Two different NSA rulings on WHT from using the cloud
The NSA has issued two different rulings on the obligation to withhold tax at source on payments for the right to use a web-based cloud access service / for a server access service, which contradict each other.
Patrycja Krzymińska, Senior Consultant at Thedy & Partners, analysed both cases and points out that in their applications for individual interpretations, the Applicants indicated that they acquire internet cloud access services under which they have access to collected data, applications and other IT resources located on multiple servers, in multiple locations, accessible virtually, via a web browser. (II FSK 1120/21), and IT services in the framework of which they use the space available on central (group) servers, for the purposes of, inter alia, uploading/collecting/storing data/files/databases, mailboxes, network services (II FSK 1078/21).
The case went before the NSA, where two contradictory rulings were made.
In the first of the cases (II FSK 1120/21), the NSA took the view that the acquisition of an internet cloud access service does not involve any activities related to the operation of an industry, an industrial machine or an industrial device, or any other device that could be described as an industrial device, so there is no use of an industrial device and, consequently, no taxation of such payments with withholding tax.
In turn, in the second of the cases (II FSK 1078/21), the NSA, relying on the two language versions of the Polish-German PSA, indicated that the word German used in the agreement is more capacious, as it includes everything related to business activity. Accordingly, the servers provided constitute an industrial facility and, consequently, the payments thereunder are subject to withholding tax.
As the positions presented by the NSA in the indicated judgments contradict each other, can we expect a resolution of the NSA to clarify the doubts regarding the concept of industrial plant?