Until recently, taxpayers successfully defended the position that fees for hosting, cloud storage, and server use should not be subject to withholding tax. However, the end of 2025 and the first few months of 2026 show a clear shift. The Supreme Administrative Court is increasingly consistently accepting that such benefits may constitute payments for the use or right to use an industrial device., and therefore fall within the scope of Article 21, paragraph 1, point 1 of the CIT Act.
This does not mean, however, that the dispute has been definitively resolved. Against the backdrop of the latest rulings of the Supreme Administrative Court (NSA), unfavorable to taxpayers, it is worth noting the non-final judgment of the Regional Administrative Court in Wrocław of April 28, 2026, file reference I SA/Wr 57/26, concerning foreign hosting services. The court repealed the contested individual tax ruling in the part concerning hosting services, but at the time of writing this article, the written justification for the ruling had not yet been published. Therefore, only its content will allow us to assess whether and to what extent the Regional Administrative Court agreed with the taxpayer's arguments regarding the lack of access to the server infrastructure and the lack of actual control over it.
This is important for companies purchasing cloud services, hosting, and IT infrastructure from foreign contractors. In practice, this means a growing risk that such payments will be considered subject to withholding tax obligations.
Classification of cloud services under WHT – NSA case law
The development of an unfavorable line of jurisprudence has already been signaled by four judgments of the Supreme Administrative Court:
- judgment of December 2, 2025, II FSK 268/23,
- judgment of December 5, 2025, II FSK 317/23,
- judgment of February 5, 2026, II FSK 1098/25,
- judgment of March 4, 2026, II FSK 757/23.
In two December cases, the Supreme Administrative Court (NSA) provided detailed justifications for why fees for cloud storage, hosting services, and server provision can be classified as fees for the use of industrial equipment. The February judgment, reference II FSK 1098/25, also confirmed this approach with respect to cloud services based on the use of infrastructure parameters such as memory, computing power, and data transfer, even though the taxpayer did not use dedicated hardware. The March ruling, reference II FSK 757/23, followed the same trend regarding development and test environments based on server infrastructure.
This no longer appears to be a case-by-case decision. A growing trend in the jurisprudence is becoming increasingly apparent, with the Supreme Administrative Court moving away from its earlier, more restrictive approach to the concept of "industrial equipment” and moves on to a functional interpretation related to the professional, commercial use of devices in business activities.
What was the dispute about?
The crux of the dispute was similar in all these cases. The taxpayers argued that:
- cloud, hosting or server is simply an IT service,
- the server is not an "industrial device" because it does not participate in the production process,
- using disk space does not mean using the device itself,
- consequently, payments to foreign suppliers should not be subject to WHT in Poland.
The tax authorities took the opposite view. They argued that a server, hosting infrastructure, or cloud storage space are devices used in professional business transactions, and the fee for providing them constitutes a fee for using an industrial, commercial, or scientific device.
In its latest judgments, the NSA agreed with the authorities.
What follows from the judgment of 2 December 2025, reference number II FSK 268/23?
The case concerned fees paid by the company to entities from Germany and the Czech Republic for IT services related to the use of software, including the ability to save files in the cloud for the purposes of, among others, placing, collecting and storing data, files, databases, mailboxes and network services.
The Regional Administrative Court (WSA) held that using cloud storage space does not constitute the use of an industrial device, but rather constitutes the acquisition of a data storage service, and therefore does not trigger the obligation to collect withholding tax. However, the NSA rejected this approach, overturned the first-instance court's judgment, and opted for a broader interpretation of this concept.
In its justification, the court stated that:
- a server or cloud storage space is a set of devices designed to collect, store and share data,
- the concept of "industrial equipment" cannot be limited only to equipment used directly in the production process,
- the functional connection of the device with the taxpayer's business activity is decisive,
- It does not matter that the user does not have physical access to the device, as long as he uses its parameters and functionalities.
In practice, the NSA found that payment for the ability to use a dedicated amount of external cloud storage may constitute a fee for the use of an industrial device within the meaning of Article 21, paragraph 1, point 1 of the CIT Act.
What follows from the judgment of 5 December 2025, reference number II FSK 317/23?
The second case concerned virtual server hosting services and the use of dedicated physical servers. The taxpayer argued that the use of the device was not the result of using it, but rather the purchase of a hosting service.
The NSA once again supported a broad interpretation of the regulations. It emphasized that:
- "industrial equipment" should be interpreted broadly, not only through the prism of production,
- virtual and dedicated servers are devices used in professional trading,
- the fee for providing disk space and server resources is in fact a fee for using the device,
Importantly, the Supreme Administrative Court clearly emphasized that adopting a narrow understanding of the term "industrial device" would lead to the unjustified exclusion from taxation of many services provided today in the modern digital economy.
What follows from the judgment of 5 February 2026, reference number II FSK 1098/25?
involved the use of dedicated equipment.
However, the Supreme Administrative Court found that this model also constitutes the use of an industrial device. The functional aspect of the service was crucial: the taxpayer uses specific infrastructure resources used commercially in business activities, so the lack of physical access to the server or the lack of assignment of a specific device does not exclude qualification under Article 21, Section 1, Item 1 of the CIT Act.
