made in PLN.

In case 2, the Applicant provides a maintenance service to a foreign transport company (VAT-EU taxpayer) located in an EU country. The Client carries out the transport of goods in Europe, including through the territory of Poland. The customer’s vehicles are on the road all the time. Under Case 2, the client commissions the Applicant to repair the vehicle in Polish. The settlement is made in PLN or EUR. Before starting cooperation with the client, the Applicant verifies the information on whether the client has a fixed place of business in the Republic of Poland. Verification is carried out by receiving a questionnaire completed by the client regarding the lack of a fixed establishment in Poland, as well as by checking the client’s registration in the EU VAT registers and in the Polish list of VAT taxpayers, and then by clarifying the discrepancies, if any.

In case 3, the Applicant provides maintenance services to a customer with VAT registration in Poland, who is a transport company. The customer carries out transport in Europe, and his vehicles are on the road all the time. As part of the order, the Applicant provides maintenance services to the customer in a European Union country other than Poland. Settlements with the client for the provision of services are made in PLN or EUR.

In case 4, the services are provided by the Applicant to a foreign contractor with its registered office in an EU country other than Poland. The customer is a transport company that carries out transport in Europe. The Client commissions the Applicant to repair the vehicle in Europe (not in Poland). Unlike the other variants, garage services are purchased from foreign entities with the use of spare parts purchased from entities from the group (…). The settlement with the customer for the services provided is made in EUR. The Applicant verifies the information on whether the customer has a fixed place of business in the Republic of Poland before starting cooperation with the customer. Verification is carried out by receiving a questionnaire completed by the client regarding the lack of a fixed establishment in Poland, as well as by checking the client’s registration in the EU VAT registers and in the Polish list of VAT taxpayers, and then by clarifying the discrepancies, if any.

In case 5, there is no provision of a comprehensive maintenance service, but the purchase by the customer of only parts or consumables, e.g. windshield washer fluids, as part of the continuation of the transport service. The settlement between the Applicant and customers for goods and consumables would be made in PLN or EUR. Maintenance service is invoiced to contractors as a single performance covering both repair services performed and spare parts used in this process.

In the above-mentioned Cases 2 and 4, in order for the Applicant to verify/determine whether the client has a fixed establishment in Poland, the Applicant provides the client with a questionnaire to fill in containing the following questions:

1)Do you have a subsidiary in the Republic of Poland?

2)Do you have a tax identification number for the purposes of value added tax (VAT) in the Republic of Poland?

3)Do you keep accounting books or other documentation related to your current operations in the territory of the Republic of Poland?

4)Do you have your own personnel base (employees) in the territory of the Republic of Poland?

5)Do you use external personnel facilities (outsourcing of employees) in the Republic of Poland?

6)Do you have a permanent representative (agent) in the territory of the Republic of Poland authorized to negotiate or conclude contracts on your behalf?

7)Do you have your own technical facilities (warehouse, technical equipment, machinery, etc.) in the territory of the Republic of Poland?

8)Do you use technical facilities (warehouse, technical equipment, machinery, etc.) provided by an external entity (in the form of leasing or rental) in the territory of the Republic of Poland?

9)Do you rent real estate (warehouses, office space, etc.) in the territory of the Republic of Poland?

9.1If so, are these properties adapted to the requirements and specifics of your business?

10)Do you have a fixed establishment in the territory of the Republic of Poland, as referred to in Article 11 of the Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax?”

The customer can answer each of the above questions with an affirmative “YES” or a negative “NO”. The Applicant will not have additional knowledge about the client’s fixed place of business in Polish other than that resulting from the information sent as a result of filling in the form by the client. In connection with the facts presented above, the following question arose.

Question

If the Applicant obtains only negative answers, i.e. “NO” answers as part of the questionnaires provided to foreign clients, and the Applicant’s lack of additional knowledge about the client’s fixed establishment in Polish, is the position correct that the Applicant considers that the foreign client does not have a fixed establishment in Poland, and therefore, in accordance with Article 28b of the VAT Act, the place of supply of services will be the place where the taxpayer who is the recipient of the services (client) has its registered office?

Your position on the matter

In the Applicant’s opinion, if the Applicant obtains only negative answers, i.e. “NO” answers, as part of the questionnaires provided to foreign clients, and the Applicant’s lack of additional knowledge about the client’s fixed establishment in Polish, the Applicant will be able to conclude that the foreign client does not have a fixed place of business in Poland, and therefore, in accordance with Article 28b of the VAT Act and the place of business of the the place where the taxpayer who is the recipient of the services (client) has its registered office.

First of all, it should be pointed out that according to Article 28a of the VAT Act:

‘For the purposes of applying this Chapter:

1.Whenever a taxpayer is referred to – it shall be understood as:

a)entities which independently carry out the economic activity referred to in Article 15(2) or the economic activity corresponding to such activity, regardless of the purpose or result of such activity, taking into account Article 15(6),

b)a legal person who is not a taxable person under point (a) and which is identified or required to be identified for tax or value added tax purposes;

2.A taxable person who also carries out activities or transactions which are not considered to be taxable supplies of goods or services in accordance with Article 5(1) shall be considered a taxable person in respect of all services supplied to him.”

Then, in accordance with Article 28b(1) and (2) of the VAT Act:

1)”The place of supply of services in the case of the supply of services to a taxable person shall be the place where the taxable person who is the recipient of the services has its registered office, subject to paragraphs 2-4 and Article 28e, Article 28f(1) and (1a), Article 28g(1), Article 28i, Article 28j(1) and (2) and Article 28n.

