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

Cloud services and withholding tax in Poland require particular attention when companies purchase 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.

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When are cloud services subject to withholding tax?

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 relevant double taxation agreement (DTA) and the conditions for preferential tax treatment must also be considered.

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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 capacity from a German provider. The infrastructure 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 did not consider this distinction sufficient to exclude WHT.

Servers may qualify as industrial equipment even without physical access or direct involvement in manufacturing processes.

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Is there an established line of NSA case law?

The March 2026 judgment follows several earlier decisions concerning server infrastructure, 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 ruling, the NSA stated that using allocated server space for data storage may constitute the use of industrial equipment.

Virtual access through the Internet does not automatically exclude withholding tax obligations.

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Is every cloud or SaaS subscription subject to WHT?

No. Tax classification depends on the actual nature of the service rather than labels such as cloud, hosting or SaaS.

Companies may purchase different services, including:

• specified storage capacity,
• computing power,
• dedicated server environments,
• access to application functionality.

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

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What should Polish companies verify before payment?

A company purchasing foreign hosting should review:

• Contract scope: Does the agreement provide application functionality or allocated server resources?
• Pricing structure: Are fees based on storage capacity, computing power or other infrastructure parameters?
• Combined services: Does the contract include hosting, software and technical support?
• Supplier’s tax residence: Which DTA applies?
• Tax documentation: Is a tax residence certificate available, and are beneficial ownership and due diligence requirements satisfied where applicable?

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How can companies reduce WHT exposure?

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

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

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

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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