January 30, 2019
From Poland: New Polish Withholding Tax Collection Mechanism May Impact Cash Flow
Source: Andersen Tax & Legal in Poland, a member firm of Andersen Global
Does your client receive dividends, interest, royalties or fees for intangible services from Poland? If so, your client’s cash flow may be affected by a new regime of the withholding tax collection (pay and refund) with effect as from July 1, 2019.
Under the new regime, if the total payments of dividends, interest, royalties and fees for intangible services made to a given non-resident exceeds PLN two million p.a. (approximately EUR 465,000), the Polish entity making the payment is obliged to collect and to remit to the tax office the withholding tax at the rate provided for in Polish tax law (as a rule, 19% for dividends and 20% for other payments), irrespective of the exemptions, exclusions or lower withholding tax rates resulting from the EU directives or double tax treaties. The tax is to be collected on the excess over PLN two million. Next, a non-resident being the beneficial owner of such payments or a Polish withholding agent may claim the refund of overpaid tax. The refund is granted within six months subject to a detailed verification procedure.
Certain steps may be taken by a non-resident and by a Polish withholding agent to avoid the obligatory collection of the withholding tax, e.g. they may apply for a special ruling or collect the relevant documents.
If you would like additional information, please contact Monika Poteraj or Katarzyna Dzik at Andersen Tax & Legal in Warsaw.