In case of dividends, the new provisions apply both to Polish and foreign payment recipients.
If the payments do not exceed PLN 2 million annually, the withholding agent will have to meet additional requirements to apply a reduced withholding tax rate. In addition, the regulations introduce new exemptions. For example, shareholders will not be obliged to collect WHT on interest/discount on corporate bonds (provided that specific conditions are met).
At the same time, we would like to draw attention to the Ordinance on the exclusion or limitation of the new mechanism of charging withholding tax untill 30.06.2020. The extended deadlines apply only to payments exceeding PLN 2 million and do not exclude the obligation to act with due diligence.
Under the mechanism, withholding agents are allowed not to collect withholding tax on payments smaller than PLN 2 million annually, provided that they submit the following documents:
The withholding agent has to undergo a certification process whose criteria have not been specified by the legislator yet.
The certification process will require in particular:
The taxpayer/withholding agent has the right to apply for a refund of the withholding tax. A new digital procedure will be developed in this respect – the details have not been revealed yet.
A taxpayer or withholding agent who has incurred the economic cost of the withholding tax and, at the same time, meets the conditions specified in the CIT Act, may apply to the tax authority for an opinion on applying a withholding tax collection exemption (“Opinion”). The opinion is issued within 6 months from the date of receiving the application by the tax authority and applies for 36 consecutive months. The fee payable on an application for an opinion amounts to PLN 2,000.
The application may be rejected in certain specific cases (e.g. if tax avoidance provisions apply)