10.6092/issn.2531-6133/16546
The outbreak of the coronavirus (COVID-19) pandemic in 2020 prompted countries around the world to take countermeasures. One was to restrict the movement of citizens between countries for employment purposes amongst others. As a result, some employees were forced to continue working remotely in their resident states for employers in other states. In this paper, the authors focus on international tax issues related to the situation of cross-border Polish employees working for German employers. They critically analyse the Polish-German Pandemic Mutual Agreement, adopted on 27 November 2020 by the competent authorities of Poland and Germany, which introduced a legal fiction of performing work in the previous country of employment to maintain the taxation rules in force before the outbreak of the COVID-19 pandemic. The authors argue, mainly from the perspective of the Polish legal system, that the legal basis for the Polish-German Mutual Agreement, its content, and its legal effects are questionable. In addition to that entered into by the Polish competent authority, nearly identical mutual agreements were successfully initiated and concluded by the German authorities and those in Austria, Belgium, France, Luxembourg, the Netherlands, and Switzerland. Thus, although this note focuses on the Polish-German Mutual Agreement, the ramifications and impact are, by analogy and mutatis mutandis, much broader.
application/pdf
2531-6133
16546
2
en
Wojciech Morawski
https://creativecommons.org/licenses/by/4.0
University of Bologna Law Review
O.E.C.D
The Questionable Polish-German Pandemic Mutual Agreement
Text.Serial.Journal
https://bolognalawreview.unibo.it/
7
Notes
2023-03-06
2023-03-05
2022-11-22
2023-03-06
205-224
UBLR
Wojciech Morawski
2022
10.6092/issn.2531-6133/16546
205
Nicolaus Copernicus University
2531-6133
2
O.E.C.D
en
224
The Questionable Polish-German Pandemic Mutual Agreement
https://bolognalawreview.unibo.it/article/download/16546/15688
7
llVOLUME 7                                  llISSUE 2                                      NOTES



                          UNIVERSITY OF BOLOGNA LAW REVIEW
                          https://doi.org/10.6092/issn.2531‐6133/16546

            Received: 30 Jan. 2022 | Accepted: 27 Sept. 2022 | Published: 6 March 2023

                                                 A

          The Questionable Polish‐German Pandemic Mutual
                                         Agreement


                        BLAZEJ KUZNIACKI* & WOJCIECH MORAWSKI**
*Błażej Kuźniacki is assistant Professor at the University of Amsterdam (Netherlands), research
assistant professor at the Lazarski University (Poland), advisor at the PwC Global Tax Policy, senior
manager at the International Tax Services of the PwC Netherlands. He is the author of around 100
publications and frequent guest lecturer at various universities word widely.
**Wojciech Morawski is a Professor at the Nicolaus Copernicus University (Poland), Head of the
Chair of Public Finance Law and Chairman of the Council of the Scientific Discipline Law of NCU.
He specialises in tax law, particularly: local taxes, income taxes and interpretation of tax law and
examines the case law of the courts in tax matters. He conducted research at Masaryk University in
Brno and Charles University in Prague. He is the author of over 300 publications in Polish, English
and Czech.
The article is, inter alia, the result of research carried out by Wojciech Morawski under the grant
funded by the National Science Centre (Poland) No. 2016/21/B/HS5/00187 “Act of interpretation
in tax law – between aid, flexibility and disintegration of system of tax law”.

 @ *blazej.kuzniacki@gmail.com ** wmoraw@umk.pl, wojciechmorawski.torun@gmail.com
  ID
       *0000-0002-3459-7656 **0000-0002-2396-9434


                                            ABSTRACT

The outbreak of the coronavirus (COVID-19) pandemic in 2020 prompted countries around the
world to take countermeasures. One was to restrict the movement of citizens between countries
for employment purposes amongst others. As a result, some employees were forced to continue
working remotely in their resident states for employers in other states. In this paper, the authors
focus on international tax issues related to the situation of cross-border Polish employees
working for German employers. They critically analyse the Polish-German Pandemic Mutual
Agreement, adopted on 27 November 2020 by the competent authorities of Poland and Germany,
which introduced a legal fiction of performing work in the previous country of employment to
maintain the taxation rules in force before the outbreak of the COVID-19 pandemic. The authors
argue, mainly from the perspective of the Polish legal system, that the legal basis for the
Polish-German Mutual Agreement, its content, and its legal effects are questionable. In addition
to that entered into by the Polish competent authority, nearly identical mutual agreements were
successfully initiated and concluded by the German authorities and those in Austria, Belgium,
France, Luxembourg, the Netherlands, and Switzerland. Thus, although this note focuses on the
Polish-German Mutual Agreement, the ramifications and impact are, by analogy and mutatis
mutandis, much broader.




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              THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


                                               KEYWORDS
    Interpretation of tax treaties; Mutual Agreement Procedure; Employment Income; COVID-19 cross border
                                               restrictions; O.E.C.D..


                                          TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   206
1. The Polish-German Pandemic Mutual Agreement . . . . . . . . . . . . . . . . . . . . . . .           210
2. Legal Basis for the Polish-German Pandemic Mutual Agreement and Interpretative Doubts               211
3. Ignorance of the Statutory Form for Shaping Taxpayer Rights and Obligations . . . . . . .           216
4. Internet Website Instead of Official Promulgator, English Instead of Polish . . . . . . . . .       217
5. Alleged Force Majeure as a Key Argument to Disrespect the Fundamental Principles of Law             219
6. More Instead of Fewer Practical Problems Under the Polish-German Pandemic Mutual
   Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   220
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   223




