Withholding tax

Changes in CIT provisions regarding withholding tax. Tax collected by tax remitter. Tax reclaim applications. DTT analysis.

Changes in withholding tax regulations. WHT reclaims. CJEU.

WHT for foreign investors in Poland

WHT reclaim opportunities for foreign investors in Poland - KPMG Poland’s experience

Non-residents who obtain revenues from Polish residents, in particular in the form of dividends, interest and royalties, may receive their payments decreased by withholding tax (WHT) collected by the tax remitters. Frequently tax remitters collect WHT, even though it is not due or is due at a lower rate considering the rules laid down in EU law or respective double tax treaties (DTT). The analysis of the payments made to non-residents is particularly important considering the revolutionary amendments to the Polish WHT regime introduced as of 1 January 2019. These changes made huge impact on the manner of withholding tax and verification of the right to the preferential taxation.

In order to manage such situations, the International Corporate Tax Team (ICT Team) offers its clients the following services:

analysis of the applicability of tax exemptions for foreign investment and pension funds, in particular in light of the CJEU jurisprudence (so-called “Aberdeen / Fokus Bank” claims);
recognition of tax-deductible costs associated with interest/royalties payments obtained by foreign recipients (on net basis – so-called “Net taxation” claims);
analysis of cross-border payments in the light of the Polish WHT rules and related obligations of the tax remitter,
opinions concerning status of the beneficial owner of the cross-border payments, including assessment of meeting the condition of conducting the genuine business activity by the payment recipients (i.e. substance analysis);
analysis of the applicability of the tax exemption or preferential tax rate stemming from the domestic tax provisions or relevant DTT;
preparation of the relevant documentation required to benefit from the tax exemption or the preferential tax rate stemming from the domestic tax provisions or the respective DTT, including application for WHT clearance opinions and drafts of WHT statements and declarations;
preparation of the internal procedures aiming at ensuring by the tax remitter the required standard of ‘due care’ while applying the respective WHT preferences or exemptions;
identification of WHT reclaim possibilities stemming from incompatibility of the Polish law with EU regulations, incorrect application of DTT provisions or lack of respective documents necessary to apply tax exemption or preferential tax rates;
obtaining WHT refunds along with interest due under the Polish law;
submission of the reclaims and representation of taxpayers in front of tax authorities (administrative proceedings) and courts (court litigation);
filing tax ruling applications in respect of possibility to apply tax exemptions / rate reductions stemming from domestic or DTT provisions.