Withholding tax (WHT) in Poland: WH-OSC statements should not be filed too early

Withholding tax (WHT) remains one of the most sensitive areas of tax compliance in cross-border transactions under Polish tax law. Particular attention is required when applying the pay and refund mechanism, which – once a statutory payment threshold is exceeded – generally obliges the payer to withhold tax at the domestic rate and only subsequently apply for a refund.

One of the instruments that allows payers to avoid the pay and refund mechanism is the WH-OSC statement. By submitting it, the payer confirms, among other things, that:

• all documentation required to apply a WHT exemption or reduced rate is in place, and
• following appropriate verification, the payer is not aware of any circumstances that would exclude the application of WHT preferences.

However, in the Polish regulatory environment, not only the content of the WH-OSC statement matters, but also the timing of its submission. This position is consistently reflected in tax rulings issued by the Head of the National Revenue Administration (Krajowa Administracja Skarbowa – KAS). In practice, WH-OSC statements are often perceived as a faster and less formal alternative to obtaining an official clearance opinion on the application of WHT preferences. This does not mean, however, that WH-OSC is a simple or low-risk solution.

Polish WHT regulations provide for strict statutory deadlines for submitting WH-OSC statements. These deadlines cannot, as a rule, be restored. As a result filing the statement too early provides no legal protection, and filing it too late may trigger the obligation to apply the pay and refund mechanism, including the need to withhold tax and seek a refund afterwards.

Key condition for WH-OSC effectiveness: actual exceeding of the PLN 2 million threshold

According to the approach presented by the Head of the National Revenue Administration, an initial WH-OSC statement becomes effective only after the actual exceeding of the PLN 2 million payment threshold to a given foreign taxpayer in a tax year. Polish regulations also set a specific deadline for filing the initial WH-OSC after the threshold is exceeded. In practice, this requires precise and ongoing monitoring of outgoing payments.

Importantly, merely anticipating that the PLN 2 million threshold will be exceeded – or submitting the WH-OSC statement in advance, even by a few days – does not provide protection. A statement filed before the threshold is actually exceeded is considered ineffective for WHT purposes.

Tax authorities stress that WH-OSC is a statement of existing knowledge, not a declaration concerning future events. This means that the payer may confirm the fulfilment of WHT preference conditions only with respect to the factual situation existing at the moment the threshold-exceeding payment is made.

Why filing WH-OSC too early does not protect the payer

From a tax compliance perspective, premature submission of a WH-OSC statement may have serious consequences:

• the statement does not exclude the obligation to apply the pay and refund mechanism,
• failure to withhold WHT based on an ineffective statement may be challenged during a tax audit,
• the payer may be exposed to tax arrears together with late-payment interest,
• the risk may also extend to fiscal penal liability of individuals acting on behalf of the payer.

It is also important to note that protection resulting from individual tax rulings applies only to the entities for which such rulings were issued. Other payers cannot automatically rely on earlier, more liberal administrative practice.

WH-OSC vs. clearance opinion on applying WHT preferences

Given the increasingly restrictive approach of the Polish tax authorities, many taxpayers are reassessing whether, in their specific circumstances, a clearance opinion on applying WHT preferences may constitute a safer solution.

Although this procedure is more time-consuming, it provides formal confirmation of the right to apply a WHT exemption or reduced rate and significantly reduces the risk of disputes during tax audits. In practice, the choice between WH-OSC and a clearance opinion should be preceded by an analysis of:

• the scale of cross-border payments,
• the group structure, and
• the level of tax risk acceptable to management.

In such cases, professional tax advisory in Poland and properly designed WHT processes are essential, including both monitoring of the PLN 2 million threshold and preparation of appropriate documentation.

What to do now – a practical checklist for WHT payers in Poland

To mitigate risks related to WH-OSC statements, payers should consider conducting a structured review of their current WHT practices:

• verify when the PLN 2 million threshold was exceeded for each foreign counterparty,
• review when WH-OSC statements were actually filed and whether this occurred after the threshold was exceeded,
• if a statement was filed too early – assess whether a valid WH-OSC should be submitted after exceeding the threshold or whether an alternative safeguard (e.g. a clearance opinion) is required,
• assess whether the absence of an effective WH-OSC may result in historical WHT arrears,
• update internal WHT procedures for payment monitoring and statement filing timelines,
• consider a clearance opinion for high-value payments or increased risk scenarios,
• >ensure consistency between finance and tax functions at group level.

WH-OSC statements remain an important element of the withholding tax system in Poland, but their effectiveness depends strictly on when they are filed. Acting too early – even out of caution – may not only fail to protect the payer, but may actually increase exposure to tax and fiscal penal risks.

In the current regulatory environment, precise planning, continuous payment monitoring and a conscious choice of WHT safeguarding instruments are essential for effective and compliant WHT management.

If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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