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Tax authorities required to state reasons when refusing to accept electronic certificates of residence


The Supreme Administrative Court in its judgement of August 25, 2020 (ref. II FSK 1276/18) stated that the Director of the National Revenue Information Service (‘KIS’) should, when issuing an individual tax ruling, explain satisfactorily why he has doubts about electronic Facebook and Google certificates of residence issued and approved by the Irish Treasury.

The case concerned the legal situation in 2017. It is worth noting at this point that until the end of 2018, Polish tax authorities accepted, as a rule, only originals of the certificates of residence. A Polish company acquiring advertising services from Facebook and Google, with their registered offices in Ireland, applied for an individual tax ruling in order to determine whether  the PDF and JPG residence certificates provided by these companies may constitute grounds for not collecting tax under the Double Tax Treaty (‘UPO’).

Let us remind you that in the case of payment for an advertising service purchased from a foreign service provider, the buyer acting as a tax remitter is obliged to deduct a flat-rate withholding tax of 20%. However, the tax might not be collected under a relevant UPO, provided that a certificate of residence is obtained from the foreign contractor. Due to the considerable interest in advertising services provided by Facebook and Google based in Ireland, the local tax administration would not keep up with the issuance of certificates of residence. Therefore, it was decided that the documents will be issued for both companies in electronic form. For that reason, the Irish tax authorities allow for such a certificate to be sent in the form of a PDF or JPG file using a secure electronic channel.

However, the Director of KIS considered the certificates issued in this way as copies, as such insufficient for the application of the regulations provided for in the UPO. However, the Voivodeship Administrative Court in Szczecin did not agree with such an interpretation stating in its verdict of  January 25, 2018 (ref. I SA/Sz 984/17) that if the Irish tax authorities recognize this form of the certificates, they may be considered valid documents under Polish tax law meeting the requirements of the CIT Act. At the same time, the court found that the Director of KIS had made a selective reference to the facts presented in the application. Moreover, he stated that if an authority considers the documents as not meeting the requirements of a statute, it should fully justify its position rather than simply questioning the validity of the certificates, considering them mere copies.

The Supreme Administrative Court has upheld the judgment of the Voivodeship Administrative Court. Therefore, the authority will have to reissue the rulings, justifying in detail why it has made such a legal classification of the document.

It is worth noting that the situation of certificates of residence changed in 2019, when new regulations entered into force allowing the use of copies of certificates of residence when purchasing intangible services, on assumption that the sum of annual payments to one contractor does not exceed PLN 10,000.

Finally, it is worth indicating that on the basis of the temporary regulation provided for in the ’Anti-Crisis Shield 4.0’, during the time of the COVID-19 epidemic alert and state of the epidemic, as well as within 2 months after their cancellation, the place of residence of the taxpayer for tax purposes may be confirmed with a copy of the certificate of residence, as long as the information provided in it does not raise reasonable doubts as to its truth.


Kinga Duszna, Tax Consultant, ATA Tax Sp. z o.o.

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