Taxation at source of dividends, interest and royalties paid to non-residents

Cross-border payment of passive income (dividends, interest, royalties) is an economic event subject to taxation on the ground third legal regimes: Polish national tax law, international tax law (dual taxation treaties) and European law (European directives).

In the case of payment of the above-mentioned categories of income between companies from different EU Member States, there will be simultaneous application of the rules of all the abovementioned legal regimes, which, in the event of a conflict between their provisions, will require the application of appropriate conflict rules.

In European tax law, the condition for exemption from taxation at source of passive income paid between companies from different Member States is to meet the criteria of participation exemption.

The purpose of this publication is to analyse the obligations of payers and possible conflicts of Polish rules with the regulations of European law and double taxation agreements, taking into account constitutional conditions of legislative freedom of tax legislation.

1. Introduction

1.1. Passive income and double taxation agreements

Regulations in force in this area: Directive 2011/96 1 and Directive 2003/49 2 is reflected in the content of the double taxation agreements between EU Member States.

However, in the case of the payment of passive income to non-EU companies, the provisions of the relevant double taxation agreement will apply, specifying the conditions under which the Treaty protection provided for in the agreement will be exercised.

In practice, this protection will be based primarily on the application of the reduced rate of withholding tax and the need for the contracting States to use the mechanism to avoid double taxation laid down in the respective double taxation agreement.

Only in the case of payment of the abovementioned liability income categories to resident companies of countries which do not belong to the EU and with which Poland has not concluded a double taxation agreement, will the relevant provisions of the Act of 15 February 1992 on corporate income tax 3 (Next the Corporate Income Tax Act).

In practice, this latter case will occur extremely rarely, so its meaning is marginal.

1.2. Order to collect withholding tax and collision with overriding acts

Polish legislator introduced 1 January 2019, the Corporate Income Tax Act regulations ordering the collection of withholding tax in the case of payment of passive income to non-residents subject to a limited tax obligation in Poland, in this case, if the amount of the payment exceeds the amount 2,000,000 PLN, one the taxpayer in the tax year concerned.

From the content of the regulation the Corporate Income Tax Act it follows that these rules apply independently of the regulation of double taxation agreements and provisions Directive 2011/96 and Directive 2003/49, That hasn't changed.

The Polish legislature predicted two exceptions to the deduction of withholding tax on dividends, interest and royalties paid to non-residents.

These special regulations are subject, in the author's opinion, to significant legal defects which may in practice lead to a conflict with the regulations of laws which, in the constitutional hierarchy of sources of law commonly applicable, take precedence over national laws. The question therefore arises of the compatibility of the above rules with double taxation agreements and with European law.

In addition, regulations the Corporate Income Tax Act is characterised by a certain level of inaccuracy and, consequently, the risk to payers paying passive income to non-residents.

Moreover, the date of entry into force of the abovementioned regulations has already been translated three times by the Minister of Finance – first into 1 July 2019 4 , Then on 1 January 2020, and lately on 1 July 2020 5 .

Attention is drawn to the fact that the postponement of entry into force only applies Article 26(2e) the Corporate Income Tax Act, not other regulations the Corporate Income Tax Act, which began to apply 1 January 2019 In practice, this means that only the collection of the withholding tax in the event of the payment of dividends, interest, or royalties to one taxable person having non-resident tax status status in Poland in excess of 2,000,000 PLN, in the tax year in force with the payer, has been deferred.

However, other statutory obligations, inter alia regarding due diligence by the payer when verifying the conditions for the application of the withholding tax exemption in law, apply from 1 January 2019 Given the obvious and direct correlation of a number of provisions Article 26 and Article 26b the Corporate Income Tax Act with regulation Article 26(2e) the Corporate Income Tax Act, those provisions cannot be applied effectively until Article 26(2e) the Corporate Income Tax Act It won't apply.

For example, provisions Article 26(2g) and Article 26b the Corporate Income Tax Act, governing the opinion on the application of the exemption, will be a "dead right" pending its entry into force Article 26(2e) the Corporate Income Tax Act If no withholding tax is applicable in the case of payment of the abovementioned claims to non-residents in excess of 2,000,000 PLN in the tax year in force with the payer, those are the conditions which allow for the non-collection of the withholding tax in such a case, indicated under Article 26(2e) the Corporate Income Tax Act, regulated in other editorial units Article 26(26b) the Corporate Income Tax Act, in practice, they will not be applicable.

A similar situation will occur in the case of a provision Article 26(2i) the Corporate Income Tax Act, which regulates proportional calculation of the limit 2,000,000 PLN where the tax year of the payer is longer or shorter than 12 months.

If the tax collection itself does not apply at source above the above limit, the calculation of that limit where the tax year of the payer is longer or shorter than 12 months, becomes meaningless.

