10 December 2025

Taxpayer in withholding tax, part 1: general rules

Withholding tax – principles, collection, preferences

The term “lump sum withholding tax” (WHT) refers to a tax collected by a payer with its registered office, place of residence, or foreign permanent establishment in Poland on certain types of payments made to non-residents.

According to Articles 21 and 22 of the Corporate Income Tax Act, the following are subject to withholding tax:

At a 20% rate:

• interest receivables,
• receivables from copyrights, related rights, rights to use industrial equipment, including means of transport, commercial or scientific equipment, for information related to industrial, commercial, or scientific experience (know-how),
• fees for entertainment services.

At a 10% rate:

• payments for intangible services: consulting, accounting, market research, legal services, advertising, management and control services, data processing, employee recruitment and acquisition services, guarantees and sureties, and similar services,
• sea or air transport.

At a 19% rate:

• dividends and other income from participation in the profits of legal entities.

Tax collection, deadlines, and declarations

The deadline for tax collection and payment to the tax office is the 7th day of the month following the month in which the payment was made (e.g., for intangible services).

For tax collection and payment, the following documents must also be prepared:

• IFT-2R – information on the amount of revenue (income) earned by CIT taxpayers who do not have their registered office or management board in Poland. This information must be submitted by the end of the third month of the year following the tax year in which the tax liability arose.
• CIT-10Z – declaration of the amount of withholding tax (for legal entities) withheld by the payer on income (revenue) earned by non-residents (taxpayers who do not have their registered office or management board in Poland). This declaration must be submitted by the end of the first month of the year following the tax year in which the tax liability arose.

Both the IFT-2R and the CIT-10Z are submitted to the Lublin Tax Office in Lublin (this is the tax authority dedicated to withholding tax matters).

Withholding tax preferences

First, it should be noted that, in conjunction with the principles outlined in the Corporate Income Tax Act – i.e., regarding taxation and collection – the provisions of ratified double taxation treaties concluded by Poland with other countries must also be taken into account (this is particularly important, as individual treaties may introduce exemptions or reduced tax rates).

Regarding passive income (i.e., royalties, interest, and dividends), the legislator has introduced the possibility of benefiting from an exemption from these payments after meeting certain conditions – provided that the transaction takes place between related entities within the EU or EEA (in the case of dividends, these may also include transactions with a non-resident subject to taxation in the Swiss Confederation).

For this income, the preferential tax rate provided for in the relevant double taxation treaty may also be applied, provided that the taxpayer’s tax residence to whom the payments are made is documented with a residence certificate (issued by the relevant tax authority).

In turn, when it comes to intangible services, under double taxation treaties, they are classified as business profits. The rule is that receivables from business profits under a typical double taxation treaty are taxed in the other country (the country of residence of the entity receiving the receivables). Therefore, if tax residency is documented with a certificate of residence, one can benefit from a complete exemption from withholding tax on intangible services in Poland; upon payment, they will be taxed in the other country.

It should be emphasized that both in the case of applying the preferential rules provided for in double taxation treaties and in the case of statutory exemptions, the payer is obligated to exercise due diligence (in terms of withholding tax, this applies in particular to verifying the received documents against the actual state, verifying the recipient’s tax residence, and verifying the status of the beneficial owner).

Mandatory withholding tax and the P&R mechanism

In the case of passive income (i.e., interest, royalties, and dividends), an additional mechanism is provided – the pay and refund mechanism. It specifies the obligation to collect and pay withholding tax when the limit of PLN 2 million in a single tax year is exceeded by the payer. In such a situation, even if the conditions for statutory exemption or preferences provided for in double taxation treaties are met, the tax must be collected and paid to the tax office (the “pay” stage).

Then, after meeting the conditions for a specific preference or exemption, apply to the office for a tax refund (the “refund” stage).

It is also possible to waive tax collection if the limit is exceeded, in the following situations:

• an opinion on the application of withholding tax preferences has been obtained,
• a declaration by the payer confirming the possession of documents and meeting the conditions for waiving tax collection has been submitted.

Obtaining an opinion on the application of withholding tax preferences or submitting a declaration by the payer will allow for exemption from the pay-and-refund mechanism. This allows for a faster procedure, allowing for the waiver of tax collection and retention of the tax amount.