This presumption is modified by double taxation treaties. If the representative office satisfies the tests set out in the applicable treaty such that it is not considered a permanent establishment, it is exempted from corporate income tax.
The income of a representative office is estimated to be that which could have been achieved if the representative office were to be an independent entity conducting the same or similar operations under the same or similar conditions. It is usually difficult to calculate the profits of a representative office on this basis using its accounting records. Therefore, it is usual to estimate the income through the use of estimated profit figures. These are calculated as a percentage of turnover (or invoice total) by the foreign company in Poland. Corporate income tax, at a rate of 40%, is levied on profits estimated by this method.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Should you have any questions in relation to the above issues, please contact:
Oliver Sinton KPMG Polska LIM Center - Marriott Hotel - IX floor Al. Jerozolimskie 65/79 00-697 Warsaw, Poland Tel: +48 (22) 630 7236 Fax: +48 (22) 630 6355
This information was correct as of 2 September 1996.