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2019 – changes in the withholding taxes in Poland

The tax law in Poland regarding withholding tax will be amended from January 2019 . The planned changes have been announced in the draft amendment to tax acts.

First major change is a set-up of the transaction limits, which will regulate the obligation regarding withholding tax. If the total amount of payments to the same taxpayer in a given tax year exceeds PLN 2 million. Exceeding this threshold will result in the payer obligation to calculate, collect and pay the withholding tax using the rates set out in the national law according to the provisions of the CIT Act or the PIT Act. Exemptions indicated in the Polish Income Tax Act or the provisions of double taxation treaties generally will not apply – except for a few proposed simplifications.

A company, exceeding the threshold, that wants to apply a preferential rate or an exemption will have to make a statement that:
1) it possesses the required documents- a certificate of residence, but in some cases also other documents, e.g. confirming that both taxpayers are closely related to each other;
2) after verifying his contractor the company does not know anything that would justify the assumption that there are circumstances that exclude the possibility of applying a tax rate, exemption or not collecting a tax.

If the statement will appear not true tax administration will impose an additional sanction 10% tax base from the payments.

In the case of tax collection by the payer, the taxpayer will be able to apply for a tax refund to the tax authority. The payer will be also entitled to apply for a refund of the tax, if he has paid the tax from his own funds and has borne the economic burden of the tax. It is planned the refund will be made within 6 months.

Another important change is that tax administration will start accepting copies of residency certificates when a company is purchasing intangible services from abroad (e.g. advertising). However, a copy will be allowed only if the company will not breach annually the threshold of 10000 PLN for these payments, and information from a copy of the document will not raise legitimate doubts of the tax office.