Withholding tax (WHT) in Poland – a comprehensive guide

Withholding tax (WHT) in Poland is one of the key tax risk areas for companies making cross-border payments. It primarily applies where a Polish company pays amounts to a foreign contractor, shareholder, lender, licensor or another entity that is not a Polish tax resident. In practice, WHT may arise in relation to dividends, interest, royalties and selected intangible services.

For businesses, the most important point is that the obligation to correctly settle withholding tax generally rests with the remitter, i.e. the entity making the payment. This means that the Polish company should determine whether a given payment is subject to WHT, which rate applies, whether an exemption or reduced rate under a double tax treaty may be used, and whether the company holds documents confirming the right to apply preferential treatment.

The importance of this area increased after the Polish Ministry of Finance (MF) published tax clarifications on 3 July 2025 concerning the application of the beneficial owner clause for withholding tax purposes. The clarifications explain, among other things, when the beneficial owner status should be verified, what scope of verification should be carried out by the remitter, and in which circumstances the look-through approach may be considered.

What is WHT?

Withholding tax is a flat-rate income tax collected on certain payments made to non-residents. The mechanism means that the entity making the payment withholds tax in Poland before transferring the amount to the recipient or, in specific situations, applies an exemption or reduced rate.

In simple terms, the foreign recipient receives the payment reduced by Polish tax, unless the remitter is entitled under the regulations to apply preferential treatment.

WHT is not a separate tax operating outside income tax legislation. It is a method of collecting income tax on selected income earned by non-residents from sources located in Poland. In the case of legal entities, the key provisions are included in the Polish Corporate Income Tax Act (CIT Act), in particular Articles 21, 22 and 26.

Which payments are subject to withholding tax in Poland?

In practice, WHT most often applies to four groups of payments:

• dividends and other income from participation in the profits of legal persons,
• interest,
• royalties,
• selected intangible services, such as advisory, management, advertising, market research, data processing services and services of a similar nature.

Not every foreign payment is automatically subject to withholding tax in Poland. The key factors are the actual economic nature of the payment, the legal basis for the payment, the status of the recipient and whether the amount falls within the catalogue of income covered by WHT.

In practice, errors most often arise when a company classifies a payment only on the basis of the name used on an invoice or in an agreement. Polish tax authorities may, however, examine the actual scope of the service. For example, an invoice described as “business support” may include advisory, management, technical or licensing elements, and each of these elements may require a separate WHT analysis.

Basic WHT rates in Poland

The basic withholding tax rates under Polish law are generally as follows:

These rates may be reduced or the tax may not be collected if the conditions resulting from the relevant double tax treaty, the Polish CIT Act or regulations implementing EU directives are met. However, the mere fact that the payment recipient is based abroad is not sufficient to apply preferential treatment.

When can a lower WHT rate or exemption be applied?

Applying a withholding tax preference requires case-by-case verification. The remitter should determine in particular:

• whether the payment is subject to WHT in Poland,
• who the recipient of the payment is,
• in which country the recipient has tax residence,
• whether the relevant double tax treaty provides for a lower rate or no taxation in Poland,
• whether the recipient is the beneficial owner of the payment, if this condition applies,
• whether the remitter holds a valid tax residence certificate and other documents confirming the right to preferential treatment,
• whether due diligence has been exercised.

In practice, WHT preferences should not be applied automatically only because the contractor has provided a tax residence certificate. The certificate is a basic document, but it is not always sufficient. For passive payments, such as dividends, interest and royalties, the assessment of the beneficial owner status is also important. The beneficial owner condition forms part of the verification process for certain payments subject to WHT and may be relevant both for statutory and treaty-based preferences.

Tax residence certificate – why is it so important?

A tax residence certificate confirms the taxpayer’s registered office or place of residence for tax purposes. In the context of WHT, it is one of the key documents enabling the application of a double tax treaty.

Without a tax residence certificate, a Polish remitter should generally not apply the reduced rate resulting from an international treaty. In such a case, it may be necessary to withhold tax at the domestic rate.

In practice, several points should be checked:

• the certificate should relate to the correct payment recipient,
• it should be valid at the time of payment,
• it should allow the recipient’s tax residence to be determined,
• in case of doubts, it should be supplemented with additional documents or statements.

The form of the certificate may also be relevant in practice, especially when the document is obtained electronically or covers a specific period. The remitter should store documentation in a way that makes it possible to demonstrate that, on the date the preference was applied, the company had grounds to do so.

Beneficial owner of the payment for WHT purposes

One of the most important concepts in withholding tax is the beneficial owner of the payment. This should not be confused with the beneficial owner under anti-money laundering and counter-terrorist financing regulations, where the term refers to a natural person exercising control over an entity.

For WHT purposes, the beneficial owner is an entity that jointly meets specific conditions. According to the Polish Ministry of Finance clarifications and the statutory definition, this is an entity that receives the payment for its own benefit, independently decides on its allocation, bears the economic risk connected with the payment, is not an intermediary obliged to pass the payment on to another entity, and conducts genuine business activity in the country of its registered office if the payment is obtained in connection with business activity. In practice, the remitter should verify whether the foreign recipient is not acting merely as an intermediary. Risk may arise especially in holding structures, intra-group financing, royalty payments and transactions where funds are quickly passed on to another entity.

