After several deferrals, Poland has confirmed that the withholding tax requirements first introduced as part of the 2019 tax reform will be implemented from 1 January 2022, with some revisions. The revised implementation of the requirements is provided for as part of the Act amending the Personal Income Tax Act, the Corporate Income Tax Act, and certain other acts, which as previously reported was signed into law on 16 November 2021 and contains the "Polish Deal" reform measures.
The withholding requirements generally provide that reduced withholding tax rates or exemptions for payments to non-residents, such as under a tax treaty, may only be applied directly if certain conditions are met. Otherwise, taxpayers that are eligible for a reduced rate or exemption are subject to standard domestic rates and must apply for a refund. In cases where the additional tax is incurred by the Polish payer, such as payment on a grossed-up basis, the Polish payer can apply for a refund.
As revised, the requirement to withhold tax at domestic rates applies for dividend, interest, and royalty payments made to related non-resident entities, with the domestic rate applied on payments exceeding PLN 2 million per year to a single related non-resident. Payments for certain intangible services are no longer within scope of the requirements as revised.
In order to apply a rate reduction or exemption at source, the revised requirements still include that a signed statement (declaration) regarding qualification for a reduction/exemption may be submitted, with the potential for increased withholding tax fees of 10% or 30% if incorrect information is submitted. As compared to the original requirements, the statement requirements have been relaxed to provide for representative signing instead of the requirement for all board members to sign.
Alternatively, an advance opinion (ruling) may be obtained in order to apply a rate reduction/exemption at source. Changes are also made regarding the advance opinion option as compared to the original requirements, including that advance opinions can be obtained in respect of rate reductions/exemptions for payments under a tax treaty instead of being limited to payments to residents of EU/EEA Member States.