Withholding tax (WHT) is levied by Polish payers on certain income earned in Poland by foreign entities having their place of residence, registered office or so-called permanent establishment outside Poland.
The WHT is collected on the following income:
- Interest and royalties
- Advisory, accounting, legal services and similar services
- Other receivables indicated in Article 21(1) of the PDPOrU
As of 1 January 2019, the concepts of due diligence and beneficial owner were introduced into the PDOPrU. The correct application of the beneficial owner and due diligence clause is crucial in the settlement of withholding tax, including the application of exemptions, non collection of tax or payment of a reduced tax rate. Correct identification of the conduit company is a particularly complex process for circular capital flows between entities.
Moreover, determining the tax obligations indicated in the PDPOrU requires a thorough analysis of the following regulations:
- EU Directives
- Double taxation agreements
- MLI Convention
- OECD Model Convention on Taxes on Income and on Capital
- Rulings of administrative courts
- CJEU judgments
Settlement of the withholding tax is also connected with fulfilling the reporting obligations set out in the PDPOrU (information IFT-2/IFT-2R, CIT-10Z declaration)