New withholding tax (WHT) procedures in Poland - 2019

The application of new WHT rules was divided into 2 steps.

From 1st January 2019 till 30th June 2019 WHT remitters, irrespective of a payment amount, in order to apply a reduced WHT rate, exemption or not to withhold WHT, are obliged to conduct due diligence on whether conditions to apply an above WHT treatment are satisfied. Furthermore, in order to apply a WHT exemption with respect to interest and royalties (and in a case of particular double tax treaties in order to apply a reduced WHT rate or not to withhold WHT) WHT remitters must obey the amended definition of a beneficial owner of payments, including the condition of genuine business activity run by the supplier.

If however payments made to a particular supplier (sum of payments subject to WHT), exceed PLN 2 million (approx. EUR 0.5 million) annually and there is no double tax treaty in force between Poland and supplier’s state of residence, which would contain both an information exchange clause and rules for taxation of dividends/interest/royalties (e.g. BVI, Guernsey), a remitter will be obliged to withhold WHT in a standard rate.

From 1st July 2019, in a case of all payments subject to WHT, made to a particular supplier, which exceed PLN 2 million (approx. EUR 0,5 million) annually (and which are calculated starting from 1st January 2019, taking into account the explanation to the draft laws), remitters will be obliged as a rule to withhold WHT in a standard rate. A taxpayer (or a remitter, if economically incurred the WHT burden) may apply for a WHT refund. Alternatively, a remitter will be allowed to apply reduced WHT rate, exemption or not to withhold WHT, on additional condition of submitting a very special statement or if a ruling on WHT exemption was issued by Polish tax authorities.

Irrespective of a payment amount, amended definition of a beneficial owner of payments and due diligence requirements will be still binding.

Till 31st December 2019 the PLN 2 million threshold will be calculated separately with respect to payments regarding account and omni account securities and separately to other payments. From 1st January 2020 one PLN 2 million threshold will be binding for all kinds of payments (summed for each supplier).

The above mentioned deadlines will be binding irrespective of a tax year of a remitter or a taxpayer.

WHT duties regarding payments exceeding PLN 2 million annually will not be binding with respect to some listed kinds of payments, e.g. to international organizations, for the use of transport vehicles, industrial or commercial device, on condition that there is a double tax treaty in force between Poland and supplier’s state of residency, which contains both an information exchange clause and rules for taxation of dividends/interest/royalties.

Due to the fact that entry into force dates are set differently for particular WHT rules, the situation of each remitter should be analyzed individually.