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Dividends, interest, royalties: Crucial changes to compliance provisions

  • Poland
  • Tax planning and consultancy

01-05-2019

The new rules provide that on disbursements of over PLN 2 million, tax remitters are obliged to collect withholding tax, regardless of connections or favourable regulations under double tax treaties. The provisions provide for two ways of not collecting tax above the statutory limit:

  • The tax remitter has the option of submitting a statement that meets the statutory requirements.
  • The tax remitter or taxpayer may apply for an opinion on application of an exemption.

A regulation of the Minister of Finance introduces a partial limitation/exclusion of application of the new rules.


New compliance provisions – WHT on disbursements over PLN 2M

In general, if the total amount of disbursements, in a given tax year applicable to the party making the disbursements, exceeds PLN 2 million to the same taxpayer, then legal persons, organizational units without legal personality, and natural persons who are entrepreneurs must, as tax remitters, collect, lump-sum income tax on the disbursements on the date the disbursement is made, at the rate of tax set forth in Art. 21(1) (among other things, interest and royalties) or Art. 22(1) (dividends, taking into account deductions) of the Corporate Income Tax Act on the surplus over PLN 2 million, without the possibility of non-collection of the tax under the relevant double tax treaty, as well as without taking into account the exemptions or rates determined under special provisions or a double tax treaty. If the amount of disbursements exceeding the above threshold includes due amounts on which no tax has been collected (such as amounts due connected with the activity of a permanent establishment in Poland), the remitter must notify the tax office of the amount and type of due amounts disbursed to the indicated taxpayer.

Tax remitter’s statement

The above rule excluding the possibility of non-collection of WHT, exemptions or application of favourable rates shall not apply if the remitter made a statement that it holds the relevant documents and after proper verification does not have knowledge against application of the favourable regime. As a rule the statement is valid until the end of the second month following the month in which the statement was made.

Opinion on applying exemption

A taxpayer or tax remitter may submit a motion for an opinion on application by the tax remitter of the exemption from collection of lump-sum income tax on the due amounts disbursed to the taxpayer, referred to in Art. 21(1)(1) or Art. 22(1) of the Corporate Income Tax Act. The opinion shall be issued without undue delay, but no later than 6 months from receipt of the application by the tax authority. The administrative fee on the application is PLN 2,000. As a rule, the opinion on applying the exemption is binding for 36 months following issuance, unless the taxpayer has ceased to fulfil the conditions.

Refund of tax on disbursed receivables

Upon application of a taxpayer or tax remitter, the tax authority shall refund the tax collected pursuant to the new rules described above, if the motion is properly documented and the verification is positive. The amount of refundable tax shall be refunded without undue delay but no later than 6 months from receipt of the application by the tax authority.

Minister of Finance’s regulation

On the basis of a regulation of the Minister of Finance, the application of these new rules is excluded for some payments, some exclusions are limited in time (until 30 June 2019), and for certain payments the application of new rules is limited (in 2019).

 

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