Fees for Technical Services Tax Rate Between India and Poland

Quick answer: The India-Poland DTAA does not have a stand-alone fees-for-technical-services article -- FTS is combined with royalties in Article 13, and taxed at the same 15% cap under Article 13(2), versus India's domestic rate of 20% under section 207(2) (Table, Sl. No. 2) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961). Article 13(4) defines FTS broadly as "payments of any kind... as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel" -- there is no "make available" limitation, so the definition is wider than treaties (such as India-USA or India-Netherlands) that restrict FTS to services that transfer technical knowledge or skill. The 15% rate stems from the 2013 Protocol, effective in India from 1 April 2015.

Key takeaways:

• FTS is combined with royalties in Article 13, not a separate article -- both share the 15% cap
• Article 13(4)'s definition of FTS has three limbs: managerial, technical, or consultancy services, including provision of personnel
• No "make available" test -- broader scope than treaties modelled on the US or Dutch approach
• Domestic rate without the treaty is 20% under section 207(2) of the Income-tax Act, 2025
• PE-connected FTS is taxed as business profits under Article 7, not at the 15% cap

FTS Tax Rate Between India and Poland

Fees for technical services (FTS) between India and Poland -- covering consulting, management, and technical-support fees -- are governed by Article 13 of the India-Poland DTAA, the same article that governs royalties. This combined structure, common in India's older treaties, means FTS carries the identical 15% cap that applies to royalties, set by the 2013 Amending Protocol (in force 1 June 2014; effective in India from 1 April 2015), rather than the separate (often higher or lower) rate some other treaties reserve for technical fees.

What distinguishes the India-Poland FTS provision is its breadth, not its rate. Article 13(4) defines FTS without the "make available" restriction found in several of India's other treaties -- there is no requirement that the service transfer technical knowledge, skill, or a process the Indian recipient can subsequently apply on its own. Any payment for managerial, technical, or consultancy services, including the deputation of technical or other personnel, falls within scope. Polish consulting firms, engineering advisers, and IT services companies serving Indian clients should assume their fees are FTS under this treaty unless clearly outside all three limbs. Our tax advisory team helps classify cross-border service fees correctly before contracts are signed.

See our India-Poland DTAA complete guide for the treaty's full provisions, and withholding tax rates: India to Poland for the combined rate table.

Treaty Rate vs Domestic Rate: Detailed Comparison

Domestic Rate (Without DTAA)

FTS paid by an Indian resident to a non-resident is taxed at 20% under section 207(2) (Table, Sl. No. 2) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961) -- doubled from 10% by the Finance Act 2023.

DTAA Rate (With Treaty)

Article 13(2) caps the source-State tax on FTS at 15% of the gross amount, on the same terms as royalties: "such royalties or fees for technical services may also be taxed in the Contracting State in which they arise... but if the beneficial owner... is a resident of the other Contracting State, the tax so charged shall not exceed 15 per cent of the gross amount."

Effective Tax Savings

On a technical-consultancy contract generating INR 80 lakh in annual fees, the treaty saves INR 4 lakh in Indian withholding tax (15% instead of 20%) -- a saving realised immediately at source, not merely as a credit claimed later in Poland.

Who Qualifies for the Reduced Rate

Beneficial Ownership Requirement

The Polish service provider must be the beneficial owner of the fee -- generally straightforward for a genuine services business, but relevant where fees are routed through an intermediary entity that itself does not perform the work.

Tax Residency

The provider must be resident in Poland under Article 4 -- incorporation or effective management for companies, or the permanent-home/vital-interests/habitual-abode/nationality cascade in Article 4(2) for individual consultants.

Anti-Abuse Rules: MLI PPT and Bilateral LOB (Article 28A)

As a Covered Tax Agreement under the Multilateral Instrument (MLI) for both countries, the treaty's FTS rate is subject to the MLI's Principal Purpose Test from 1 April 2020 in India, alongside the treaty's own bilateral Limitation of Benefits clause at Article 28A, which denies benefits to a non-individual resident, or to an arrangement or transaction, where obtaining the benefit was a main purpose. A Polish shell entity interposed between an Indian payer and the actual service-performing personnel (based elsewhere) is exposed under either test.

