Filip Świtała
Services rendered by Non-Residents and the Case Law in Income Tax Matters
Summary
Author presents the issue of withholding tax on certain services such as advertisement, advisory, legal, marketing and similar services, known as „intangible”, rendered by foreign corporations outside of Polish territory for a Polish corporate recipient.
Author criticises the recent case-law pointing, that the source of income is in Poland, if Polish service recipient pays fees for the services or that the source of income is located in Poland, if the result of services occurs in Poland. Author argues that in fact, the right to tax is allocated to the state where the service provider is established – this rule is encompassed in the Commentary to the OECD Model Convention as a common rule for all the OECD member states, including Poland.
In the article, author first presents the rule of taxation of business profits as provided in art. 7 of the OECD Model comparing to the views taken by tax authorities in their official rulings. Then interprets the provisions of the corporateincome tax law, presents the issue of the certificate of residency against the background of the OECD’s model convention, double tax treaties and the Constitution. She shows that the case law of the tax courts and rulings of the tax administration contradict the double tax treaties and may contravene the Vienna convention on the law of treaties, since services rendered abroad are outside of Polish tax jurisdiction. Author considers that the recent draft law on corporate income tax will not eliminate existing contradictions on withholding tax on services.
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