Genuine business activity of the recipient

Verification of the recipient’s genuine business activity should not be limited to checking whether the company is registered in a given country. Polish tax authorities may expect a broader analysis, including in particular:

• the scope of activity carried out by the recipient,
• premises, technical and personnel resources,
• functions performed within the group,
• level of decision-making independence,
• use of the amounts received,
• economic justification of the structure,
• consistency of documents with the actual course of the transaction.

This does not mean that every holding or finance company automatically loses the right to WHT preferences. It does mean, however, that the remitter should hold documents and arguments confirming that the recipient is not an artificial entity or only a formal link in the structure.

Intangible services and WHT in Poland

Intangible services are one of the most problematic areas of WHT in Poland. This results from the broad catalogue of services and the difficulty of classifying mixed services, especially in international capital groups.

Services that may require WHT analysis include, among others:

• advisory services,
• management and control services,
• advertising services,
• market research,
• data processing,
• employee recruitment and personnel acquisition,
• guarantees and sureties,
• services of a similar nature.

For intangible services, it is particularly important to determine whether the payment falls within the catalogue covered by WHT and whether the relevant double tax treaty allows it to be treated as business profits taxable, in principle, in the recipient’s country of residence. The Polish Ministry of Finance clarifications indicate that, in the case of intangible services constituting business profits within the meaning of the relevant double tax treaty, the verification of the right to preferential treatment does not include the beneficial owner condition, unlike in the case of passive payments.

In practice, however, this does not release the remitter from the obligation to properly document the nature of the service and exercise due diligence.

Dividends and withholding tax in Poland

Dividends paid by Polish companies to foreign shareholders are generally subject to WHT at the rate of 19%. In certain cases, it is possible to apply an exemption under the Polish CIT Act or a lower rate under the relevant double tax treaty.

For the dividend exemption, the following factors are particularly important:

• tax status of the paying company,
• tax status of the dividend recipient,
• required level of shareholding,
• required shareholding period,
• confirmation that the recipient does not benefit from an exemption from taxation on all its income,
• possession of a tax residence certificate,
• fulfilment of anti-abuse conditions,
• assessment of the beneficial owner status, if required in a given model.

In holding structures, particular caution is needed where a dividend is paid to an intermediary company and then passed on further. In such cases, Polish tax authorities may examine the economic justification of the structure, the functions of the intermediary company and its actual role within the group.

Interest and royalties

Interest and royalties paid to foreign entities are generally subject to WHT at the rate of 20%. Preferences may result from double tax treaties or from an exemption implementing the EU Interest and Royalties Directive.

In the case of interest and royalties, verification of the beneficial owner status is particularly important. This applies especially to intra-group financing, back-to-back loans, cash pooling structures and payments for licences, trademarks, software or know-how.

The remitter should determine whether the recipient has the right to retain the payment for itself, whether it bears the economic risk connected with the transaction and whether it is not obliged to transfer the received funds further.

The PLN 2 million threshold and the pay and refund mechanism

One of the most important elements of the Polish WHT system is the PLN 2 million threshold for payments made to the same taxpayer in the remitter’s tax year. Once this threshold is exceeded, the pay and refund mechanism may apply to certain payments made to related entities.

This mechanism means that, on the surplus over PLN 2 million, the remitter should withhold WHT at the statutory rate, and then the taxpayer or, in specific cases, the remitter may apply for a tax refund if the conditions for applying preferential treatment were met.

The pay and refund mechanism generally applies to passive payments, such as dividends, interest and royalties, made to related entities. It does not apply in the same way to intangible services such as advisory or management services.

How to avoid tax collection after exceeding the threshold?

After exceeding the PLN 2 million threshold, Polish law provides solutions that allow preferential treatment to be applied without the need to withhold tax at the domestic rate. In practice, the two most important instruments are the opinion on the application of preferences and the remitter’s statement.

Opinion on the application of preferences

An opinion on the application of preferences allows the remitter to confirm the possibility of not collecting tax, applying an exemption or applying a reduced rate in relation to specific payments and a specific taxpayer. The application is submitted electronically on the relevant form.

Obtaining the opinion requires preparing arguments and documentation confirming that the conditions for preferential treatment are met. In practice, the procedure may involve additional questions from the authority and the need to supplement documents.

Remitter’s statement: WH-OSC or WH-OSP

An alternative is to submit the remitter’s statement. For corporate income tax, the WH-OSC form is used, while for personal income tax, the WH-OSP form applies.

Submitting the statement is not merely a formality. The persons signing the document confirm, among other things, that the remitter holds the required documents and that, after verification, the remitter has no knowledge justifying the assumption that the conditions for applying the preference are not met. This means real responsibility on the part of managing persons.

Due diligence of the remitter

Due diligence is one of the central concepts in WHT settlements in Poland. The remitter should be able to demonstrate that, before applying preferential treatment, it carried out a reasonable and adequate verification.

The scope of this verification depends on the circumstances. It may look different for a small payment to an unrelated contractor than for a multi-million dividend or interest payment within a capital group.