       INTRODUCTION

Poland and Germany are closely linked by economic and social ties. This link is due not
only to cooperation between companies but also to the free movement of people. The
circumstances are favourable for such movement, as major cities are located on both
sides of the Polish-German border. Berlin (Germany) is less than an hour’s drive from
Szczecin (Poland) on a motorway, and the old towns were divided by the border in 1945,
but they now function in harmony.                 For example, Gubin and Guben, Słubice and
Frankfurt (along the Oder River), and Zgorzelec and Görlitz, in Poland and Germany
respectively. The considerably higher level of earnings in Germany has led many Poles to
seek work in Germany.1 The ease of cross-border movement of workers between Poland
and Germany, such as that between other countries in the world, was significantly
restricted by the coronavirus [hereinafter COVID-19] pandemic in 2020.
           The actions of Polish authorities aimed at controlling the COVID-192 pandemic
did not differ significantly from those taken by other Member States of the European
Union. In the situation relevant to our study, in the first year of the pandemic before
mass vaccination began, any employee who lived in one country (in the case of
Polish-German relations, most often an employee living in Poland) could not commute
regularly to work in another country (here, most often Germany). As a result, Polish
1
  Salaries in Germany are, on average, three times higher than those in Poland. See Reinis Fisher,
  Average Monthly Salary in European Union 2020, (June. 16 2022), https://www.reinisfischer.com/average-
  monthly-salaryeuropean- union-2020;           See also EUROSTAT,         Wages and Labour Costs,
  https://ec.europa.eu/eurostat/statisticsexplained/index.php?title=Wages_and_labour_costs.
2
  “COVID-19” refers to a specific coronavirus disease caused by severe acute respiratory syndrome
  coronavirus, https://en.wikipedia.org/wiki/COVID-19.
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employees had to choose between staying in Germany for a longer period or leaving
their jobs in Germany and living with family in Poland. For some employees, a third
option was available: to continue working, but remotely, from their homes in Poland. In
this paper, we focus on international tax issues related to this situation of cross-border
Polish workers.3
          In principle, this situation is regulated by the Polish-German Tax Treaty signed
in 20034 [hereinafter Polish-German Tax Treaty] which is largely based on the
Organisation for Economic Co-operation and Development [hereinafter O.E.C.D.] Model
Tax Convention on Income and on Capital [hereinafter O.E.C.D. Model Tax Convention].5
In line with Article 15(1) of the Polish-German Tax Treaty, a Polish resident who works
for an employer in Germany (source state) may be taxed in both states for work
performed in Germany.6 A problem arises when the work is not performed in Germany -
for example due to restrictions imposed during the COVID-19 pandemic. In this case,
employment income should be taxable only in Poland.
          This causes practical problems particularly in relation to taxation in the source
state. The employer, who usually made the advance income tax payments to the tax
authority, is not a resident of the state to which these payments must be made. Thus, the
employees are required to make such tax settlements on their own. Associated problems
were highlighted by the O.E.C.D., inter alia, in § 60 of the Updated Guidance on Tax
Treaties and Impact of the COVID-19 Pandemic from 21 January 20207 [hereinafter
O.E.C.D. Pandemic Guidance of 21 January 2021] as follows:

            Employers may have withholding obligations, which are no longer
            underpinned by a substantive taxing right. These would therefore
3
  This is a situation strictly caused by the pandemic and thus should be distinguished from the situation of so-
  called “digital nomads”, who perform work remotely with the mutual consent of employees and employers.
  The expression “digital nomad” refers to a person who is not limited to one geographic location for work,
  study, or leisure and whose mobility, particularly in remote working, has been enabled by new information
  technologies and the Internet, Tsugio Makimoto & David Manners, DIGITAL NOMAD (1997). For analysis of an
  application of tax treaties to digital nomads, Svetislav V. Kostic, In Search of the Digital Nomad: Rethinking the
  Taxation of Employment Income under Tax Treaties, 11 WORLD TAX J. 189 (2019).
4
  Agreement between the Federal Republic of Germany and the Republic of Poland for the Avoidance of Double
  Taxation with respect to Taxes on Income and on Capital, Ger.-Pol., May 14, 2003, (entered into force Jan,
  2015) (Journal of Laws [Dziennik Ustaw] 2005, item 90) [hereinafter Polish-German Tax Treaty].
5
  That is, the 2003 version of the O.E.C.D.’s Committee on Fiscal Affairs, O.E.C.D. Model Tax Convention
  on Income and on Capital, Jan. 28, 2003. For the various versions of the model, see https://www.oecd-
  ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-full-version_9a5b369e-en                 (last
  visited Aug. 23, 2022).
6
  To avoid double taxation in Poland, the exemption with progression will be applied according to Polish-
  German Tax Treaty, supra note 4, art. 24(29)(a).
7
  O.E.C.D., Updated Guidance on Tax Treaties and Impact of the COVID-19 Pandemic from 21 January 2020
  [hereinafter O.E.C.D. Pandemic Guidance of 21 January 2021] § 60. Available online at: https://www.oecd-
  ilibrary.org/social-issues-migration-health/updated-guidance-on-tax-treaties-and-the-impact-of-the-
  covid-19-pandemic_df42be07-en (last visited Aug. 23, 2022).


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              THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


             have to be suspended or a way found to refund the tax to the
             employee. The employee would have a new or enhanced liability in
             their jurisdiction of residence, which would result in new filling
             obligations.

Another problem arises where an employee’s remuneration is to be taxed in Poland and,
at the same time, deducted from the employer’s income in Germany. This contradicts the
logic of the O.E.C.D. Model Tax Convention and Polish-German Tax Treaty. Article 15 of
the O.E.C.D. Model Tax Convention was created in accordance with the principle8 that an
employee’s income would be taxed in the state in which the remuneration was deductible
from the employer’s income.
           The governments of Poland and Germany have made efforts to resolve this
concern. These efforts have resulted in a specific solution with respect to the application
of articles 15(1) and 19(1) to cross-border workers and government officials, respectively.
The agreement was adopted on 27 November 2020 by the competent authorities of
Poland and Germany on the basis of Article 26(3) of the Polish-German Tax Treaty which
regulates the mutual agreement procedure [hereinafter M.A.P.] initiated by the
competent authorities of the contracting states [hereinafter Polish-German Pandemic
Mutual Agreement].9 This agreement introduced a legal fiction of performing work in
the previous country of employment to maintain the taxation rules that were in force
before the outbreak of COVID-19.10 The aim of the present study is to critically analyse
the Polish-German Pandemic Mutual Agreement, mainly from the perspective of the
Polish legal system, to demonstrate that the legal basis for the mutual agreement, its
content, and its legal effects are questionable. The legal form of the solution adopted by
the Polish and German governments is so doubtful that it may entail a complete lack of
binding force for taxpayers and tax agents (employees and employers), tax authorities,
and courts. It is astonishing that such a solution appears to be endorsed by the O.E.C.D.-
as is evident in the following statement:
8
   However, it is not explicitly formulated in any provision, so its legal significance in the interpretation of the
   tax treaty is limited.
 9
   Available online at: https://www.podatki.gov.pl/media/6433/agreement-ca-niemcy.pdf (last visited Aug. 5,
   2022).
10
   The Polish-German Pandemic Mutual Agreement does not apply to a situation where a Polish employee
   worked in Germany for a Polish employer, as that problem can be solved by applying § 5 of the commentary
   to Article 15 of the model, as suggested by the O.E.C.D. Pandemic Guidance of 21 January 2021, See O.E.C.D.
   Pandemic Guidance of 21 January 2021, supra note 7, §§ 54-57, that is, if the days of sickness “prevent the
   individual from leaving and he would have otherwise qualified for the exemption”, they exceptionally do
   not count towards the days-of-presence test in Article 15(2)(a). The O.E.C.D. argued that this exception may
   cover many situations driven by the COVID-19 pandemic, such as banning travelling by governments and
   cases where it is, in practice, impossible to travel due, for example, to cancellation of flights. Wojciech
   Morawski & Błażej Kuźniacki, The German-Polish Tax Problems of Cross-Border Workers in the COVID-19 Pandemic
   - When the Remedy is Worse than the Problem, BIALOSTOCKIE STUDIA PRAWNICZE, Nov. 2021, at 98, 100.


