Withholding tax payers are tax non-residents, therefore Polish companies act as the payer of the respective tax and have to control the amount of payments made to a foreign contractor.
From July 2019, according to the new tax obligations, the payers (Polish companies) will be required to collect the withholding tax in full amount (from the amount exceeding PLN 2 million) at rates 20% or 19%. In that case, the taxpayer (foreign entity) will be able to apply for a tax return.
Examples of transactions covered by new regulations:
- dividend payment;
- cross-border interest payment;
- license fees;
- cross-border low added value services (management fee, administration fee etc.);
- cross-border royalties;
- interest on loans or fees for intangible services of advisory, accounting, advertising, etc., which a foreign company receives from a Polish entity.
To apply exemptions or reduced rates, the declaration of the whole management board will be required, confirming the execution of a detailed verification of the contractor’s status.
To get more information or advisory services on the matter above, please contact our Tax Advisory Department.