On January 1st, 2019 new regulations modifying previous withholding tax charging mechanism were implemented to Polish CIT and PIT Acts. New regulations foresee amendments to the way of verification by tax authorities of taxpayer’s right to benefit from preferencial tax treatment.

The regulations relate primarly to the obligation to excercise due duligence in order to apply preferential tax rate or right to refrain from tax collection foreseen by specific provisions or double taxation avoidance agreements as well as to the obligation to collect withholding tax at the full rate for the payments above 2 mln PLN a year made for the benefit of one taxpayer involving the right to claim tax refund.

Despite the fact that as a rule application of the regulations has been deferred until December 31st, 2019, the due diligence obligation must be excercised. The tax Acts do not implement a definition of what should be understood by due diligence, and it only mentions that while assessing the exercise of due diligence the nature and the scale of activity pursued by the remitter shall be taken account of.

Also, tax authorities issuing tax rulings are unable to provide a clear anwser and the procedure of issuing tax rulings itself is improper to assess evidences gathered by remitters.
Although the Ministry of Financehas published a project of commentary to the withholding tax provisions, the presented information raise concerns among experts who take the view that the Ministry expects too much from the remitters and tax authorities pass their obligation to control and verify tax settlements on tax remitters.

It should be stressed that the legislator foresees a range of penalties for failure of fulfilling the obligations including taxation at the maximum rate of 20 per cent.
Kancelaria Doradcy Podatkowego – Marcin Podżorski (Tax Advisory Office – Marcin Podzorski) offers support at every stage in fulfilling the obligations of remitters imposed by new provisions to witholding tax regulations as well as tax review of evidence gathered documenting present international transactions.