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            Exceptional circumstances call for an exceptional level of
            coordination between jurisdictions to mitigate the compliance and
            administrative costs for employees and employers associated with an
            involuntary and temporary change of the place where employment is
            performed.        Where relevant, MAP should be applied efficiently and
            pragmatically to help resolve issues arising out of the COVID-19 pandemic.
            Jurisdictions have issued useful guidance and administrative relief to
            mitigate the unplanned tax implications and potential new burdens
            arising due to effects of the COVID-19 pandemic. A sample of that
            guidance is included in Box 4.11



Although we agree with the O.E.C.D. that the “M.A.P. should be applied efficiently and
pragmatically to help resolve issues arising out of the COVID-19 pandemic”, we can
hardly subscribe to the arguments that “efficiency and pragmatism” may derogate
international and constitutional laws. It is noteworthy that, in Box 3, the O.E.C.D. listed,
inter alia, mutual agreements initiated by German authorities with those in Austria,
Belgium, France, Luxembourg, the Netherlands, Poland, and Switzerland.12 Hence, even
though this study focuses on the bilateral solutions between Poland and Germany, the
ramifications of the study and its impacts are, by analogy and mutatis mutandis, much
broader. It is true that the Polish-German Pandemic Mutual Agreement deals with the
taxpayer’s right, rather than his or her obligation, to use the option of taxation of
income in the country of the employer’s registered office. However, once they opt for
that legal fiction, documentational obligations are imposed on them. Taxpayers must be
able to become aware of their rights and obligations. This matrix of rights-obligations
may raise doubts as to the legality and validity of the Polish-German Pandemic Mutual
Agreement, as discussed below.




11
   O.E.C.D. Pandemic Guidance of 21 January 2021, supra note 7, § 62. From the point of view of the O.E.C.D., the
   Polish-German Pandemic Mutual Agreement and other German-style Pandemic Mutual Agreements seem
   like a good solution because they reflect the logic of rules for the taxation of worker income; that is, such
   remuneration should be taxed in the state in which it constitutes a deductible tax cost and therefore reduces
   the tax base of the employer. LYNNE OATS ET AL., PRINCIPLES OF INTERNATIONAL TAXATION 175 (Bloomsbury
   Professional, 6th ed., 2017).
12
   O.E.C.D. Pandemic Guidance of 21 January 2021, supra note 7, § 62, at 19-20.


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            THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


       1. THE POLISH‐GERMAN PANDEMIC MUTUAL AGREEMENT

The solution under the Polish-German Pandemic Mutual Agreement is based on the legal
fiction of performing work in a place where it is not physically performed, as it stipulates
that

           days of work for which wages are received and during which the
           employment was exercised at home (home-office-day) solely due to
           the measures taken to combat the COVID-19 pandemic by the German
           or Polish Government or their local subdivisions, may be deemed as
           day of work spent in the Contracting State where the cross-border
           worker would have exercised the employment without the measures
           taken to combat the COVID-19 pandemic.13

The competent authorities of Poland and Germany clearly expressed a will to apply this
solution only to situations caused specifically by the COVID-19 pandemic, following
thecaveat according to which the mentioned legal fiction “does not apply to working
days that would have been spent either as home-office-days or in a third State,
independent from these [anti-COVID-19 pandemic] measures”. They added that this
fiction “does not apply to cross-border workers insofar as they are exercising their
employment at home according to their employment contract”.14 The latter situation is
typical for so-called “digital nomads”.15
         As mentioned, the legal fiction functions as a right rather than as an obligation;
thus, employees who acquire the right to make use of it must initiate its application in
accordance with the suggestion that it “may be deemed as a day of work spent in the
Contracting State”.16 However, once its application is chosen by the employee, the
employee is “obliged to apply this fiction consistently in both Contracting States and to
keep appropriate record (i.e., written confirmation of the employer stating which parts
of the home-day-office were solely due to the COVID-19 pandemic related measures)”.17
         The Polish-German Mutual Agreement, in Section 3, also envisages the rule as
aimed at the prevention of the misuse of the legal fiction, according to which it

           shall only apply to the extent that the respective wages for the days
           spent working at home are usually taxed by the Contracting State in
13
   Mutual Agreement between the Competent Authorities of Germany and Poland according to paragraph 3 of
   Article 26 of the Polish-German Tax Treaty, supra note 4, § 1, 2021.
14
   See 6. the Polish-German Pandemic Mutual Agreement § 1.
15
   See MAKIMOTO & MANNERS, supra note 3.
16
   See supra note 14.
17
   Mutual Agreement between the Competent Authorities of Germany and Poland according to paragraph 3 of
   Article 26 of the Polish-German Tax Treaty, supra note 4, § 2, 2021.


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               which cross-border worker would have exercised the employment
               without the measures taken to combat the COVID-19 pandemic. The
               cross-border worker accordingly agrees that these items of income
               will be actually taxed in the Contracting State where he would have
               exercised the employment without the measures taken to combat the
               COVID-19 pandemic. These items of income shall be regarded as
               “actually taxed” when they are included in the assessment basis used
               to calculate the tax.

Finally, after the mutual agreement was enforced on 28 November 2020, it was applied “to
days in the period from 11th March 2020 until 31st December 2020” and, later, “[would]
automatically be extended, unless it is terminated by either Competent Authority of a
Contracting State”.18 Hence, although its retroactive application is precisely indicated, its
prospective application is actually unknown, as it depends on a unilateral decision by the
competent authorities of Poland or Germany.




