KSeF and foreign contractors – problems with the definition of “fixed establishment” and implications for businesses

The National e-Invoicing System (KSeF), which is set to become mandatory in 2026, will not be limited to companies headquartered in Poland. The regulations will also apply to foreign entities operating in Poland through what is referred to as a fixed establishment (FE).

Although the legal construction of the provision appears simple, in practice determining when the obligation arises leads to more questions than answers – both for foreign sellers and their Polish counterparts.

Who must use KSeF and when?

According to the amended VAT Act, mandatory e-invoicing will be introduced in phases:

• from 1 February 2026 – the obligation will apply to taxpayers whose gross turnover for 2024 exceeded PLN 200 million;
• from 1 April 2026 – all remaining taxpayers will be covered, including both active and VAT-exempt entities.

This group also includes foreign companies that have a fixed establishment (FE) in Poland, even if they do not have a registered office in the country.

When does KSeF not apply?

Under Article 106(2)(1)–(2) of the VAT Act, the KSeF obligation does not apply to:

• taxpayers who have neither a registered office nor a fixed establishment in Poland;
• taxpayers who do not have a registered office in Poland but do have a fixed establishment, provided that the FE does not participate in the supply of goods or services for which the invoice is issued.

These principles may seem straightforward at first glance. In practice, however, they generate numerous interpretative doubts and uncertainty about the correct issuance and receipt of invoices. Even determining whether a foreign entity has an FE in Poland can be problematic. And when one adds the question of whether that FE actually “participates” in the transaction – additional ambiguities arise, also affecting Polish buyers.

Fixed establishment (FE) – a key issue in cross-border transactions

The obligation to issue invoices via KSeF has been linked to the existence of a fixed establishment (FE) in Poland – a real business presence without formal registration. However, neither Polish nor EU law offers clear criteria for establishing such status. As a result, instead of simplifying VAT settlements, the new rules are introducing confusion on both sides of the transaction.

Lack of precise definition and practical consequences

According to Article 11 of Council Implementing Regulation (EU) No 282/2011, an FE is defined as:

The challenge is that each case requires individual analysis – the nature of the infrastructure in Poland and its role in carrying out a specific transaction are both key.

The mere presence of staff, a warehouse, or equipment does not in itself mean an FE exists. What matters is whether the structure is actually involved in supplying goods or services – that is, whether the invoice relates to business activities conducted from that specific location.

Legal uncertainty and a wave of interpretations

Given the lack of clarity, many businesses are filing requests for individual tax rulings to determine whether they are subject to mandatory e-invoicing. However, the explanatory notes promised by the Ministry of Finance offer no guarantee of full legal protection or uniform application of the rules – each situation may be assessed differently depending on its context.

This uncertainty also affects Polish buyers, who cannot always verify whether a foreign partner is complying with the KSeF obligation. An improperly issued invoice may complicate VAT reporting and trigger the need to amend tax returns.

Compliance with the derogation – unanswered questions remain

Further concerns arise from whether Polish regulations align with the derogation granted by the European Commission to implement KSeF. That derogation was explicitly limited to entities with a registered office in Poland.

However, the amended VAT Act also includes foreign companies with an FE in Poland. According to a ruling by the Voivodeship Administrative Court in Gliwice (October 2024), this expansion may go beyond what the Commission authorised – raising doubts about the legal basis of KSeF obligations for such firms.

The court found that extending the obligation to entities without a registered office but with an FE in Poland may lack a legal basis under EU law.

What can businesses do? Practical steps and risk mitigation

In light of unclear definitions, diverging interpretations, and potential non-compliance with EU law, both foreign entities and their Polish partners must proactively safeguard their VAT position. Most importantly, they should assess in advance whether a foreign company has an FE in Poland that participates in transactions subject to KSeF.

Uncertainty in this area should not be ignored. Businesses have several options:

• Voluntary use of KSeF

Even in the absence of a formal statutory obligation, some entities may opt to issue invoices via KSeF to reduce legal risk and streamline cooperation with Polish buyers. This requires advance preparation of accounting systems and internal processes.

• Requesting an Individual Tax Ruling

A formal request to the National Revenue Administration can clarify whether the KSeF requirement applies. Although such rulings offer protection, they can be time-consuming and are not immune to later disputes or reinterpretation.

• Using self-billing agreements

In long-term partnerships, buyers and foreign suppliers may agree that the buyer issues invoices on behalf of the seller. This offers control over format and timing but requires contractual arrangements and administrative coordination.

• Implementing buyer-side controls

Polish companies should monitor whether they have received all relevant invoices through KSeF – especially corrections and supplementary documents. Failure to do so can delay settlements or result in the need for retrospective adjustments.

Each of these actions involves resources, time, and preparation. The common goal is to minimise formal errors and ensure compliance – even where the law lacks clarity.

Mandatory KSeF introduces a major shift in invoicing practices, but also raises complex questions for foreign businesses and their Polish partners. The central issue is whether a foreign entity has a fixed establishment in Poland and whether it participates in transactions requiring e-invoicing. Without a precise definition or reliable guidance, each case must be assessed individually and in advance.

This is not just a technical challenge – it requires strategic risk management on both the issuing and receiving side. Otherwise, companies risk legal errors, penalties, and disruption of VAT reporting processes.

For many cross-border businesses, the coming months will be a time for careful assessment and preparation. It’s worth investing this time now – before the KSeF obligation takes effect, and inaction turns into a costly mistake.

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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