Poland: Significant withholding tax changes ahead beginning with 2019

According to a draft bill currently passing through the Polish Parliament, Polish companies may be obliged from 2019 onwards to deduct full withholding tax (WHT) from remunerations paid for intangible services, dividends, royalties and interest paid to non-residents.

Planned changes in the legislation.

Polish companies making payments to non-residents shall not be allowed to apply exemptions or reduced tax rates provided for in double tax treaties or local regulations implementing EU Directives. This means that remunerations for intangible services, dividends, royalties and interest may be initially taxed at a 19%/20% withholding tax rate, while an exemption / reduced rate may only subsequently be applied within a refund procedure (that may last even longer than six months). The new scheme shall apply to exceeding PLN 2 Mio (approx. EUR 466,000) in a tax year per recipient.

An application of an exemption / reduced rate by the paying company may be, however, possible if:

  • a that all relevant conditions for an exemption / reduced rate are fulfilled is submitted to the tax authorities (statement made under penal-fiscal liability of the person submitting such a statement)
  • an advance tax opinion is obtained – applicable only to EU Directives’ based exemptions

Expected impact.

The new regulations would have a negative cash flow impact and entail an additional significant administrative burden (advance tax opinions, application for refund).

Next steps.

Detailed analysis of cash-flows between potentially concerned Polish companies and non-residents from the perspective of the new WHT regulations is recommended. Based on the results of this analysis – relevant statements / advance tax opinion applications should be submitted / obtained and WHT refunds will have applied in due time.

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Barbara Behrendt-Krüglstein

Barbara Behrendt-Krüglstein

Manager | Deloitte Tax Telefon: +43 1 537 00 7112 Mail: bbehrendt-krueglstein@deloitte.at

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