The judgment of February 5, 2026, is therefore an important element in a new line of case law. It demonstrates that the Supreme Administrative Court's broad interpretation covers not only traditional hosting or dedicated servers, but also modern, flexible cloud computing services, in which the client acquires access to specific parameters of the IT environment, rather than to a physically designated device.
The judgment of the Supreme Administrative Court of 4 March 2026, reference number II FSK 757/23 confirms the direction
Regarding II FSK 757/23 We don't yet have a written justification, but the outcome of the proceedings is significant. The Supreme Administrative Court overturned the judgment of the Provincial Administrative Court favorable to the taxpayer and dismissed the appeal against the individual interpretation. This is another sign that the Court of Cassation is perpetuating the approach according to which payments for certain IT infrastructure services can be treated as receivables subject to withholding tax.
A judgment of the Regional Administrative Court in Wrocław of 28 April 2026, file reference I SA/Wr 57/26, favorable to taxpayers
Against the backdrop of this unfavorable trend, however, the latest ruling favorable to taxpayers has emerged. In the non-final judgment of April 28, 2026, file reference I SA/Wr 57/26, the Regional Administrative Court in Wrocław partially repealed the individual interpretation of the Director of the National Tax Information Office of 25 November 2025, reference number 0111-KDIB1-2.4010.410.2025.2.ANK, concerning, among others, the qualification of payments for foreign hosting services and cloud storage.
The case involved a Polish company using software hosting services, including a SAP system, provided by foreign entities. The description provided in the request for interpretation indicated that:
- the company had no physical access to the servers,
- she did not know their location, technical parameters or how to service them;
- she did not rent them, did not lease them, did not control them.
The purpose of the purchased service was to enable the use of specific software functionality, and not to provide the company with a specific technical infrastructure to use..
However, the Director of the National Tax Information (KIS) found that payments for such services should be treated as receivables for the use or right to use an industrial device within the meaning of Article 21, Section 1, Item 1 of the Corporate Income Tax Act. The authority assumed that a server, like a computer, is a device, and since its resources are used in the taxpayer's business activities, payments for access to disk space or a cloud environment may be subject to withholding tax.
The Regional Administrative Court in Wrocław repealed the contested interpretation in the part concerning the qualification of payments for hosting and cloud services. The written justification for the judgment is not yet available, so a full assessment of the reasons for the ruling will only be possible after its publication. If the taxpayer presented the case to the court in a similar manner to the application for an individual interpretation, it can be assumed that they consistently emphasized the service-related nature of the provision. They argued that there was no use of industrial equipment because the purchased service was not a lease, rental, or leasing of a server. The company also pointed out that it had no physical access to the infrastructure, did not know the location or technical parameters of the servers, and did not exercise control over them. In its opinion, the essence of the provision was the use of the hosting service's functionality, not the provision of a specific device for use. This approach to the service may be significant for further assessment of the case, although the actual reasons for the decision of the Regional Administrative Court in Wrocław will only be known after the written justification is prepared.
This ruling breaks the recent unfavorable line of case law, according to which the use of technical parameters of cloud infrastructure, such as disk space, computing power, or data transfer, could be treated as the use of industrial equipment. However, it does not end the dispute. First, the ruling is not final. Second, the written justification is not yet available in the ruling database, so a full assessment of the court's arguments will only be possible after its publication.
In practice, the ruling strengthens the arguments of taxpayers who purchase hosting or cloud services without actual access to the provider's infrastructure. However, it does not eliminate the risk of WHT. In each case, the following will remain crucial:
- the actual content of the contract,
- how to use the service and
- whether the remuneration concerns only the service functionality or whether it can also include an element of paid access to specific infrastructure resources.
What does this mean for business?
For entrepreneurs, this means very specific consequences.
Firstly, companies purchasing services from foreign suppliers such as: cloud storage, hosting, virtual servers, dedicated servers, provision of server room resources, and other services involving the use of IT infrastructure should re-examine whether the remuneration paid does not fall within the scope of receivables covered by WHT.
Secondly, the mere qualification of a payment as covered by Article 21 paragraph 1 item 1 of the CIT Act triggers further obligations of the payer, in particular in the scope of:
- verification of the contractor's tax residence,
- determining whether the provisions of the relevant double taxation treaty can be applied,
- exercise due diligence,
- collecting the required documentation,
- possible tax collection and reporting.
Thirdly, it is of particular importance breakdown of remuneration into componentsIf, as part of a single package, the provider provides both access to infrastructure and additional support, maintenance, or purely service-related elements, the tax risk may primarily relate to the portion of the fee related to the provision of server resources or disk space.
The new ruling by the Supreme Administrative Court requires greater caution, a review of contracts, and a reassessment of payer obligations. At the same time, the non-final judgment of the Regional Administrative Court in Wrocław confirms that the dispute over the classification of hosting and cloud services has not yet been definitively resolved. This makes the analysis of each specific service model even more important, including whether the taxpayer merely obtains access to specific service functionality or the actual right to use the technical infrastructure.
If you're unsure whether your company's cloud or hosting services are subject to WHT, contact us – we'll help you assess the risks and prepare a secure tax approach.
