The National Revenue Administration (pol. Krajowa Administracja Skarbowa, KAS) targets precisely selected areas, increasingly within transfer pricing (TP) and withholding tax (WHT). In this article, I will look into current tax control trends that not only taxpayers should have in mind.

Have a question or need support?

Contact us

TP within a constant focus of attention

Transfer pricing consistently remains a focus of the National Revenue Administration, as evidenced by the ongoing communications on the outcomes of various settlements’ audits which amounted to significant sums. KAS is scrutinising transactions with related parties ever more closely, actively counteracting aggressive tax planning. As a result, the authorities are challenging both non‑arm’s‑length terms and overstated costs, which at times translates into significant tax top‑ups and return corrections.

The changing image of tax administration – specialisation and precision

Importantly, KAS is increasing the selectivity and specialisation of its actions. Particular attention is paid to VAT and CIT of course, and both analytical and control activities in these areas are supported by various and growing tools (most notably the various data systems as STIR, JPK or recently KSeF). Specialised KAS units are also being established, such as Competence Centres for Settlements (pol. Centra Kompetencyjne Rozliczeń, CKR) – focused on specific areas.

At the same time, KAS is pursuing functional specialisation. For example, within WHT matters, pay & refund cases and opinions are handled by the Lublin Tax Office (pol. Lubelski Urząd Skarbowy), whereas the verification of validity of applied exemptions and preferences is carried out by the Heads of Tax and Customs Offices.

The many challenges before WHT remitters

Most often it is taxpayers who have to face audits of their settlements. However, in case of WHT matters, the remitters are responsible for collecting and remitting the tax to a proper tax office, and these actions are subject to increasingly intensive verification. Case selection for controls is based on complex analytics, which is a fact all remitters should keep in mind. KAS’ activities in this respect are geared towards international capital groups, where outbound payments are structured and recurring.

WHT regulations have evolved substantially, and applying exemptions or reduced rates no longer consists merely of obtaining a statement from the recipient and a tax residency certificate. Today, withholding remitters must exercise due diligence, assessing not only technical and formal requirements, but also the substantive conditions of a chosen preference. These obligations do not derive solely from statutes, but their scope and interpretation are shaped by dynamic case law and official publications of the Ministry of Finance (e.g., Tax Guidelines of 3rd July 2025, commented on by CRIDO experts in an article “WHT Guidelines Released by Polish Ministry of Finance – A Long-Awaited Document That Raises New Questions”).

At the forefront of detailed WHT verification is the beneficial owner (BO) test, under which the payment’s recipient must receive it for their own benefit, without a legal or factual obligation to pass it on, and (if the payment is related to their business) must conduct genuine economic activity in the state of residence, adequate to its profile. These requirements derive primarily from OECD guidelines and CJEU case law, whose familiarity is gaining increasing importance.

Within the European Union, proper fulfilment of WHT remitter’s obligations depends greatly on specific EU directives, whose interpretation has a significant impact on the scope of these obligations. This interpretation is shaped mainly by CJEU case law, and KAS frequently invokes the concepts expressed therein (e.g., the so‑called “Danish cases”, i.e. CJEU judgment of 26 February 2019 in joint cases C-115/16, C-118/16, C-119/16 and C-299/16). If however the applied preference is based on a double taxation treaty (DTT), information on the remitter’s obligations is centred around the OECD Model Tax Convention. Many examples from national case law show that the (seemingly straightforward) text of a specific DTT can have broader implications, that are not easy to interpret from the treaty alone.

Moreover, additional burdens for WHT remitters come from procedural rules. A major change in recent years was introducing the pay & refund procedure, under which – after exceeding a threshold of PLN 2 million in payments to a single recipient – the remitter must first withhold tax at statutory rate and only thereafter apply for a refund (provided the conditions for the preference are met). Alternatively, remitters may choose not to withhold and file the appropriate statement (on an official WH‑OSC electronic form), or obtain an official opinion on the preference application. Nevertheless, in both cases WHT remitters must exercise due diligence and be mindful of the broad range of their duties.

The extensive consequences of disputed settlements

Challenging WHT settlements entails a wide range of consequences. This situation involves mainly payment of the outstanding tax (with due interest), the risk of an additional tax liability, or – on a personal level – a penal fiscal liability. Regarding payments between related parties, disputing the applied WHT rate may also result in challenging the transfer‑pricing arrangements. For example, if the authority establishes that payments were made within an artificial structure (devoid of economic substance) or involved an intermediary entity, it may lead to a parallel challenging of terms of transactions between related parties. This, in turn, has further consequences, such as an income uplift (additional assessment) or a re‑allocation of functions and risks. Ultimately, this event necessitates corrections of documentation and benchmark studies.

Overall, KAS practice demonstrates that payment streams between related entities are thoroughly analysed, and that WHT and TP matters are closely interconnected.

Summary

KAS activities have long been focused on transfer pricing, which continues to attract attention. Recently, however, a clear trend has emerged of extending control pressure to the WHT area. Both CIT taxpayers and WHT remitters must therefore remain vigilant. For related‑party structures, every WHT choice must be consistent with transfer‑pricing policy. In the current legal environment, special care should be taken in developing tax procedures – many risks can be mitigated through ongoing cooperation with a tax advisor.