         2. LEGAL BASIS FOR THE POLISH‐GERMAN PANDEMIC MUTUAL
         AGREEMENT AND INTERPRETATIVE DOUBTS

In general, a mutual agreement is not unusual in the treaty practice of O.E.C.D. Member
States.19 However, the Polish-German Pandemic Mutual Agreement appears to have a
shaky legal basis considering the situation that it purported to regulate and the method
of its regulation. In essence, the Polish-German Pandemic Mutual Agreement is based on
Article 26(3) of the Polish-German Tax Treaty, which states that “[t]he Competent
Authorities of the Contracting States shall endeavour by mutual agreement to remove any
difficulties or doubts [that] may arise in the interpretation or application of the Agreement.” This
raises the fundamental question of which doubts or difficulties must be resolved in the
M.A.P.
             In principle, the place where work is performed will determine the place of
employment income taxation. The commentary to Article 15(1) of the O.E.C.D. Model Tax
Convention in Section 1 clearly indicates that “work is exercised in the place where the
employee is physically present when performing the activities for which the employment

18
     Id. §§ 5 - 6.
19
     Qiang Cai & Pengfei Zhang, A Theoretical Reflection on the O.E.C.D.’s New Statistics Reporting Framework for the
     Mutual Agreement Procedure: Isolating, Measuring, and Monitoring, 21 J. INT’L. ECON. L. 867 (2018); Hugh J. Ault,
     Improving the Resolution of International Tax Disputes, 7 FLA. TAX REV. 137 (2005).


                                                          211
              THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


income is paid.”           A deviation from the above-mentioned principle of taxation of
remuneration for cross-border work would require change in the tax law at both the
international and national levels.
           In spite of some hesitations in the case law, the prevailing view of courts is also
consistent with the aforementioned principle according to which employment income
may be taxed only in the country in which the work is actually performed. For example,
in a judgement delivered on 22 December 2006, the Dutch Supreme Court (Hoge Raad)
held that, in relation to standby fees, the place of work performance is where employees
are present during the period for which they are paid, not where the employee would
potentially perform the work.20                In this specific case, which involved editorial and
television presentation activities, an application of the principle meant splitting the
taxation of remunerations between two countries, as the taxpayer in question was in the
Netherlands for a few days as well as in their place of residence (Mexico) also for a few
days.21
           A similar interpretative approach was taken by the Supreme Administrative
Court in Poland (Naczelny Sąd Administracyjny [hereinafter N.S.A.]) in respect to the
Polish-German Tax Treaty. In a judgement delivered on 13 May 2011,22 the N.S.A. made
the following statement:

             The right to tax income in N. [an abbreviation from pol. Niemcy,
             Germany] is not determined, as a rule, by the place where the
             employer is located, nor by the place where the results of the work
             are used, nor by the place where the remuneration is paid, nor by the
             place where the entity paying the remuneration is located. The only
             criterion is the place where the work is performed. Thus, the Court of
             First Instance correctly interpreted Article 15(1) of the Tax Treaty by
             assuming that the place of taxation of salary, wages [,] and similar
             remuneration from paid employment depends on the place where the
             work is performed (emphasis added).

Individual interpretations by the Polish tax authorities have emphasised the place of the
physical presence of an employee during the performance of their duties as the
determinant of the place of work performance.23 However, these have raised concerns

20
   See Hoge Raad der Nederlanden [HR] [the Dutch Supreme Court] Dec. 22, 2006, BNB 2007, 97 (Neth.).
21
   See Frank P.G. Pötgens, Stand-By Fee Taxable in Residence State Under Art. 15 of the O.E.C.D. Model, 48 EUR. TAX’N
   85 (2008); see also FRANK P.G. PöTGENS, INCOME FROM INTERNATIONAL PRIVATE EMPLOYMENT 304 (2007).
22
   Naczelny Sąd Administracyjny [Polish Supreme Administrative Court] May. 13, 2011, see Poland: Case No. II
   FSK 2165/09 (Pol.).
23
   The Director of National Tax Information, Against the Background of Article 14 of the Polish-Czech Double Taxation
   Convention: Interpretation of 9 October 2018 (0115-KDIT2-2.4011.336.2018.1.HD), https://sip.lex.pl/orzeczenia-
   i-pisma-urzedowe/pisma-urzedowe/0115-kdit2-2-4011-336-2018-1-hd-opodatkowanie-185028845.
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regarding situations wherein performing work in a given place has been the result of the
free decision of the person concerned - not an effect of restrictions on cross-border
movement. In the Polish tax law literature, none of the different views have negated the
reference to the employee’s place of residence as the place of work performance.24
          Contrary to the assertions of the competent authorities, the Polish-German
Pandemic Mutual Agreement does not therefore, remove doubts in the interpretation of
the Polish-German Tax Treaty. Nor does it confirm a particular understanding of the
treaty.     In fact, the Polish-German Pandemic Mutual Agreement has proposed an
interpretation of the provisions of Article 15 in the Polish-German Tax Treaty that is
completely different from the prevailing view in tax jurisprudence and academia.
Moreover, the view presented by the competent authorities does not stem from the
wording of the Polish-German Tax Treaty. It is a change in the wording thereof. In fact,
the Polish-German Pandemic Mutual Agreement confirms this finding, as the Agreement
uses the concept of “legal fiction” and makes it available to only some taxpayers. The
interpretation of Article 15 of the Polish-German Tax Treaty does not allow its
application under such a legal fiction, since it is not included in the wording of the
Treaty.25
          The competent authorities misapplied the interpretative guidance included in
Section 5 of the commentary to Article 15 of the O.E.C.D. Model Tax Convention. As
mentioned in the Introduction above, Section 5 applies to a situation wherein a Polish
employee works in Germany for a Polish employer. In such a situation, the commentary
reads that days of sickness count for calculation of the 183-day period, in Article 15(2)(a)
of the O.E.C.D. Model Tax Convention, being the “days of physical presence” method,
“unless they prevent the individual from leaving and he would have otherwise qualified
for the exemption”. This is clearly an exception from the principle that days of sickness
count for the purposes of the “days of physical presence” method under Article 15(2)(a).
This exception should be interpreted strictly,26 and not be applied by analogy to
situations that are not covered by Article 15(2)(a) in contradiction with the ordinary
meaning of terms used in other treaty provisions.27 In particular, this exception should
by no means be extended to situations covered by Article 15(1) of the O.E.C.D. Model Tax
Convention insofar as they concern employment which is exercised in the other
24
   See W. Morawski, Opodatkowanie Dochodów z Pracy Najemnej w Świetle Umów o Unikaniu Podwójnego
   Opodatkowania (Cz. 1) [Taxation of Income from Employment in the Light of Double Taxation Conventions
   (Part 1)], 9 PRZEGLąD PODATKOWY [TAX L. REV.] 7 (2006).
25
   See Morawski & Kuźniacki, supra note 10, at 95, 102.
26
   Joined Cases C-283 & C-291 C-292/94, Denkavit Int’l B.V., VITIC Amsterdam B.V. and Voormeer B.V. v.
   Bundesamt für Finanzen, 1996 E.C.R. I-5063 §27.
27
   See also U. LINDERFALK, ON THE INTERPRETATION OF TREATIES: THE MODERN INTERNATIONAL LAW AS EXPRESSED IN
   THE 1969 VIENNA CONVENTION ON THE LAW OF TREATIES 286 (Springer Sci. & Bus. Media, 2007). See generally
   LORAND BARTELS & FEDERICA PADDEU, EXCEPTIONS IN INTERNATIONAL LAW (Oxford University Press, 2020).

