Draft decrees again delay the effective date of application of withholding tax rules in Poland.
The draft decrees apply with respect to corporate income tax and individual (personal) income tax. For corporate income taxpayers, the draft decree delays until 30 June 2020 the effective date for implementation of a withholding tax collection mechanism. The effective date had previously been extended to 1 January 2020. Read TaxNewsFlash
For individual taxpayers, the effective date also has been extended to 30 June 2020 (from 1 January 2020).
The new withholding tax rules generally provide that those in Poland paying dividends, interest or royalties or making payments for certain intangible services to foreign persons or entities must withhold tax (at a rate of 20% or 19%). The rules provide a refund mechanism for use by foreign recipients of such payments.
The delayed effective date applies only to the mechanism of collection of withholding tax. Other measures—such as requirements for due diligence in verifying the application of an exemption or a preferential withholding tax rate—remain in place.
According to information, the delayed effective dates reflect a plan by the Ministry of Finance to amend the regulations regarding withholding tax.
In addition to the postponement of the effective date for the new withholding tax rules, other items in the draft decrees concern payments of interest and discount on bonds offered by the State Treasury and Bank Gospodarstwa Krajowego (BGK). In general, such payments were not subject to a tax levy if offered on the foreign markets. As of 1 January 2020, this exclusion will apply also to bonds offered on the domestic market, without a time limit. The Ministry of Finance justified this treatment in an attempt to diversify the base of purchasers of treasury bonds and to improve the competitiveness of BGK bonds in comparison to the bonds offered by other issuers.
Read a December 2019 report [PDF 277 KB] prepared by the KPMG member firm in Poland
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