No Permanent Establishment or Fixed-Base Connection -- and the Service-PE Trap

Article 13(5) withdraws the 15% cap where the FTS is effectively connected with a permanent establishment (or fixed base) the Polish provider has in India, shifting taxation to Article 7 business profits instead. This interacts directly with Article 5(2A), a service PE clause inserted by the 2013 Protocol: "the furnishing of services, including consultancy services, by an enterprise... through its employees or other personnel... continue (for the same or a connected project) in the other Contracting State for a period or periods exceeding in the aggregate six months within any 12-month period" creates a PE in its own right. A Polish consultancy sending personnel to India for a single project lasting, or projects aggregating, more than six months in any 12-month window can therefore find its own fees pulled out of the 15% FTS cap and into PE-attributed business-profits taxation.

FTS-Specific Treaty Provisions Under Article 13

Article 13(1): Residence-State Taxation

Article 13(1) allows the recipient's State of residence to tax FTS in the first instance, alongside the source-State right discussed below.

Article 13(2): The 15% Source-State Cap

Paragraph 2 sets the shared 15% ceiling for both royalties and FTS -- there is no separate, lower or higher, FTS-specific rate anywhere in Article 13.

Article 13(4): Definition of Fees for Technical Services

"'Fees for technical services'... means payments of any kind, other than those mentioned in Articles 15 and 16, as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel." This three-limb definition (managerial / technical / consultancy) is genuinely broad: unlike the India-USA or India-Netherlands treaties, it contains no "make available" requirement -- a payment can be FTS even if the Indian recipient learns nothing transferable and simply consumes a one-off advisory output.

Article 13(6): Source Rule

FTS is deemed to arise where the payer is resident, or, if borne by a PE or fixed base of the payer, where that PE or fixed base is situated -- the same source rule that applies to royalties under the combined article.

Article 13(7): Arm's Length Adjustment

Where a special relationship inflates the fee above an arm's length amount, the 15% cap applies only to the arm's length portion; the excess is taxable under domestic law without treaty protection -- directly relevant to intercompany management-fee and cost-allocation arrangements.

Documentation Required to Claim the Reduced Rate

Tax Residency Certificate (TRC)

A Tax Residency Certificate from the Krajowa Administracja Skarbowa (Polish National Revenue Administration) for the relevant financial year, per section 159(8) of the Income-tax Act, 2025 (section 90(4) of the Income-tax Act, 1961).

Form 41 (formerly Form 10F)

Form 41, filed electronically, where the TRC lacks the prescribed particulars.

Self-Declaration and Service Agreement

A self-declaration of beneficial ownership and no-PE status, and a copy of the underlying service or consultancy agreement describing the scope of work -- useful evidence if the Indian tax authority later questions whether the payment is genuinely within Article 13(4) or is, for instance, a reimbursement of costs outside the treaty's FTS definition.

Withholding Procedure for Indian Payers

Section 393(2): TDS Obligation

Indian payers must deduct tax at source under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961) -- 15% with valid documentation, or 20% by default.

Forms 145 and 146 (formerly Forms 15CA and 15CB)

Form 145 filed online before remittance, and Form 146 from a Chartered Accountant for remittances exceeding INR 5 lakh.

Section 395(1): Lower Withholding Certificate

Where the actual liability is expected to be lower than the treaty rate produces, the Polish provider can apply under section 395(1) of the Income-tax Act, 2025 (section 197 of the Income-tax Act, 1961) for a certificate authorising a reduced or nil deduction rate.

