The applicant is a Polish company that plans to enter into an agency agreement with a company in India (agent). The agent will act as an intermediary for the sale of the applicant’s products on the Indian market. His tasks will include representing the company, attending meetings, making offers on behalf of the company, answering any questions from customers, negotiations, etc.
The company asked the question whether the income earned by the agent falls within the catalog of Article 21 sec. 1 of the Polish CIT Act? According to the company, the answer to the question posed in this way is negative, thus the company is not obliged to collect WHT on the agent’s remuneration.
The Director of the National Tax Information (NTI) did not agree with this thesis, pointing out that the analyzed services are similar to advertising services, market research services and consulting services (they bear characteristics corresponding to services of a similar nature to the referenced services) – therefore WHT should be collected in Poland.
The District Administrative Court (DAC) upheld the company’s complaint and revoked the interpretation.
According to the DAC, we are dealing here with agency, which should be referred to the agency agreement regulated in the Polish Civil Code. According to the DAC, the fact that the services provided by the intermediary are similar to advertising services, market research services and consulting services does not determine that these elements prevail in the intermediation agreement concluded by the company.
This ruling was upheld by the Supreme Administrative Court (SAC).
The SAC agreed with the DAC that the service analyzed is an intermediary service, where typical elements are participation in meetings, offering, negotiations, etc. Thus, these are typical activities of an agent, a sales support entity. Yes, the intermediary in some way advertises goods with his activities, but this is not an end in itself. This activity is related to its primary purpose, which is to bring about a sale. The SAC also noted that such a thesis is supported by the agent’s remuneration – which depends on sales. As a result, such a benefit is not subject to WHT under the Polish CIT Act.
Judgment of the Supreme Administrative Court of 12th April 2023, file refence number II FSK 2470/20.
