5. Business Presence Issues
a. How the Use of One or More Independent Contractors Creates a Permanent Establishment in Country and the Ramifications
Conclusion of a civil law contract by a company having its seat outside the territory of Poland, with a Polish national, for performing work in the territory of Poland, does not give rise to tax or insurance obligations of that employer towards the appropriate Polish offices. Such contracts, as a rule, are governed by the national law of the employer. Tax obligations (income tax), if any, may concern the employee performing work in Poland for a foreign entity.
b. How the Employment of One or More Individuals Creates a Permanent Establishment in Country and the Ramifications
Employment of a Polish national on the basis of the employment contract in the territory of Poland, by an employer who has neither its seat nor a branch in Poland can, contrary to civil law contracts, give rise to certain obligations.
If the employer is an undertaking from an EU country, such employer must register itself as a payer of the Polish insurance contributions with ZUS and pay social insurance contributions for the employed employee. This duty arose with Polish accession to the European Union, i.e. on 1 May 2004. Due to the fact that the abovementioned duties could discourage an employer from the EU (the language barrier, international transfers), it is possible to shift them to the employee employed by the foreign undertaking. This requires an agreement between the EU employer and the employee who is to perform work in Poland. Under such agreement, the duties of the payer (filing of the forms and payment of the contributions) will be shifted to the employee.
If the employer is an undertaking from outside the European Union and it has neither a seat nor a branch in Poland, the duty to pay social insurance contributions does not arise. The employee will be free to decide whether he will pay such contributions or not.