Tax explanations concerning the rules for determining a permanent place of business.
Tax explanations concerning the rules for determining a permanent place of business in the territory of the country for the purposes of issuing invoices using the National e-Invoicing System issued by Polish Minster of Finance
On 28th January 2026, the Polish Minister of Finance issued highly anticipated tax explanations regarding the determination of a Fixed Place of Business (FE) for VAT purposes. This guidance is a critical response to the mandatory launch of the National e-Invoicing System (KSeF), which begins its phased roll-out on 1st February 2026.
The core purpose of these explanations is to resolve long-standing ambiguity over when a foreign entity is considered to have enough of a physical and human presence in Poland to trigger mandatory e-invoicing obligations. The existence of a Fixed Establishment determines whether a foreign entity must use KSeF for its Polish transactions. As such, if a foreign taxpayer has a Fixed Establishment in Poland and that establishment participates in the supply of goods or services, issuing structured invoices via KSeF is mandatory. If on the other hand, there is no Fixed Establishment, or if the existing Fixed Establishment does not participate in the transaction, the taxpayer is exempt from mandatory KSeF invoicing for that specific supply.
Key Rules for Determining SMPD
Based on the January 2026 explanations, which align with EU Regulation 282/2011 and CJEU case law, a Fixed Establishment is defined by three primary criteria:
- Sufficient Permanence:
The activity must not be temporary or occasional. It must have a minimum scale and duration that indicates a “fixed” presence rather than a one-off project. - Adequate Structure (Human & Technical Resources):
There must be a physical presence (office, warehouse, or equipment) and personnel capable of performing or receiving taxable activities in Poland. It is important to note, that business is not required to ownthese resources, having comparable control (e.g., through long-term outsourcing or leasing) is sufficient to create a Fixed Establishment. - Operational Autonomy:
The establishment must be capable of receiving and using services for its own needs or performing independent taxable operations.
Explanation Highlights:
– A foreign entity with a fixed establishment in Poland is only required to issue a structured invoice in KSeF if that specific FE is involved in the supply of goods or services. If the FE is not involved, the transaction remains outside mandatory KSeF.
– The Ministry clarifies that a FE does not strictly require the taxpayer to own the resources; “technical and personal back-up” can be provided via third parties (subcontractors) if the taxpayer has comparable control over them as if they were their own.
– The Ministry indicated that these are the only planned tax explanations for KSeF, highlighting the specific legal risk this area poses for international businesses.
Implications for Foreign Businesses
Foreign entities registered for VAT in Poland must perform a detailed analysis of their local operations. If an activity is deemed to constitute a FE, failure to use KSeF will be treated as a failure to issue a valid invoice once the 2027 penalty grace period ends. For businesses without a FE, KSeF remains optional, but they must still be prepared to receive invoices from Polish contractors who are in the system.