When a firm pays a foreign tech company for an AI tool, an ad campaign or servers in the cloud, two independent questions have to be settled: whether a withholding-tax obligation arises, and how to settle VAT on the import of services. A typical "own-use" software subscription, e.g. ChatGPT, is usually not subject to withholding tax. Advertising and part of cloud services, however, fall within the statutory list and, without a certificate of tax residence of the supplier, can mean 20% of tax to be paid out of your own pocket.
An entrepreneur as withholding-tax remitter
A foreign company that earns certain revenues in Poland pays a flat-rate income tax on them. It is collected by the Polish counterparty as remitter. The CIT Act imposes this duty not only on companies, but also on individuals who are entrepreneurs (Article 26(1)). This therefore also applies to a sole proprietorship (JDG). The tax collected is remitted by the 7th day of the month following the month of collection (Article 26(3)), and after the end of the year the remitter files a statement of payments and tax collected by the end of the third month (Article 26(3a)).
The list of payments covered by the tax is closed. From the viewpoint of firms using digital services, two items count:
- royalties — for copyrights, trademarks, know-how (Article 21(1)(1) of the CIT Act), rate 20%;
- intangible services — including advisory, advertising, data-processing, management and control "and services of a similar nature" (Article 21(1)(2a)), rate 20%.
AI tools and software under subscription
A subscription for an AI assistant, an office suite or a graphics program gives the right to use the software only for personal needs. The entrepreneur may not copy or distribute the software, does not receive the code and does not grant further licences. Tax authorities in individual tax interpretations generally accept that such fees are not "royalties" within the meaning of Article 21(1)(1) of the CIT Act, so no tax is collected.
The assessment changes where the contract grants broader rights, e.g. to embed the model or library in a product sold to clients, to modify the code or to grant sublicences. The fee may then be a royalty. The same may apply where access is granted to a programming interface used by an application made available to clients.
Advertising, cloud and data processing
Advertising services are listed in the catalogue expressly. Fees for campaigns in search engines and on social media, bought from foreign companies, are therefore in principle subject to withholding tax. In practice, the tax is usually not collected, because double-tax treaties generally award the right to tax business profits to the country of the enterprise's residence. The condition is, however, documenting the supplier's seat with a certificate of tax residence obtained from the supplier (Article 26(1)). The remitter must observe due diligence, i.e. check, among others, whether the certificate concerns the correct company and the correct period.
For cloud services, such as hosting, computing power or disk space, a question arises about "data processing". Interpretations differentiate situations by the scope of the service. The mere provision of infrastructure is often not regarded as a service from the catalogue, but the analysis depends on the contract. Here too, the supplier's residence certificate removes most of the risk.
VAT: import of services instead of an invoice with Polish VAT
A service from a foreign supplier for a Polish firm is taxed in Poland (Article 28b of the VAT Act), and the tax is settled by the purchaser as import of services (Article 17(1)(4)).
- Active VAT payer shows in JPK_V7 the output VAT at the domestic rate (usually 23%) and at the same time input VAT in the same amount, if the service is used for taxable sales. On a net basis, nothing is paid.
- Entrepreneur exempt from VAT must register as a VAT-UE taxpayer (Article 97(3)(1)), file a VAT-9M return and pay the tax. There is no right of deduction, so the VAT really raises the cost of the tool.
When buying, the firm's VAT-UE number has to be given in the client panel. If this is missing, the supplier will treat the firm as a consumer and add Polish VAT on the invoice. Such tax cannot be deducted in JPK_V7. The solution is to complete the data and ask for a correction.
Cost in income tax
Subscriptions and services used in the business are deductible costs. Amounts in a foreign currency are converted at the average NBP rate announced on the last business day before the day the cost is incurred (Article 11a(2) of the PIT Act). The document is an invoice or a bill from the supplier's panel. It is worth downloading them monthly in one place, because many services keep them only for a limited time.
Example: a small agency's monthly payments
A marketing agency on the flat tax (podatek liniowy), an active VAT payer, in October 2026 pays:
| Expense | Withholding tax | VAT |
|---|---|---|
| Team subscription for an AI assistant | No — end-user licence | Import of services, output and input VAT |
| Search-engine campaign from a company in Ireland | Advertising service from the catalogue. No collection under the treaty with Ireland — provided a current residence certificate is held | Import of services |
| Cloud server from a company based in the United States | To be assessed by the scope of the service; a residence certificate allows the treaty to be applied | Import of services |
| Licence for a library embedded in an application for a client | Risk of a royalty — the rate under the treaty after obtaining a certificate, without it 20% | Import of services |
What to watch out for
- No residence certificate for advertising does not mean the tax disappears. A remitter who has not collected it is liable for it with their own assets.
- For payments to related entities above PLN 2,000,000 per year, special collection rules apply (Article 26(2e)).
- An invoice with Polish VAT from a foreign platform usually means the firm's data were given incorrectly.
- For an entrepreneur exempt from VAT, the first purchase of a tool from abroad triggers the duty to register for VAT-UE.
How Good Balance can help
We organise documents from foreign suppliers, settle the import of services in JPK_V7 or VAT-9M, and keep track of residence certificates for payments from the catalogue. We also handle the flow of sales documents under the service of VAT invoices. Where a contract with a supplier raises doubts as to withholding tax, we prepare an application for an individual tax interpretation.