Withholding tax is imposed on many passive payments transferred
out of Poland to foreign jurisdictions. A few years ago Poland adopted a mixed system of withholding tax collection, which means that under certain circumstances Polish tax agents are obliged to collect withholding tax at source. In case tax agents want to apply an immediate relief-at-source, then additional instruments need to be implemented. Learn with us how the withholding system works in Poland.

General features

  • is imposed on passive payments and some intangible services
  • In most cases, it refers to consultancy or advisory-type services, as well as transfer of royalties, interests, dividends
  • basic rates of withholding tax are 19% for dividends, and 20% for interests and intangible services (applicable in case no further treaty or directive may be used to reduce them)
  • Poland has concluded around 90 Double Tax Treaties, implemented solutions
    from Interest Royalties and Parent-Subsidiary Directive, in many cases
    notified the OECD Multilateral Convention (MLI)
  • there are two basic withholding tax collection regimes. Relief-at-source regime means that after fulfilling certain requirements, one is allowed to apply for reduced rates or exemptions at payment. The collect and refund regime means that one needs to first collect the tax and later apply for its refund. The Polish system is a mixed one. Up to PLN 2 million thresholds it works like a relief-at-source regime, and after the threshold is exceeded, it works like a collect and refund regime.
  • collection of withholding tax is made directly at the payment of the income to the income recipient, the tax is then paid by the tax agent to the Polish tax office on due dates
  • there are some related filings required when settling the tax in Poland

Learn more with our 15-minute synthetic video

Managing WHT function

How to manage the Polish withholding tax in your organisation? We will suggest a few steps.

1. Determine types of transactions subject to or potentially subject to tax. Analyse the related line of interpretation, and list the titles subject to WHT

2. Collect necessary documents and information (certificate of tax residency, beneficial owner statements, documents to defense file confirming substance and beneficial owner status)

3. Choose the proper tax instrument. For repetitive transactions or transactions
exceeding the PLN 2 million threshold, you may consider applying tax agent statements, withholding tax opinions, or refund applications

4. Implement the settlement and filing process

5. Verify and control the existing processes, including at such essential moments as the turn of the tax year, changes of the tax law, identification of new withholding tax titles, and change of the interpretational line.

Complicated? See how we can help:

– analysis of records, advising on the current interpretational line

– verification of certificates of tax residency, drafting templates of documents, co-drafting of procedures

– assistance by choosing the matching tax instrument (drafting withholding tax statements, applying for opinions, tax refunds, and tax rulings)

– composing or verifying calculations, running settlements (compliance), performing filings

– withholding tax reviews, trainings and updates.

-we advise in special cases arising in economic reality