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              THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


Contracting State rather than the days of presence in the other State. Both authoritative
scholarship28 and international case law29 confirm such an interpretation by arguing
that work is performed under Article 15(1) where the individual is actually present for
that purpose - either actually performing the work or being ready to do so. Whereas the
term “is present” under Article 15(2)(a) has to be interpreted autonomously and literally,
meaning the period of physical presence in the source state of work. Again, the only
exception, solely for purposes of Article 15(2)(a), is included in Section 5 of the
commentary to Article 15 of the O.E.C.D. Model Tax Convention and relates to sickness
days that prevent the individual from leaving the source state of work, and said
individual would have otherwise qualified for the exemption from taxation in the source
state of work pursuant to Article 15(2) of the O.E.C.D. Model Tax Convention.
          Furthermore, the Polish-German Pandemic Mutual Agreement clearly states that
it is a legal fiction and not a particular way of interpreting a tax agreement. A “legal
fiction” is, after all, something quite different from the interpretation of a tax treaty.
The phrase “legal fiction” entails an acceptance that “reality” is different from the result
of its application.
          Consequently, the legal fiction introduced by the competent authorities in the
Polish-German Mutual Agreement30 stems from an interpretation contra legem of Article
15(1) of the Polish-German Tax Treaty. It is an example of extensive interpretation per
analogiam of the “sickness’s exception” under Section 5 of the commentary to Article
15(2)(a) of the O.E.C.D. Model Tax Convention to revise the meaning of treaty terms used
in Article 15(1) of the Polish-German Tax Treaty.31 Interestingly, such interpretation is
not even supported by Sections 54-57 of the O.E.C.D. Pandemic Guidance of 21 January
2021, since they refer to the mentioned exception solely for purposes of Article 15(2)(a)
of the O.E.C.D. Model Tax Convention, rather than to Article 15(1). Moreover, there are

28
   See, e.g., Luc De Broe, Income from Employment, in KLAUS VOGEL ON DOUBLE TAXATION CONVENTIONS 1164-76
   (Wolters Kluwer Law & Business eds., 4th ed., 2015).
29
   See also Bundesfinanzhof [BFH] [German Fiscal Court] Aug. 27, 2002, Case No. BStBl. II 883 (2002); BFH Oct.
   17, 2004, Case No. I B 98/03 and NV 161 (2004); Amsterdam Court of Appeal Sep. 4, 2003, Case No. 01/1655,
   VN 2003/49.1.1; Hoge Raad [HR] [the Dutch Supreme Court] Feb. 21, 2003, Case Nos. 37011 and 7004, BNB
   2003/177 and 178; Court of Appeals Brussels, Jun. 14, 2000, Case No. 197 TFR 258. De Broe, supra note 26,
   1166-72.
30
   I.e., the assumption that
                 days of work for which wages are received and during which the employment was
                 exercised at home (home-office-day) solely due to the measures taken to combat the
                 COVID-19 pandemic by the German or Polish Government or their local subdivisions,
                 may be deemed as day of work spent in the Contracting State where the cross-border
                 worker would have exercised the employment without the measures taken to combat
                 the COVID-19 pandemic.
   See supra Section 1.
31
   It must be admitted, however, that this interpretation does appear to be reasonable, to an extent, even if we
   consider it to be going too far.


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2023]                          UNIVERSITY OF BOLOGNA LAW REVIEW                      [Vol. 7:2


critical contextual and factual differences between the situations covered by the
juxtaposed Treaty provisions and the “sickness exception” vis-a-vis the COVID-19
pandemic cross-border restrictions, as follows:



       1. The exception applies to derogate from the principle in a situation in which
           sickness prevents the individual from leaving the source state of work (e.g.,
           Germany) to enter their residence State (e.g., Poland), whereas the COVID-19
           pandemic cross-border restrictions prevent the individual from leaving their
           residence state (e.g., Poland) to perform work in the source state of work (e.g.,
           Germany).


       2. The sickness prevents the individual from actually performing work for their
           employer, whereas the pandemic restrictions do not (i.e., work is still actually
           performed by the individual, but it is done in their residence state instead of the
           state of the source of work).


       3. The “sickness exception” works in favour of taxation only in the residence State of
           the individual, while the legal fiction in the Polish-German Mutual Agreement
           works in favour of the taxation of the individual in both Contracting States in
           accordance with Article 15(1) of the Polish-German Tax Treaty. Apparently, these
           differences were entirely ignored by the competent authorities while designing
           and introducing the legal fiction to Article 15(1) of the Polish-German Tax Treaty
           via the Polish-German Mutual Agreement.



Finally, it is noteworthy that the very fact that the legal fiction under the Polish-German
Mutual Agreement is an option/right rather than an obligation does not change the above
observations. The key observation remains untouched: the legal fiction, irrespective of its
legal mechanism of functioning (right instead of obligation), does not find support in an
appropriate interpretation of Article 15 of the Polish-German Tax Treaty. Also, it is not
obvious that the use of the option to rely on legal fiction will always work in favour of
the individual, as, in some cases, it may cause more problems instead of fewer practical
problems.32



32
     See infra Section 6.


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              THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


      3. IGNORANCE OF THE STATUTORY FORM FOR SHAPING TAXPAYER
      RIGHTS AND OBLIGATIONS

The preamble of the Polish-German Pandemic Mutual Agreement indicates that the
COVID-19 pandemic “is a situation of force majeure” and that “the measures taken in
response to the pandemic can lead to substantial uncertainty with respect to the tax
position of cross-border workers”. This altogether justifies the introduction of the legal
fiction via the mutual agreement pursuant to Article 26(3) of the Polish-German Tax
Treaty. This solution, the preamble continues, has been agreed upon by the competent
authorities of Germany and Poland, “with prudence and deliberation, to minimise the
personal burden on cross-border workers”.                     Two circumstances were crucial to the
introduction of the mutual procedure, namely (i) the pandemic, considered a force
majeure, and (ii) the desire to minimise (taxpayer) problems caused by the pandemic.
           Despite the clearly good intentions and seemingly compelling reason for the
Polish-German Pandemic Mutual Agreement, the introduction of the legal fiction
appears to be at odds with the constitutional principle of legalism- according to which a
public authority may act only on the basis of statutory provisions.33 Facilitating the
taxpayer’s compliance with personal tax settlements, as in the case at hand, does not
seem to be a goal meriting the disrespect of this constitutional principle, which is
fundamental to the functioning of public authorities (such as the competent authorities).
           Hypothetically, we could even argue that the Polish-German Pandemic Mutual
Agreement does not give taxpayers the right to opt for their income to be taxed in
Germany, rather than at their actual place of work performance. This follows from the
requirements concerning the creation of such rights.                               Under Polish law, the
determination of the amount of tax and its payment must have its basis in statutory law,
that is, an act adopted by Parliament, such as a domestic tax act or an international
agreement ratified with the consent of the Parliament (e.g., a tax treaty),34 which means
no taxation without representation (an emanation of the rule of law in the tax
domain).35 Neither the Polish Income Tax Act [P.I.T.A.]36 nor the Polish-German Tax
Treaty mention such a choice in dealing with tax settlements as that under the
Polish-German Pandemic Mutual Agreement. Of course, it is difficult to expect tax

