Cloud services and withholding tax in Poland – Supreme Administrative Court of Poland (NSA) rulings on server infrastructure

Cloud services and withholding tax in Poland are a significant concern for companies purchasing hosting from foreign providers. In its judgment of 4 March 2026 (II FSK 757/23), the Supreme Administrative Court of Poland (NSA) held that servers may qualify as industrial equipment. Payments for allocated server space may therefore be subject to withholding tax (WHT) at the domestic rate of 20%. However, not every cloud or SaaS service is automatically taxable.

Are cloud services subject to withholding tax in Poland?

Under Article 21(1)(1) of the Polish Corporate Income Tax Act, payments for the use of, or right to use, industrial, commercial or scientific equipment may be subject to 20% WHT on revenue.

However, the applicable double taxation agreement (DTA) and the conditions for preferential treatment must also be considered.

What did the NSA rule on server hosting?

In its judgment of 4 March 2026 (II FSK 757/23), the NSA adopted a broad, functional interpretation of industrial equipment.

The case concerned a Polish software company purchasing cloud storage from a German supplier. The allocated server space was used to store databases and support a Software as a Service (SaaS) platform.

The company argued that it accessed virtual storage rather than physically using a server. The NSA rejected this distinction as sufficient grounds for excluding WHT.

Physical access is not required for server infrastructure to qualify as industrial equipment. Servers may fall within this category even when they are not directly involved in manufacturing.

Is this an established line of NSA case law?

The March 2026 judgment follows earlier decisions, including:

• 16 May 2024 – II FSK 1078/21;
• 30 October 2025 – II FSK 183/23;
• 5 February 2026 – II FSK 1098/25.

In the February 2026 judgment, the NSA confirmed that using allocated server space for storing data may constitute the use of industrial equipment.

Accessing infrastructure virtually over the Internet does not automatically exclude WHT.

Is every SaaS subscription subject to WHT?

No. Tax classification depends on the actual nature of the service, not commercial labels such as cloud, hosting or SaaS.

A company may purchase storage capacity, computing power or a dedicated server environment. Alternatively, it may pay primarily for application functionality.

The judgment in II FSK 757/23 concerned a specific server-space arrangement. It does not establish that every cloud software subscription is subject to WHT.

What should companies verify before payment?

Polish companies purchasing foreign hosting should examine:

• Service scope: Application functionality or allocated infrastructure resources?
• Pricing model: Are charges based on storage, computing power or server capacity?
• Contract structure: Does the agreement combine hosting, software and technical support?
• Supplier’s tax residence: Which DTA applies?
• Tax documentation: Is a valid tax residence certificate available, and are beneficial ownership and due diligence requirements satisfied where applicable?

How can companies reduce WHT exposure?

A withholding tax analysis should be completed before payment, particularly when the contract provides access to specific server resources.

Finance departments should review the supplier agreement, technical specifications, remuneration structure and actual use of infrastructure.

The invoice description alone is insufficient to determine the correct WHT treatment.

Read the full article here: Cloud services and withholding tax in Poland – Supreme Administrative Court of Poland (NSA) rulings on server infrastructure.