Disposing of an establishment as a prerequisite for establishing a permanent establishment in the era of widespread remote working

Abstract

The growing popularity of remote work, particularly in the form of the home office, has led to the questioning of the long-held assumption that the establishment of a permanent establishment in the country of employment requires the physical possession of premises (e.g. the employee’s house) by the employer. This has resulted in different interpretation of the need to have premises at one’s disposal by the Polish National Tax Information Office in its tax rulings and by the administrative courts in their case law. This divergence has been evident since 2015. However, analysing these rulings and case law leads to the conclusion that the necessity to have premises at one’s disposal as a prerequisite for the establishment of a PE is currently supported exclusively by the text of the Commentary on the OECD Model Convention. Conversely, a linguistic, systematic and functional interpretation of the very definition of a permanent establishment contained in Article 5(1) of the OECD Model Convention, disregarding the content of the Commentary, suggests that having premises at one’s disposal is no longer a premise limiting the establishment of a PE.