33
   See KONSTYTUCJA RZECZYPOSPOLITEJ POLSKIEJ[CONSTITUTION OF THE REPUBLIC OF POLAND] Apr. 2, 1997, art. 7
   (Dziennik Ustaw [Journal of Laws], no. 78, item 483) [hereinafter “Polish Constitution”].
34
   See Polish Constitution, art. 217.
35
   See P.J. Hattingh, The Multilateral Instrument from a Legal Perspective: What May Be the Challenges?, 71 BULLETIN
   INT’L TAX’N 5, (2017). See generally TOM BINGHAM, THE RULE OF LAW (Allen Lane, 1st ed. 2010).
36
   See Ustawa z dnia 26 lipca 1991 r. o podatku dochodowym od osób fizycznych [Personal Income Tax Act (1991)], 1128
   JOURNAL OF LAWS (consolidated version of 24 June 2021) (Pol.).


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authorities to disregard the content of the Polish-German Mutual Agreement.37 The
taxpayer should retain a favourable position under the Mutual Agreement on the basis of
the principle of protection of legitimate expectations, which is generally accepted in
various legal systems.38




      4.      INTERNET WEBSITE INSTEAD OF OFFICIAL PROMULGATOR,
      ENGLISH INSTEAD OF POLISH

We also argue that introducing implied changes to the law through the Polish-German
Pandemic Mutual Agreement may violate taxpayer rights. The Polish-German Tax Treaty
(like any international agreement) was published appropriately in the official journal of
promulgation, which in Poland is the Journal of Laws (Dziennik Ustaw). Mutual agreements
are not published in Poland in the Journal of Laws or in any other official promulgating
journal. The Polish-German Pandemic Mutual Agreement was published solely on the
website of the Polish Ministry of Finance. Without having the exact location of this
Polish-German Pandemic Mutual Agreement,39 one must have excellent navigation skills
in using the website. An ordinary person in Poland with knowledge of the Polish legal
system knows that to consult the law, the generally accessible Journal of Laws must be
consulted. To this end, people are not obligated to regularly search the website of the
Ministry of Finance, which would, in any case, be quite troublesome.
           Laws are published in the official language of the State in which they have binding
force. Obviously, in Poland and in respect to Polish tax law, the official language is Polish.
The position of the Polish language as the official language of the law is guaranteed by
the Constitution. Article 27 of the Polish Constitution indicates that “[i]n the Republic of
Poland, the official language is Polish”. Moreover, Article 6 of the Polish Language Act
of 7 October 199940 provides that “international agreements concluded by the Republic
37
   However, in some situations, even an administrative court has refused to protect a taxpayer when it acted on
   the basis of a position of the Minister of Finance which had no relevant legal basis, for example, a judgement
   of the N.S.A. on 10 October 1994, Case No. II SA 1836/93.
38
   See, e.g., Gavin Barrett, Protecting Legitimate Expectations in European Community Law and in Domestic Irish Law,
   20 Y.B. EUR. L. 191 (2001).
39
   Mutual Agreement between the Competent authorities of Germany and Poland according to paragraph 3 of
   Article 26 of the Agreement Between the Federal Republic of Germany and the Republic of Poland for the
   Avoidance of Double Taxation with respect to Taxes on Income and on Capital signet at Berlin on 14 May
   2003 with respect to the application of Paragraph 1 Article 15 on cross-border workers and of paragraph
   1 Article 19 on government officials working cross-borders, Ger.-Pol., Nov. 12-Nov. 27, 2020, available at
   https://www.podatki.gov.pl/media/6433/agreement-ca-niemcy.pdf.
40
   USTAWA z dnia 7 października 1999 r. o języku polskim [The Polish Language Act (1999)] Journal of Laws,
   item 1480 (consolidated version from 7 August 2019).


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            THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


of Poland should have the Polish language version as the basis for their interpretation,
unless specific provisions provide otherwise”. Through these provisions, Polish legislators
attempt to guarantee Polish citizens access to the law in a language they know. Even the
case law of the Court of Justice of the European Union underscores that the basic condition
for imposing obligations on individuals is the ability to be acquainted with law in their first
language - as stated in the following:41



           Article 58 of the Act concerning the conditions of accession to the
           European Union of the Czech Republic, the Republic of Estonia, the
           Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania,
           the Republic of Hungary, the Republic of Malta, the Republic of
           Poland, the Republic of Slovenia and the Slovak Republic and the
           adjustments to the Treaties on which the European Union is founded,
           precludes the obligations contained in Community legislation which has
           not been published in the Official Journal of the European Union in the
           language of a new Member State, where that language is an official
           language of the European Union, from being imposed on individuals
           in that State, even though those persons could have learned of that
           legislation by other means (emphasis added).



Shockingly, the Polish-German Pandemic Mutual Procedure was drafted and published
only in English on the website of the Polish Ministry of Finance.42 In comparison, the
German government’s website published information on the mutual agreement, including
its content, in German, the official language of Germany.43




41
   See judgement of the Court (Grand Chamber) of 11 December in Case C-161/06, Skoma‑Lux sro v. Celní
   ředitelství Olomouc, 2007 E.C.R.
42
   No version of the Polish-German Tax Treaty was ever drafted in English; it was drafted solely in
   Polish and German, available at https://www.podatki.gov.pl/media/1836/niemcy-konwencja-tekst-polski-
   niemiecki.pdf.
43
   Konsultationsvereinbarung zwischen der Bundesrepublik Deutschland und der Republik
   Polen vom 12./27.              November 2020 [Consultation Agreement between the Federal
   Republic of Germany and the Republic of Poland of 12/27 November 2020], available at
   https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales
   _Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Polen/2020-12-08-Konsultationsvereinbaru
   ng-DE-PL-Covid-19-Besteuerung-Grenzpendler.html.