Common Classification Disputes

Because Article 13(4) has no "make available" test, Indian tax authorities generally take a wide view of what counts as managerial, technical, or consultancy services under this treaty -- a position more favourable to source-State taxation than under India's US or Dutch treaties. The recurring classification question for Poland is instead whether a payment is FTS at all, or falls outside Article 13(4) entirely as (for example) a payment for independent personal services taxable under Article 15, or a reimbursement of actual costs with no service element. Because both royalties and FTS carry the identical 15% cap under this treaty, the classification dispute rarely changes the withholding rate itself -- its main practical consequence is instead for the source rule (Article 13(6)), the PE-connection analysis (Article 13(5) combined with the Article 5(2A) service-PE clause), and whether the payment is includible at all if it is genuine cost reimbursement.

Practical Examples and Calculations

Example 1: Management Consultancy Fee

A Warsaw-based consultancy advises an Indian retailer on supply-chain restructuring for a one-time fee of INR 50 lakh, with no personnel deputed to India beyond short scoping visits.

• Without DTAA: TDS at 20% = INR 10 lakh.
• With DTAA: TDS at 15% = INR 7.5 lakh, under Article 13(2)/(4), with no PE risk given the limited on-the-ground presence.

Example 2: Extended On-Site Technical Support Creating a Service PE

A Polish engineering firm deputes technicians to an Indian client's plant for a connected project running eight months within a 12-month period, earning INR 1.2 crore in fees.

• PE created: Because the aggregate period exceeds six months within any 12-month period, Article 5(2A) deems a service PE to exist.
• Consequence: Under Article 13(5), the fees connected with that PE are taxed as business profits under Article 7 (net-basis, 35% foreign-company rate) rather than at the 15% gross-basis cap -- a materially higher effective burden unless deductible costs are substantial.

Example 3: Combined Licence-and-Support Contract

An Indian manufacturer pays a Polish supplier INR 90 lakh under a single contract covering both a software licence (royalty) and ongoing technical support (FTS).

• Rate impact: Because both components fall under the same Article 13 with the same 15% cap, the blended withholding is 15% on the combined amount regardless of the licence/support split -- simplifying compliance compared with treaties that tax the two components differently.

Frequently Asked Questions

Does the India-Poland DTAA have a separate article for fees for technical services?

No. Fees for technical services are combined with royalties in Article 13 of the India-Poland DTAA, and both share the same 15% cap under Article 13(2). There is no stand-alone FTS article, and no separate FTS rate distinct from royalties, unlike some of India's other tax treaties which treat the two income types differently.

Is there a "make available" requirement for FTS under this treaty?

No. Article 13(4) defines FTS as any payment for managerial, technical, or consultancy services, including provision of personnel -- with no requirement that the service transfer technical knowledge or skill the recipient can use independently. This is broader than treaties like India-USA or India-Netherlands.

What is the FTS withholding tax rate under the India-Poland DTAA?

The India-Poland DTAA caps fees for technical services at 15% of the gross amount under Article 13(2), the same rate that applies to royalties under the same article. This compares to India's domestic rate of 20% under section 207(2) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961), which doubled from 10% under the Finance Act 2023.

Can extended on-site service work by a Polish provider create a permanent establishment in India?

Yes. Article 5(2A), added by the 2013 Protocol, deems a service PE where an enterprise furnishes services (including consultancy) through employees or personnel for the same or a connected project, aggregating more than six months in any 12-month period. Fees connected with that PE are then taxed as business profits under Article 7, not at the 15% FTS cap.

What documentation does a Polish service provider need to claim the 15% rate?

A Tax Residency Certificate from the Krajowa Administracja Skarbowa, electronically filed Form 41, a self-declaration of beneficial ownership and no-PE status, and a copy of the underlying service agreement. The Indian payer must also file Form 145, and Form 146 for remittances exceeding INR 5 lakh.

Does the MLI affect FTS taxation under the India-Poland DTAA?

The MLI's Principal Purpose Test applies to India's withholding taxes from 1 April 2020, since both countries have listed this treaty as a Covered Tax Agreement. It works alongside the treaty's own bilateral Limitation of Benefits clause under Article 28A, giving Indian authorities two grounds to deny the 15% rate to arrangements whose main purpose was obtaining that benefit.