2)If the services are provided for the taxpayer’s fixed place of business, which is located in a place other than its registered office, the place of supply of these services is the fixed place of business.”

On the other hand, according to Article 5(1) of the VAT Act:

‘The following shall be subject to the value added tax, hereinafter referred to as the ‘tax’:

1)the supply of goods and services for consideration within the territory of the country;

2)export of goods;

3)import of goods within the territory of the country;

4)intra-community acquisition of goods for remuneration in the territory of the country;

5)intra-Community supply of goods.”

In the present factual situation, due to the fact that comprehensive repair services are provided by the Applicant (who is an active VAT taxpayer) to a customer who is also a taxpayer in accordance with Article 28a of the VAT Act, as a rule, the place of supply of services should be determined in accordance with Article 28b(1) and (2) of the VAT Act.

In addition, the special rules for determining the place of supply of services set out in Articles 28e-28n of the VAT Act will not apply to the maintenance services provided by the Applicant to customers (taxpayers in accordance with Article 28a of the VAT Act), including in particular Article 28h of the VAT Act, dedicated to services provided to consumers, according to which:

‘In the case of the provision of services to non-taxable persons:

1)transport services such as loading, unloading, transhipment or similar services,

2)valuation of tangible movable property and on tangible movable property – the place of supply of services is the place where the services are actually performed.”

As a result, according to the principles derived from the above-mentioned provisions, the provision of comprehensive maintenance services (for taxpayers) should be taxed only in the country where the Applicant’s taxpayer’s customer is established.

This is confirmed, m.in, by the advance tax ruling of the Director of the National Tax Information Service of 19 July 2021, file no. 0111-KDIB3-3.4012.282.2021.1.PK. “The circumstances of the case in question show that the Applicant plans to provide maintenance services for equipment to a contractor from Luxembourg, who is a taxpayer within the meaning of Article 28b of the VAT Act. This entity does not have a fixed place of business in Poland for which the Company’s services would be provided. There are no special rules for determining the place of their provision for maintenance services. Therefore, in this case, in order to determine the place of provision of services, the indicated general rule will apply, and thus the place of provision of maintenance services by the Applicant will be located in the country of the contractor’s registered office. Therefore, this service will not be subject to taxation in the territory of the country.”

As a result, in accordance with Article 28b(1) and (2) of the VAT Act, the decisive factor for the final determination of the place of VAT taxation in the case of foreign customers will be whether the customer has a fixed establishment in Poland. On the other hand, in the facts in question, it was noted that under Cases 2 and 4, covered by the question addressed to the interpretation, the Applicant’s client fills in a special questionnaire in which he answers questions regarding individual factual circumstances that are potentially related to the possibility of establishing a fixed establishment in Poland and thus declares that he does not have a fixed place of business in the territory of Republic of Poland.

In the light of the judgments of the Court of Justice of the European Union (C-190/95 (ARO Lease BV) and C-73/06 (Planzer Luxembourg): “Fixed establishment” is any place, other than the registered office of the taxpayer, characterized by sufficient permanence and appropriate structure in terms of human and technical facilities, to enable the receipt and use of the services provided for their own needs of this fixed place of business.”

On the other hand, in the light of relatively new judgments of the CJEU, i.e. for example C-333/20 (Berlin Chemie A. Menarini SRL) of 7 April 2022, it was stated that technical and human resources cannot be used to provide and receive the same services at the same time. In the light of the judgment C-232/22 (Cabot Plastics Belgium SA vs. the State of Belgium) of 29 June 2023, the Court stated that “a taxable person who is a recipient of services, whose registered office is outside the European Union, does not have a fixed establishment in the Member State in which the entity providing the services in question, legally separate from that recipient of the service, is established, if it does not have an appropriate structure in terms of human and technical facilities that may constitute such a fixed place of business, even if the taxpayer providing services provides to that taxpayer who is the recipient of the services, in performance of an exclusive contractual obligation, services in the form of production from entrusted materials and a number of ancillary or supplementary services that contribute to the taxpayer’s business activity recipient of the service in that Member State.’

In addition, in the light of the judgment C-533/22 (SC Adient Ltd & Co. KG vs Agenţia Naţională de Administrare Fiscală) of 13 June 2024, it was stated that “a company which is a VAT taxable person, having its registered office in one Member State, which uses services provided by a company established in another Member State, cannot be considered to have FE in the latter Member State for the purposes of determining the place of supply of these services, for the sole reason that both companies belong to the same group or that these companies are bound to each other by a contract for the provision of services.”

That judgment also pointed out that the fact that a VAT-taxable company established in one Member State and which uses the goods processing services provided by a company established in another Member State has a structure in the latter Member State which participates in the supply of finished products obtained as a result of those processing services, or that those supply operations are carried out, for the most part, outside the transactions carried out in that Member State are subject to VAT are irrelevant for the purposes of establishing, for the purposes of determining the place of supply of services, that that company has FE in that Member State. An important issue raised in the judgment is also the fact that a company which is a taxable person for VAT and which has its registered office in one Member State and which uses the services provided by a company established in another Member State does not have an FE in the latter Member State if the human and technical facilities which it has in that Member State are not separate from the facilities, by means of which services are provided to the company, or if this human and technical facilities only ensure the performance of preparatory or auxiliary activities.

Taking the above into account, in the facts in question, the Applicant has taken all actions that can reasonably be expected of it in terms of determining whether the foreign customer has a fixed establishment in Poland, including the following questions as part of the questionnaire: