Financial statements and dividend payment in the context of withholding tax

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24 March 2021 

by Tomasz Kośmider

The regulation of the Minister of Finance which excludes the mandatory withholding tax on payments exceeding 2,000,000 million zloty in one year to one entity is in force until 30 June 2021.

Due care obligation

Please remember that the obligation to exercise due care has not been suspended and companies still have to fulfil it. Failure to exercise due care triggers adverse tax implications on the withholding agent, i.e. tax arrears and interest as well as additional tax liability under the Tax Act.

Special cases

Due care is particularly important during the approval of financial statements and deciding on profit allocation. If you want to pay a dividend to a Polish non-resident and enjoy the preferential tax rate under the respective tax treaty or a tax exemption under Directive 2011/96/EU, you need to collect certain documentation.

Moreover, the Polish payer is each time obliged to check the documents for accuracy and truthfulness. If tax authorities detect any irregularities, e.g. missing documents, the burden of penalty rests on the withholding agent (i.e. the entity which pays the profit).