In addition, it should be stated that, in view of the late 2019 consultations and the changes to the aforementioned provisions announced by the Ministry of Finance – a further postponement of entry into force should be considered quite likely Article 26(2e) the Corporate Income Tax Act

2. Conditions for participation in the Corporate Income Tax Act

2.1. Preliminary remarks

The conditions of the so-called participation exemption, implementing the Polish national law provisions Directive 2011/96, whose objective, according to point 3 The preamble is to exempt dividends and other profits distributed by subsidiaries to their parent companies from income-derived tax and eliminate double taxation of such income at the level of the parent company, and Directive 2003/49/ EU[6] , have been substantially regulated under Article 21(3) the Corporate Income Tax Act (for interest and royalty receivables) and under Article 22(4) the Corporate Income Tax Act (for dividends). By Article 22a the Corporate Income Tax Act provisions Article 20-22 the Corporate Income Tax Act apply taking into account double taxation agreements to which the Republic of Poland is party. In accordance with the provisions Article 22b the Corporate Income Tax Act exemptions and deductions resulting from the provisions Article 20-22 the Corporate Income Tax Act applies subject to the existence of a legal basis under a double taxation agreement or other ratified international agreement to which the Polish tax authority is party to obtain tax information from the tax authority of the State (other than the Republic) in which the taxpayer is established or where the income has been obtained. On the other hand – at disposal Article 22c(1) the Corporate Income Tax Act provisions Article 20(3), Articles 21(3) and 22(4) the Corporate Income Tax Act – the above exemptions and deductions shall not apply if the benefit of the exemption provided for in those provisions is:

1) in the circumstances in question contrary to the object or purpose of those provisions;
2) main or one from the main objectives of the transaction or other activity, or multiple transactions or other activities, and the mode of operation was artificial.

In accordance with the disposition Article 22(2) the Corporate Income Tax Act for needs section 1 the method of action is not artificial if, on the basis of the existing circumstances, it should be assumed that a reasonable and legitimately motivated entity would apply that method to the greatest extent for legitimate economic reasons.

Reasons referred to in the sentence first, does not include the purpose of the exemption provided for in the legislation Article 20(3), Articles 21(3) and 22(4) the Corporate Income Tax Act, contrary to the object or purpose of those provisions. This provision constitutes a clause against tax avoidance for passive income.

This specific regulation, in conjunction with the possibility of assessing the activities of the taxpayer on the basis of the under Article 119a-119zf Act on 29 August 1997 - Tax Ordinance ((cc) the general anti-avoidance clause allows the tax authorities to assess whether the tax authorities have acquired the right to benefit from the exemptions in question and the circumstances in question.

Under Article 21(3) or Article 22(4) the Corporate Income Tax Act, were not dictated to a large extent or solely by the desire to avoid taxation. In that case, these tax exemptions could not be applied.

2.2. Conditions for the waiver of participation interest and royalties

In accordance with the provisions Article 21(3) the Corporate Income Tax Act income tax shall be exempt, inter alia, from interest and royalty income if the following cumulative conditions are met:

1) the paying agent is:

(a) a company which is a taxable person of income tax established or managed in the territory of Poland, or

(b) located in the territory of the Republic of Poland, a foreign establishment of a company subject to income tax in the EU Member State on all of its income, irrespective of where they are achieved, if the claims paid by that foreign establishment in question under Article 21(1)(1) the Corporate Income Tax Act, are included in the cost of obtaining revenue in determining taxable income in Poland;

the income obtained is a company which is subject to an income tax on all of its income in a Member State other than the Republic of Poland of the EU or in another EEA State irrespective of where it is achieved;
Company:

(a) referred to Under point 1, has directly no less than 25% shares in the capital of the company in question Under point 2

either

(b) in question Under point 2, has directly no less than 25% shares in the capital of the company in question Under point 1;

4) the actual owner of the abovementioned receivables is:

(a) the company in question Under point 2

either

(b) the foreign establishment of the company in question Under point 2, where the income generated by these receivables is taxable in the Member State in which the foreign establishment is situated.

According to Article 21(3) the Corporate Income Tax Act the condition of holding the shares in question Under section 3 point 3, it shall also be deemed to have been fulfilled if, in both the capital of the company it provides section 3 point 1, and the capital of the company in question Under section 3 point 2, another company which is subject to an EEA tax in a Member State of the EU or in another EEA State on the income tax on its entire income, irrespective of where they are to be achieved, has directly no less than 25% shares (shares).

Exemption in question Under section 3 if the holding of the share(s) referred to Under section 3 point 3 and section 3a, results from ownership (Article 21(3b) the Corporate Income Tax Act).

Exemption provided for section 3 apply if the company in question Under section 3 point 2 does not benefit from the income tax exemption on its total income, regardless of the source of the income (Article 21(3c) the Corporate Income Tax Act).

Moreover, the recipe section 3 applicable where the companies concerned Under section 3 point 3, hold shares of the amount of shares of which it provides section 3 point 3, continuously for a period 2 years (Article 21(4) the Corporate Income Tax Act).

