Why?
One of the most important modifications that was implemented recently in terms of withholding tax (WHT) regulations is the introduction of a so-called pay-and-refund mechanism. It involves the requirement to collect a tax if the total amount of receivables paid to the same taxpayer on account of interest, licensing fees or dividends exceeds PLN 2 MM in a tax year, and such a payer does not hold a so-called preference opinion or the payer’s representatives have not submitted a statement on satisfying the prerequisites for the application of exemption or lower WHT rate, arising from a relevant double taxation treaty.
In addition, WHT payers have been obliged for some time now to exercise so-called due diligence when applying exemption or a reduced rate of this tax. In the absence of a clear definition of ‘due diligence’ in income tax regulations, exercising it comes with certain practical difficulties for WHT payers (i.e., entities paying certain receivables).
The current definition of a beneficial owner also comes with a number of doubts. The legislation in this regard oblige WHT payers to study the economic standing of a counterparty or shareholder, including the fact of actually running a business in the country of its establishment.
For whom?
For domestic entrepreneurs who are payers of such receivables as dividends, interest or licensing fees (and equivalent – e.g., fees for using certain asset types), paid to foreign entities, as well as foreign entrepreneurs who are tax payers, i.e., recipients of the aforementioned receivables.
How?
What we offer:
- Analysing the applicability of WHT exemptions and preferential rates based on applicable legislation and provisions of relevant double tax treaties;
- Supporting or representing payers or tax payers in the course of a procedure related to the so-called preference opinion, i.e., one allowing exemption from the pay-and-refund mechanism obligation.
- Supporting or representing payers or tax payers in the course of overpayment procedure related to a WHT return claim;
- WHT-related tax audit including:
– verification of current and planned payments to foreign entities in terms of the withholding tax obligation,
– verification of the identity and correct documentation related to the application of reduced rate/exemption from WHT.
- Support in developing documents required to exercise due diligence.
- Developing an internal procedure related to due diligence, in order to appropriately manage processes and obligations of a WHT payer (among others, correct application of reduced rates/exemptions from WHT, and collecting correct documentation), as well as effectively verify payments subject to WHT;
- Support in developing documents mitigating a risk of a dispute in relation to the application of reduced rate/exemption from WHT (defence file).
- Support in fulfilling registry obligations associated with WHT (e.g., IFT-2R, PIT-8AR returns);
- Training for employees in the field of obligations related to withholding tax.
