Tax residency certificate as a condition for applying a Double Taxation Agreement (DTA) to withholding tax (WHT) in Poland – Polish Supreme Administrative Court (NSA) ruling

A tax residency certificate is now a key document for Polish withholding tax (WHT) payers. It determines whether the preferences of a Double Taxation Agreement (DTA) can be applied or whether tax must be collected at the domestic rate. The judgment of the Supreme Administrative Court (NSA) of 20 August 2025 (II FSK 47/23) clearly confirms that without a valid certificate of residence, it is not possible to apply a DTA, and other documents – even very extensive ones – cannot replace this condition.

In practice, this means that if a Polish entity makes payments for, among other things, dividends, interest, royalties or selected intangible services, and the recipient’s certificate of residence has not been obtained and verified, the payer is automatically obliged to collect withholding tax at domestic rates.

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What is a certificate of residence and why is it crucial for withholding tax?

A certificate of residence is an official confirmation of the country in which a given entity (natural or legal person) is resident or has its registered office for tax purposes. It is issued by the competent foreign tax authority and it is this document that determines whether and to what extent a given recipient can benefit from the protection provided for in a double taxation agreement.

In the context of withholding tax, a certificate of residence:

• enables the application of rates and exemptions from the Double Taxation Agreement (DTA) – instead of domestic WHT rates resulting from Articles 21–22 of the CIT Act,
• confirms that the recipient is a resident of a given country and is subject to unlimited tax liability there,
• protects against double taxation of the same income in Poland and in the taxpayer’s country of residence.

If the certificate of residence is not provided or is out of date, the Polish payer must, as a rule, collect a flat-rate income tax in Poland – most often at a domestic rate of 19% (dividends) or 20% (selected intangible services, licence fees).

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Certificate of residence and the list of payments subject to withholding tax

In the context of the application of the certificate of residence, the key items are those listed in Articles 21-22 of the CIT Act, i.e.

• dividends and other income from participation in the profits of legal persons,
• interest on debt financing,
• licence fees – including for the use of copyrights, trademarks, know-how, industrial equipment,
• selected intangible services (including consulting, legal, advertising, market research, personnel recruitment, management and control services),
• certain revenues of foreign air transport companies – in accordance with the relevant DTAs.

In each of these cases, the application of a preferential treaty rate (or exemption) depends on whether the Polish payer has a certificate of residence for the contractor and has exercised due diligence.

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When does a certificate of residence allow the application of a double taxation agreement?

The mere existence of a Double Taxation Agreement between Poland and a given country is not enough. In order for a Polish payer to apply a treaty rate, a reduced rate or an exemption, several conditions must be met cumulatively – and a certificate of residence is one of them, but not the only one.

As a rule, it is necessary to:

1. Have a valid certificate of residence
• covering the period in which the withholding tax liability arises,
• issued by the competent tax authority in the country of residence.
2. Verify the status of the beneficial owner
• the recipient of the payment must be the entity that actually receives the money and decides on its use,
• it is necessary to ensure that there are no artificial, ‘empty’ companies in between that only transfer the funds and do not conduct any real business activity.
3. Assessment of actual economic activity in the country of residence
• it is necessary to check whether the entity has real activity there – e.g. an office, employees, assets and business risks incurred,
• the scale of this activity should be adequate to the amount of payments it receives (i.e. the entity should not be just a ‘post office box’).
4. Correct classification of payments
• It is necessary to precisely determine the type of payment – whether it is a dividend, interest, royalty or intangible service,
• then check which article of the relevant DTA regulates this type of income in order to apply the correct rate or possible exemption.

If any of the elements ‘fail’ – in particular, if there is no valid certificate of residence – the Polish payer has no basis for applying treaty preferences and should collect WHT at the domestic rate.

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Supreme Administrative Court judgment II FSK 47/23 – certificate of residence as a condition for applying the Double Taxation Agreement

The Supreme Administrative Court judgment of 20 August 2025 (II FSK 47/23) very clearly emphasises the role of the certificate of residence in the withholding tax system.

The facts in brief

• A Polish entity paid remuneration for management and advisory services to a foreign contractor.
• The recipient was based in Puerto Rico (associated with the US, but not a US state within the meaning of the Polish-American DTA).
• The payer did not have tax residency certificate confirming that the recipient was a US tax resident for treaty purposes,
• instead, a number of other documents were presented (registrations with supervisory authorities, identification numbers, confirmations of tax settlements in the US).

The tax authorities decided that this evidence wasn’t enough to apply the Double Taxation Agreement and demanded that tax be withheld at source at the national rate of 20%. The case went to the Provincial Administrative Court and then to the Supreme Administrative Court, and both courts upheld the tax authority’s position.