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2023]                            UNIVERSITY OF BOLOGNA LAW REVIEW                                      [Vol. 7:2


      5. ALLEGED FORCE MAJEURE AS A KEY ARGUMENT TO DISRESPECT
      THE FUNDAMENTAL PRINCIPLES OF LAW

The competent authorities indicated that the COVID-19 pandemic constitutes a force
majeure. Indeed, a pandemic is an event that is not, from a human point of view,
something ordinary and routine. However, absolutely no consensus has been reached in
legal circles, neither nationally nor internationally, as to whether the COVID-19
pandemic can be considered a force majeure in every case and for every subject (i.e. erga
omnes and in abstracto).44 None of Polish nor German law nor the Polish-German Tax
Treaty defines COVID-19 as a “force majeure”. In civil law, a force majeure is accepted as an
event that is beyond the control of the parties in question, one that could not have been
foreseen at the time the contract was concluded, and that has consequences that could
not have been prevented by taking normal precautions.45 The question as to whether the
COVID-19 pandemic constitutes a force majeure, therefore, does not have a clear answer
even in the area of contract law, as the pandemic has affected various individuals,
including employees and employers in extremely different ways. Many have had, and
continue to have, opportunities to take countermeasures, and some professionals should
have been prepared for it. Thus, whether a COVID-19 pandemic constitutes a force
majeure which is case-specific and varies by situation. This is widely accepted by legal
communities in both Germany and Poland.46
           There is no reason to treat the situation of employees from Poland working for
German employers differently, as the legislation applicable to them does not make it
clear whether the COVID-19 pandemic should be regarded as a force majeure - with all its
consequences. Furthermore, neither Poland nor Germany has decided to impose a state
of emergency due to the COVID-19 pandemic, while the Czech Republic, Slovakia, and



44
   See Carter B. Casady & David Baxter, Pandemics, Public-Private Partnerships (PPPs), and Force Majeure | COVID-19
   Expectations and Implications, 38 CONSTR. MGMT. & ECON. 1077 (2020); Ş. Esra Kiraz & Esra Y. Üstün, COVID-19
   and Force Majeure Clauses: An Examination of Arbitral Tribunal’s Awards, 25 UNIF. L. REV. 437 (2020); see
   also Vasudha Luniya & Ankita Mehra, Analysing the Concept of Force Majeure, Especially During the COVID-19
   Pandemic, LEXOLOGY (Apr. 19, 2021), https://www.internationallawoffice.com/Newsletters/Corporate-
   Commercial/India/Clasis-Law/Analysing-the-concept-of-force-majeure-especially-during-the-COVID-19-
   pandemic#Conclusion.
45
   See T. Hauss, M. Distler, & L. Nassi, Germany: Force Majeure, Legal 500 §§ 11-12 (2021), available at
   https://www.legal500.com/guides/chapter/germany-force-majeure/; C. Rapallo, Kiedy Pandemia Wpływa na
   Zdolność do Wykonywania Zobowiązań: Siła Wyższa, Nadzwyczajna Zmiana Stosunków [When a Pandemic Affects
   the Ability to Perform Obligations: Force Majeure, Extraordinary Change in Relations], Garrigues ( Mar.
   20, 2020), available at https://www.garrigues.com/pl/pl-PL/news/kiedy-pandemia-wplywa-na-zdolnosc-
   do-wykonywania-zobowiazan-sila-wyzsza-nadzwyczajna-zmiana.
46
   Hauss et al., supra note 43; Rapallo, supra note 43.



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             THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


Estonia have decided to do so.47 Similarly, neither Polish nor German tax authorities,
unlike tax authorities in Ireland48 and Finland,49 have published official positions
recognising the COVID-19 pandemic as a force majeure. Thus, the most important reason
for the actions of the competent authorities of Poland and Germany, which is the
elimination of the negative tax consequences of a force majeure on cross-border workers,
has dubious justification. It is difficult to consider the unreflective identification by the
competent authorities of the COVID-19 pandemic as a force majeure as an action of
prudence and deliberation in the context of cross-border taxation.
          Even if one recognises the pandemic as a force majeure, the proportionality of the
measures taken in relation to the achievement of their purpose in the given circumstances
remains questionable. As was demonstrated earlier, the Polish-German Pandemic Mutual
Agreement undermines principles contained in the Polish Constitution. Some difficulties
are related to the tax settlements of a certain group of employees, while other difficulties
are related to constitutional standards. These standards were treated as less important
than the tax difficulties.




      6. MORE INSTEAD OF FEWER PRACTICAL PROBLEMS UNDER THE
      POLISH‐GERMAN PANDEMIC MUTUAL AGREEMENT

The intention of the competent authorities was undoubtedly to ease the lives of some
taxpayers (i.e., cross-border workers) during the difficult times of the pandemic.
Paradoxically however, the legal fiction under the Polish-German Pandemic Mutual
Agreement may generate more problems than solutions. This pertains, for example, to
workers who partially worked remotely from the territory of Poland before the outbreak
of the COVID-19 pandemic (this income was taxed in Poland) and then opted for the legal
fiction under the mutual agreement. And, now it must be determined which days spent
47
   See K. Grzęda-Łozicka, Koronawirus w Polsce. Stan Wyjątkowy. Co to Oznacza dla Mieszkańców? [Coronavirus
   in Poland. A State of Emergency. What Does it Mean for the Inhabitants?], PORTAL ABCZDROWIE (2020),
   https://portal.abczdrowie.pl/koronawirus-w-polsce-stan-wyjatkowy-co-to-oznacza-dla-mieszkancow (last
   visited Aug.     21, 2022); A. Pokrywczyński, Stan klęski żywiołowej czarnym scenariuszem pandemii
   koronawirusa? [State of Disaster Black Scenarios of Coronavirus?], INFO SECURITY 24 (Oct. 12, 2020),
   https://infosecurity24.pl/stan-kleski-zywiolowej-czarnym-scenariuszem-pandemii-koronawirusa.
48
   See COVID-19 Information and Advice for Taxpayers and Agents, REVENUE - IRISH TAX AND CUSTOM,
   https://revenue.ie/en/covid-19-information/index.aspx (last visited Aug. 21, 2022).
49
   See Vero Skatt, Effects of the Coronavirus Pandemic on Taxes on Income Received Under an Employment
   Contract in a Foreign Country (the Six-Month Rule and Forces Majeures), VERO (Sept.          10, 2020),
   https://www.vero.fi/en/detailed-guidance/statements/82178/effects-of-the-coronavirus-pandemic-
   on-taxes-on-income-received-under-an-employment-contract-in-a-foreign-country-the-six-month-rule-
   and-forces-majeures2/.


