For many years, withholding tax (WHT) has remained one of the most high-risk areas of tax compliance for Polish companies making payments to related parties. One of the instruments allowing payers to avoid withholding tax at the statutory rate and the subsequent “pay & refund” procedure is the WH-OSC statement.
In practice, however, many payers overlook one critical aspect of this mechanism – the obligation to file a subsequent WH-OSC statement, the deadline for which falls at the end of January.
The essence of the WH-OSC statement
The WH-OSC statement is a mechanism provided for in the Polish CIT and PIT Acts which, by way of exception, allows the payer not to apply the pay & refund mechanism where:
- a Polish company makes so-called passive payments (dividends, interest, royalties) to a single related entity, and
- the total amount of such payments exceeds PLN 2 million in a given tax year.
By submitting the WH-OSC statement, the payer confirms that:
- it holds the required documentation (e.g. tax residency certificate, beneficial owner statements), and
- following appropriate verification, it has no knowledge of circumstances that would exclude the application of a WHT exemption or a reduced rate resulting from specific provisions or double tax treaties.
Initial WH-OSC statement
The so-called initial WH-OSC statement must be submitted no later than the end of the second month following the month in which the PLN 2 million threshold is exceeded for payments to a single taxpayer.
For example, if the threshold is exceeded in February, the deadline for submitting the initial WH-OSC statement is the end of April.
Submitting the statement on time allows the payer to continue making payments without withholding tax until the end of the tax year.
Subsequent WH-OSC statement
Crucially, submitting the initial statement does not exhaust the payer’s obligations.
If, after submitting the initial WH-OSC, the company:
- continued making passive payments to the same recipient, and
- did not withhold tax or applied a reduced WHT rate,
it is required to submit a subsequent WH-OSC statement.
The deadline is absolute: the last day of January following the relevant tax year (for entities whose tax year coincides with the calendar year).
Example:
A company submitted the initial WH-OSC in May 2025 and continued making payments during that year. It must submit the subsequent WH-OSC no later than 31 January 2026.
Why is the January deadline so important?
The deadlines for submitting both the initial and subsequent WH-OSC statements are:
- non-reinstatable, and
- not subject to extension.
Failure to submit the subsequent statement on time results in the loss of the protection afforded by the WH-OSC mechanism. In practice, this means the obligation to:
- pay withholding tax at the statutory rate together with interest, and
- only afterwards apply for a refund – without interest – under a separate procedure.
Management board liability and sanctions
The WH-OSC is not merely a formal declaration. It is submitted under criminal fiscal liability.
In cases of:
- making false statements or concealing the truth, or
- failure to properly verify the conditions for applying WHT preferences,
members of the management board may face:
- a fine of up to 720 daily rates (currently exceeding PLN 40 million), and
- the company may be subject to an additional CIT liability of 10% or 20% of the understated tax.
WH-OSC or an opinion on the application of preferences?
Although the WH-OSC is a fast and formally straightforward solution, it entails significant risks. An alternative is to obtain an opinion on the application of WHT preferences, which provides greater legal certainty but requires:
- a considerably longer waiting period (often 8–9 months), and
- advance planning of payment flows.
If a company fails to obtain the opinion before exceeding the PLN 2 million threshold, the safest solution is often to withhold the tax and subsequently apply for a refund.
Summary
The WH-OSC statement is an effective but high-risk tool in withholding tax compliance. Particular attention should be paid to the obligation to submit the subsequent WH-OSC statement, the deadline for which falls at the end of January. Missing this deadline may result in severe financial consequences for the company and personal liability for management.
In practice, the WH-OSC should form part of a consciously managed WHT process, rather than a one-off action taken “in passing” when paying a dividend or interest.
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