Delivery and installation of devices in Switzerland shall not entail existence of a permanent establishment in that country; it may, however, impact upon taxation of the income of employees delegated to perform such tasks by their Polish employer.

Some of the double taxation treaties signed between Poland and other countries include provisions deviating from the OECD Model Convention. The most well-known of these modifications – and ones regularly negotiated and applied by Poland - concern:

  • Taxation of licence fees at source;
  • The broad definition of licence fees, encompassing also use and/or right to use of industrial, technical, or scientific devices (a category which includes transborder leasing of fixed assets);
  • Different taxation regimes applied to trans-border interest payments, depending on whether these payments are remitted to the benefit of a bank or of some other entity.

No permanent establishment 
A different sort of modification – and one which is quite favourable from the perspective of taxpayers – is provided for in the Polish-Swiss double taxation treaty of 2 September 1991. In general, art. 5.3 of the OECD Model Convention (as well as of treaties based thereon) provides that, where construction or installation works are conducted in another country for a period exceeding 12 months, the entity performing such works shall be deemed to have a permanent establishment in that country. The Polish-Swiss treaty, meanwhile, institutes an exception from this general rule: its art. 5.4.f provides that no permanent establishment shall arise where a business enterprise based in one contracting state runs within the other an assembly operation in connection with delivery of machines or devices to a buyer in such other country.

In other words, if a Polish company assembles or installs machines or devices within Switzerland in the context of delivery to a Swiss buyer, it shall not be deemed to operate a permanent establishment within Switzerland, whatever the duration of such assembly or installation works.


A Polish company was conducting installation works in Switzerland in performance of a contract for delivery of equipment to a Swiss buyer. The installation work in Switzerland was conducted by employees assigned by their Polish employer, each of whom worked in Switzerland for more than 183 days at a stretch. Does this Polish company have a permanent establishment in Switzerland ? If this were the case, the Polish company’s income from its contract with this Swiss buyer of its equipment would be subject to taxation in Switzerland. Yet, in light of art. 5.4.f of the Polish-Swiss convention, no permanent establishment will be deemed to arise, whatever the duration of the Polish workers’ Swiss assignment.

Swiss income tax return 

That said, if the Polish employees perform work in Switzerland for periods in excess of 183 days within the tax year, this circumstance will have indirect bearing on taxation of their earnings. Those Polish workers who spent more than 183 days working in Switzerland will be subject to Swiss personal income tax – the duration of their Swiss stint will prevent them from benefiting from the tax exemption provided for in art. 15.2 of the Polish-Swiss convention.

All along, such employees – presuming that they are Polish tax residents – shall remain subject to an unlimited tax duty in Poland. In accordance with art. 23.1.a of the Polish-Swiss convention, revenue accruing to such an employee in Switzerland and duly taxed there, while not subject to further taxation in Poland, ought to be noted in her/his yearly tax return. This is necessary for purposes of establishing the tax rate to be applied to her/his other earnings for the given year.