Poland: General ruling on qualification for dividend withholding tax exemption
The ruling provides a taxpayer-favorable interpretation of existing regulations
The Minister of Finance issued general ruling no. DD9.8202.1.2024 (dated November 15, 2024, and published November 20, 2024) regarding the condition under existing regulations, for qualification for the withholding tax exemption on dividends paid by Polish companies in Article 22(4) of the Corporate Income Tax Act, that the recipient not benefit from exemption on its total income in an EU (EEA) State, to mean that the recipient must be subject to worldwide income taxation in Poland or in any other EU or EEA country as a tax resident of Poland or any such country. This condition is fulfilled even if a dividend is exempt in the hands of an EU or EEA recipient based on the tax provisions implementing the Parent-Subsidiary Directive (PSD).
Furthermore, in accordance with the general ruling, even if profits are transferred in a chain of entities such that the dividend is not taxed at least once within the EU or EEA (e.g., when the ultimate beneficial owner is not a tax resident of the EU or EEA) or the recipient does not pay tax on the dividend in the EU or EEA because of their individual circumstances (e.g., utilizing tax losses or earning revenues solely from dividends), the foreign recipient still may be treated as not benefiting from exemption on its income in the EU or EEA. However, such circumstances may be subject to challenge under Article 22c of the CIT Act (i.e., specific anti-avoidance clause in the local PSD rules).
The general ruling is not considered a source of law, but it will provide protective guidance for taxpayers and tax remitters who apply for an individual tax ruling.
Read a November 2024 report prepared by the KPMG member firm in Poland