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outside the territory of the country of usual employment (Germany) are to comply with
the new rule in accordance with the legal fiction.                     Problems also arise from the
retroactive implementation of the Polish-German Pandemic Mutual Agreement. It was
enforced on 28 November, but according to its § 5, it “shall apply to days in the period
from 11th March 2020 until 31st December 2020”. Certainly, it accounted for monthly
advance payments of personal income taxes by persons who performed remote work for
German employers from the territory of Poland during the year and, with respect to this
work, for advances on personal income taxes in accordance with the principles of the
Polish-German Tax Treaty.50
          In this context, it is worth noting that, in its final provisions, the Polish-German
Pandemic Mutual Agreement vaguely indicates that it “shall apply to days in the period
from 11th March 2020 until 31st December 2020,” and then “[f]rom 31st December 2020
onwards, the application of this Mutual agreement will automatically be extended,
unless it is terminated by either Competent Authority of a Contracting State”. How can
taxpayers determine whether this mutual agreement has been renewed?51 If this were
“normal law”, an individual would learn about it from the Journal of Laws in the Polish
language. However, in relation to the Polish-German Pandemic Mutual Agreement,
individuals must search for it on the website of the Polish Ministry of Finance and
attempt to interpret and understand rules based on a legal fiction written in a language
that is not the official language in Poland.
          In addition, pursuant to § 6 of the mutual agreement, either competent
authority may terminate it unilaterally at any time without providing a reason. If the
taxpayer (or the tax remitter-employer) did not notice its implementation or the
extension of the possibility of using the solutions contained in the Polish-German
Pandemic Mutual Agreement, this will not have negative consequences – only a missed
option for (alleged) simplification of tax settlements. It would be worse if the taxpayer
had opted to follow the legal fiction and then did not notice termination of the mutual



50
   See J. Chorązka & K. Rzeżnicka, Nowe Polsko-Niemieckie Porozumienie Wpływa na Opodatkowanie Pracy
   Zdalnej Pracowników Transgranicznych [New Polish-German Agreement Affects Taxation of Remote Work of Cross-
   Border Workers], PWC STUDIO (Dec. 4, 2020), https://studio.pwc.pl/aktualnosci/alerty/polsko-niemieckie-
   porozumienie-wplywa-na-opodatkowanie-pracy-zdalnej-pracownikow-transgranicznych.
51
   The agreement was valid until 30 June 2022. This follows from a further agreement “Mutual termination
   agreement of 12 and 27 November”(“the Mutual Agreement”) between the Competent Authorities of
   German and Poland according to paragraph 3 of article 26 of the Agreeemnt between the Federal Republic of
   Germany and Republic of Poland for the Avoidance of double Taxation with respect on Income and Capital
   signed at Berlin on 14 May 2003”, available: https://www.podatki.gov.pl/media/8194/mutual-termination-
   kopia.pdf.




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                THE QUESTIONABLE POLISH-GERMAN PANDEMIC MUTUAL AGREEMENT


agreement. In this case, the taxpayer still does not pay tax in Poland and thus incurs tax
arrears - with all the consequences thereof.
             This shows that the requirement to publish “law” and, in general, to regulate the
rights and obligations of the taxpayer by means of legislation (and not through
interpretative acts such as a mutual agreement) through an official promulgation in the
Journal of Law is not formalistic but rather a guarantee of protection of the taxpayer’s
rights. When an authority amends an international agreement published in the Journal of
Laws by publishing the text of a mutual agreement on the website of the Ministry of
Finance, this unfortunately results in problems for the taxpayer.
             Moreover, from the perspective of employers, their cross-border employees
following the legal fiction means that it is necessary to prepare appropriate
documentation that enables the application of the new, special taxation rules for these
employees. The Polish-German Pandemic M.A.P. imposes a requirement on employees to
acquire written confirmation from employers of the impossibility of performing work in
the employer’s state of residence due to the COVID-19 pandemic.
             The imposition of an obligation to document the fact of working at home due to
the pandemic is obviously a rational solution. The problem is that the Polish-German
Mutual Agreement is not an appropriate legal basis for imposing any obligation on a
taxpayer. The rules on imposing obligations on taxpayers are clear in Poland. The
principle of legalism applies, which has its basis in both the Polish Constitution52 and the
provisions of tax statutes.53 This means that if a tax authority demands any action from
a taxpayer, the authority must indicate its legal basis. The legal basis must be a provision
of law. The formal confirmation that “something” is a “law” is actually a publication in
the Journal of Laws.
             Therefore, even if taxpayers did not have the relevant documentation required
by the Polish-German Mutual Agreement, they could still otherwise prove (e.g. through
witness testimony) that the conditions for benefiting from the agreement were met.




52
     Polish Constitution, art. 7.
53
     USTAWA z dnia 29 sierpnia 1997 r. Ordynacja podatkowa [Act of 29 August 1997 - Tax Ordinance], art. 120
     (Journal of Laws of 2020, item 1325, as amended) (Pol.).


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    CONCLUSION

Prima facie, the Polish-German Pandemic Mutual Agreement appears rational because it
was created to simplify tax settlements, thus facilitating the functions of both taxpayers
and tax administrations (even if this intention may in some cases bring about the
opposite effect - as explained in Section 5). However, actions with benevolent intentions
are not always legal. The following proverb applies to the Polish-German Pandemic
Mutual Agreement: “The road to hell is paved with good intentions”. Many principles of
national and international laws have been trampled underfoot.
        Certainly, difficulties in the application of the Polish-German Tax Treaty have
arisen owing to the pandemic, but they are hardly problems that could be resolved by
the introduction of the legal fiction in the Polish-German Pandemic Mutual Agreement.
The mechanism contained in the O.E.C.D. Model Tax Convention was created in a
different time - when the employee was present at the place of work. So, the principle of
taxation of remuneration at the place of work was adopted. During the pandemic, the
link between the employee and the workplace, understood as the place held by the
employer, was broken, giving rise to problems concerning the application of tax treaties.
However, this problem can only be solved by amending the Polish-German Tax Treaty,
and not through a free interpretation of it.
        The problem lies in the fact that a rational solution has been “dressed up” in a legal
form, which is not appropriate for addressing the problem in question. Of course, one must
be aware that the application of a “correct” legal formula, that is, an amendment to the
Polish-German Tax Treaty limited to pandemic duration, would probably be both quite
difficult to agree during the pandemic and certainly take additional time. In brief, the
scope of the Polish-German Pandemic Mutual Agreement is not overly wide, but the extent
of its impact is questionable. Does it herald the end of a solution adopted for the taxation
of income from paid employment, one based on the link between the place where income
is taxed and the place where the work is performed and therefore where the employee is
a resident? The pandemic has clearly shown that, at present, this reasoning does not at
all correspond to economic reality. Of course, this question involves “another story”.




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                          224
