As a reminder: withholding tax (WHT) covers amounts paid to outside contractors in the form of dividends, interest, royalties, or fees for intangible services. The outside contractor (recipient of payments) is considered a taxpayer, while the company transferring the payment is an actual payer of the tax (as it operates within the Republic of Poland).
The withholding tax applies to legal entities, organizational units without legal personality, and every natural person managing business activity.
The first stage of law implementation has been completed on January 1st, 2019. The changes that entered into force at that time concerned, among others:
However, not all the provisions covered by the amendment became effective on January 1st, 2019. The Regulation of the Minister of Finance (Journal of Laws of 2018, item 2545), published on December 31st, 2018, introduced the exclusion or limitation of the application of Art. 26 sec. 2e of the Corporate Income Tax Act. This applies to the new withholding tax collection model for certain payments above 2 million PLN.
The entry into force of the regulations has already been postponed five times in total. Therefore, it should be remembered that the latest date, July 1st, 2021, may also prove to be postponed.
Provided that the current deadline holds: from July 1st, 2021, the rules for calculating withholding tax for payments that exceed PLN 2 million per year to a given contractor will change significantly. Taxpayers will have two ways to meet their tax obligations:
It is worth mentioning that the provisions on payments exceeding 2 million PLN per year do not apply to certain categories of payments, provided that Poland has a binding agreement on the avoidance of double taxation with the contractor’s country of residence. This applies to payments:
The Ministry of Finance is still working on a comprehensive amendment to the withholding tax regulations. We can expect the regulations to take their final shape in the second half of 2021.
Starting from January 1st, 2021, WHT-related official services have been centralized – Lublin Tax Office in Lublin (LUS) has become a nationwide specialized office responsible for withholding tax. Taxpayers and payers will be able to submit to LUS, inter alia, applications for an opinion on the exemption and/or overpayment in WHT. According to the Ministry of Finance, the concentration of tax services in one office will ensure efficient and uniform tax processing.