Key points of the Supreme Administrative Court’s ruling on the certificate of residence

The Supreme Administrative Court stated explicitly that:

• the tax residency certificate is a prerequisite for applying the DTA rate or exemption – it cannot be replaced by other documents,
• even detailed confirmations of tax settlements in a given country cannot replace a formal certificate of residence,
• if the payer does not have a certificate, they must apply the rates provided for in the CIT Act (domestic WHT),
• in addition, the court recalled that the territorial scope of the DTA is important – the fact that an entity is connected with a contracting state does not automatically mean that its territory (e.g. associated territory) is covered by the treaty.

In practice, the judgment confirms that a certificate of residence is not a ‘technical addition’ but a formal condition for the availability of treaty preferences. Without it, the Double Taxation Agreement does not apply, and the Polish payer is liable for the uncollected tax.

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Certificate of residence and due diligence of the Polish payer

The obligation to exercise due diligence when collecting withholding tax is currently one of the most important elements of tax audits in the area of WHT. The certificate of residence is one of the pillars of this diligence, but the authorities also expect:

1. The correct form of the residence certificate
• original, electronic document (e-cert) or certified copy (e.g. PDF),
• no doubt as to its authenticity and source of origin.
2. Appropriate period of validity
• if the certificate does not contain clear expiry dates, as a rule, it is assumed to be valid for 12 months from the date of issue,
• in practice, it is worth ensuring that the certificate of residence covers the date of payment and not just the period in which the invoice was issued.
3. Connection of the certificate with reality
• the certificate should correspond to the taxpayer’s actual residence in a given period;
• a change of registered office or restructuring within the group may mean that a new document must be obtained.
4. Complete procedural documentation
• it is worth having procedures in place for WHT, checklists and notes from the analysis of residence and beneficial ownership status,
• all residence certificates, documents and tax decisions should be stored appropriately so that, in the event of an audit, the correctness of the actions can be easily demonstrated.

The 2025 Supreme Administrative Court ruling is part of a broader line of jurisprudence in which the courts agree with the authorities: if the payer fails to obtain a residence certificate and due diligence documentation, they bear the risk of payment liability for uncollected tax.

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Certificate of residence in practice – the most common mistakes

Practice shows that most problems with withholding tax do not result from ignorance of the regulations, but from seemingly minor errors in the process and documentation itself. In the context of the certificate of residence, several typical mistakes can be identified:

• using an expired tax residence certificate that does not cover the payment period,
• relying solely on the contract, correspondence or tax identification number of the counterparty,
• the mistaken assumption that since a country is linked to another jurisdiction (e.g. an associated territory), it automatically benefits from the Double Taxation Agreement,
• lack of a system of reminders about the need to renew certificates,
• failure to link the certificate to specific categories of payments (different rules for dividends, different rules for intangible services or royalties).

Each of these errors may result in the certificate of residence, although formally existing in the documents, not meeting the requirements set by regulations and case law.

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Why should a certificate of residence be a permanent feature of withholding tax (WHT) procedures?

The Supreme Administrative Court’s judgment II FSK 47/23 is likely to be frequently referred to during withholding tax audits and proceedings. For entrepreneurs, this means that they need to streamline their processes in practical terms.

In particular:

• The certificate of residence should be obtained in advance – before payment is made.
• It is advisable to link financial and accounting systems to the certificate register in order to block the application of preferences when the document is invalid or incomplete.
• It is necessary to clearly determine which department of the company – tax, finance or legal – is responsible for verifying residence, beneficial ownership status and type of payment,
• Tax decisions (application of the DTA or collection of tax at domestic rates) should be justified and documented in each case.

In practice, a certificate of residence is no longer just an addition to accounting documents, but a key element of correct and secure WHT settlement.

If you need support in the area of withholding tax – in particular in the area of verification of residence certificates, payment qualification and the development of due diligence procedures – the getsix® team provides professional tax advisory services for Polish and foreign entrepreneurs. Feel free to contact us.

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The Supreme Administrative Court ruling II FSK 47/23 clearly confirms that a tax residency certificate is a basic condition for applying a tax treaty in relation to withholding tax (WHT). The absence of this document means that the payer must collect tax at domestic rates and risks payment liability. In practice, a certificate of residence, together with an assessment of the beneficial owner, economic substance and correct classification of payments, should be a permanent feature of due diligence procedures. Only complete documentation and clearly defined processes allow for the safe application of preferences resulting from double taxation agreements.

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Legal basis

• Judgment of the Polish Supreme Administrative Court of 20 August 2025, ref. no. II FSK 47/23.
• Act of 15 February 1992 on corporate income tax.
• Double taxation agreements concluded by the Republic of Poland with other countries.

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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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