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Poland: New withholding tax rules pending enactment

Poland: New withholding tax rules pending enactment

Pending legislation in Poland would amend the individual (personal) income tax, corporate income tax, tax procedural rules, and other regulations. If enacted, the measures would be effective 1 January 2019.

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Among the provisions are stricter withholding tax rules that could adversely affect the cash flow of certain taxpayers. Other changes concern the definition of “beneficial ownership” and the extension of an anti-abuse clause. 

Withholding tax measures

New withholding tax rules would require a taxpayer with a total of “qualifying payments” exceeding PLN 2 million (approximately U.S. $530,000) in a tax year to collect and pay withholding tax at domestic tax rates—19% for dividends and 20% for interest, royalties, and certain types of intangible services (e.g., advisory and management fees). Withholding tax domestic participation exemptions and income tax treaty relief would be disregarded at this amount—that is, these mechanisms would apply only for amounts in excess of PLN 2 million.

After the amount of withheld tax is remitted, the taxpayer (and in some cases, the party remitting the tax) would be entitled to seek a refund of the withheld tax, but the refund procedures could take at least six months (hence, the cash-flow implications). To avoid this delay, two solutions could be considered:

  • Provide the tax authorities with the withholding tax remitter’s statement
  • Obtain a withholding tax clearance opinion (only for the withholding tax exemptions under the EU directive for interest and royalty and the EU parent-subsidiary directive)

 

Read a November 2018 report [PDF 369 KB] prepared by the KPMG member firm in Poland

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