New WHT regime
Currently, payments for interest, royalties, dividends and certain services (e.g. advertising, management etc.) are subject in Poland to WHT exemptions or lower treaty-based rates.
Under the new measures, the basic rule assumes collection of 19% or 20% on such payments by the Polish tax remitter for any excess above PLN 2 m (per recipient per year), transferred to the tax office, while foreign recipients of the payment will be allowed to request a WHT refund. The WHT collection will be automatic, and irrespective of the existence of a double tax treaty or EU Directives.
There are two possible ways for the Polish remitter to apply a WHT exemption or lower tax rate for such payments; however, these involve extensive documentation and require significant analysis before implementation.
For corporate tax payers application of the new regime for payments exceeding PLN 2 m per year per recipient is currently suspended until 31 December 2019 (for certain specific payments suspension is indefinite). However new stricter criteria for determining the beneficial owner and tax remitter’s due diligence are applicable as of 1 January 2019.
TAX ALERT: WHT “Pay and refund” mechanism suspended till 31 December 2019 and WHT draft clarifications published
Limitation of the application of the new withholding tax regulations | Decree of the Ministry of Finance
Take a closer look on the WHT changes
The new rules cover certain payments which may be subject to WHT in Poland, namely interest, royalties (e.g. for trademarks, know-how, fees for using certain equipment / machinery), dividends and payments for certain services, such as advisory, entertainment, advertising or management.
Qualified payments are subject to two regimes depending on the value of the payment:
If the tax remitter wishes to apply either EU Directive based exemptions, or the given double tax treaty, he needs to provide a statement in which he will certify that:
The statement is associated with personal sanctions for Board members stipulated under the Polish Fiscal Penal Code, and will be valid for approximately two to three months.
The application of automatic collection of WHT for payments exceeding PLN 2 m per year per recipient is currently suspended until 30 June 2019 but for certain specific payments suspension is indefinite. However new stricter criteria for determination of the beneficial owner and tax remitter’s due diligence are applicable as of 1 January 2019. For more details please click here
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