In practice, due diligence may include in particular:

• analysis of the agreement and the nature of the service,
• verification of invoices and source documents,
• obtaining a tax residence certificate,
• obtaining statements from the recipient,
• analysis of the beneficial owner status,
• verification of the group structure,
• analysis of financial flows,
• assessment of the recipient’s genuine business activity,
• documentation of the decision-making process.

The tax clarifications of the Polish Minister of Finance of 3 July 2025 specify the application of the beneficial owner clause also in the context of the remitter’s obligation to exercise due diligence. Following tax clarifications may provide protection under the Polish Tax Ordinance, including for remitters.

Look-through approach – when may it matter?

The look-through approach consists in analysing whether WHT preference may be assessed from the perspective of an entity other than the direct payment recipient, if that other entity is the actual owner of the payment.

In practice, this may be relevant in structures where a payment passes through an intermediary entity but economically reaches another entity. The possibility of applying this approach is allowed in certain situations, but it is not an automatic obligation of tax authorities.

For businesses, this means that relying on the look-through approach should be preceded by a detailed analysis and proper documentation of cash flows, functions of the entities involved and the right to preferential treatment on the part of the actual economic recipient.

WHT documentation – what should be prepared?

There is no single universal list of documents sufficient for every payment. The scope of documentation depends on the type of payment, the relationship with the recipient, the payment value and the preference applied.

In practice, WHT documentation may include:

• tax residence certificate,
• agreement forming the basis for the payment,
• invoices and confirmations that services were performed,
• recipient’s statement on beneficial owner status,
• statement on genuine business activity,
• recipient’s registration documents,
• financial statements,
• description of the recipient’s business activity,
• capital group structure,
• documents confirming financial flows,
• analysis of the relevant double tax treaty,
• internal tax memorandum documenting the verification process.

For larger payments or intra-group transactions, it is advisable to prepare documentation before the payment is made, not only in the event of a tax audit.

Liability for WHT errors

Errors in WHT settlements may lead to serious consequences. The risks include in particular:

• tax arrears,
• late-payment interest,
• the need to correct tax returns and tax information,
• disputes with tax authorities,
• fiscal penal liability of persons responsible for settlements,
• reputational risk,
• deterioration of cash flow, especially under the pay and refund mechanism.

Statements submitted by the remitter are particularly sensitive. Signing a statement without appropriate documentation may be risky, because managing persons confirm specific circumstances under liability rules.

WHT in international capital groups

In international capital groups, WHT often arises in relation to recurring payments, such as:

• licence fees for the use of trademarks,
• software fees,
• interest on intra-group loans,
• management service fees,
• advisory and administrative support fees,
• dividends paid to holding companies.

In such structures, WHT should not be analysed only at the payment stage. A safer approach is to prepare a payment map in advance, define value thresholds, verify documents and determine whether a given relationship will require a statement or an opinion on the application of preferences.

See also: practical issues related to WHT. Withholding tax often requires an analysis not only of the general rules, but also of specific situations in which the remitter must assess the tax risk before making a payment. We discuss selected practical issues in more detail in the related articles:
· Withholding tax (WHT) on hosting services in Poland – Supreme Administrative Court of Poland (NSA) judgment
· Withholding tax (WHT) in Poland: WH-OSC statements should not be filed too early
· 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

Analysis of WHT obligations for dividends, interest, royalties and intangible services

At getsix®, we support companies in the practical analysis of obligations related to withholding tax in Poland. The starting point is the specific payment, its economic nature, legal basis, recipient status and documents required to apply the correct rate, exemption or WHT procedure.

As part of our tax advisory in Poland, we assist in particular with:

• classification of outbound payments from Poland, including dividends, interest, royalties, software payments and selected intangible services,
• analysis of the possibility of applying a reduced rate or exemption under Polish regulations or the relevant double tax treaty,
• verification of the beneficial owner status, the recipient’s business substance and required documentation,
• preparation of WHT documentation, including support with WH-OSC, WH-OSP and applications for an opinion on the application of preferences,
• assessment of the possibility of recovering tax if WHT has already been withheld, as well as reviewing and organising previous settlements.

The purpose of such analysis is to identify a safe course of action: withholding tax, applying a preference at source, applying for an opinion on the application of preferences or starting the WHT refund procedure.

How to prepare a company for proper WHT settlements in Poland

A good practice is to implement an internal WHT process that allows risks to be identified before payments are made. This process should combine the accounting, tax and operational perspectives.

In practice, it is worth taking the following steps:

1. Identify all foreign payments.
2. Divide them by type: dividends, interest, royalties, intangible services and other payments.
3. Determine the recipients and their tax residence.
4. Check whether payments are made to related entities.
5. Monitor the PLN 2 million threshold for the same taxpayer.
6. Verify tax residence certificates.
7. Assess the beneficial owner status for passive payments.
8. Prepare due diligence documentation.
9. Determine whether an opinion on the application of preferences or a remitter’s statement is needed.
10. Update documentation regularly.

WHT should be treated as a permanent element of tax control in the company, not as a one-off activity performed at year-end.

FAQ

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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