By Sound Article 21(5) the Corporate Income Tax Act, provisions section 3 and 4 also apply where the period 2 years of continuous holding of shares (shares), of the amount specified Under section 3 point 3, end after the date of acquisition by the company in question Under section 3 point 2, revenue it represents section 1 point 1.

This regulation means that interest and royalties can be paid without the need to deduct withholding tax even if the recipient company does not have at least 25% shares (shares) in the capital of the company paying these claims continuously over the period 2 years, if, after payment of the abovementioned debts, this condition is met post factum.

In case of non-compliance with the condition of holding the shares in question Under section 3 point 3, continuously for a period 2 years, the company of which it is section 3 point 2 – is liable to pay tax, including interest on late payment, on the revenue specified Under section 1 point 1 height 20% revenue, including double taxation agreements to which the Republic of Poland is party.

Interest shall be calculated from the day following the expiry of the period referred to under Article 26(3) the Corporate Income Tax Act By Sound Article 21(9) the Corporate Income Tax Act the exemption in question under Article 21(3) the Corporate Income Tax Act, shall not apply if the paying agent is a limited partnership established or managed in the territory of the Republic of Poland.

In addition, provision Article 21(6) the Corporate Income Tax Act excludes the application of the participation exemption in question under Article 21(3) the Corporate Income Tax Act, in respect of revenue which under separate provisions will be considered as:

1) revenue from the distribution of profits or repayment of the capital of the paying company referred to Under section 1 point 1;
2) income from claims giving the right to participate in the profits of the debtor;
3) revenue from the claim authorising the creditor to convert his right to interest into the right to participate in the profits of the debtor;
4) income arising from a claim which does not entail the obligation to repay the principal amount of that claim or where repayment is due after at least the expiry of the 50 years after the establishment of the claim.
2.3. Conditions for exempting participating dividends

Under regulation Article 22(4) the Corporate Income Tax Act, income tax revenue for the share of profits of the legal persons in question is exempt under Article 7b(1)(1) point (a), f and j the Corporate Income Tax Act (with the exception of the revenue obtained by the sub-contractor for the share of profits of a limited-share company established or managed in the territory of the Republic of Poland where the following cumulative conditions are met:

the payment of dividends and other income from the participation of legal persons is a company established or managed in the territory of Poland;
Receipts on dividends and other income on the share of profits of the legal persons concerned Under point 1, is a company subject to a tax in the Republic of Poland or in another EU Member State, or another EEA Member State, on the income tax on all of its income, regardless of where they are achieved;
the company in question Under point 2, has directly no less than 10% shares in the capital of the company of which it is point 1;
the company in question Under point 2, does not benefit from the income tax exemption on all of its income, regardless of the source of the income.

This exemption applies where the company receiving dividends and other income from the share of profits of legal persons established or managed in the territory of the Republic of Poland has shares in the company paying these claims in the amount in question Under section 4 point 3, continuously for a period 2 years (Article 22(4a) the Corporate Income Tax Act).As per content Article 22(4b) the Corporate Income Tax Act This exemption shall also apply where the period 2 years of continuous holding of shares (shares), of the amount specified Under section 4 point 3, by a company receiving income (revenue) from the share of the profit of a legal person established or managed in the territory of Poland, shall end after the date of obtaining these incomes (revenue).

In case of non-compliance with the condition of holding a share, the amount specified Under section 4 point 3, continuously for a period 2 years of the company concerned Under section 4 point 2, is liable to pay tax, including interest on late payment, on income (income), specified Under section 1, height 19% revenue (income) to 20.

the day of the month following that in which she lost the right to be released. Interest shall be calculated from the following day after the day on which the first She's been fired.

In accordance with the provisions Article 22(4c) the Corporate Income Tax Act above provisions Article 22(4-4b) apply mutatis mutandis to:

cooperatives bound on the basis of Regulation (EU) 1435/2003 to 22 July 2003 on the Statute of the European Cooperative Society 7 (SCE), hereinafter referred to as ‘theRegulation (EU) 1435/2003”;
revenue(s) concerned Under section 1, paid by specified companies Under section 4 point 1, companies subject to taxation in the Swiss Confederation with income tax on all their income, regardless of where they are achieved, with a certain Under section 4 point 3 direct percentage of the capital of the company in question Under section 4 point 1, set at not less than 25%;
revenue paid (assigned) to a company situated in the territory of an EU Member State or of another EEA State or in the Swiss Confederation Under section 4 point 2, if the company meets the conditions laid down Under section 4-4b.

According to the content Article 22(6) the Corporate Income Tax Act, provisions section 4-4d shall apply mutatis mutandis to those entities In Annex 4 to the Corporate Income Tax Act, in the case of the Swiss Confederation, provisions section 4-4d apply if it is met the condition referred to in Article 22(4c)(2) the Corporate Income Tax Act In addition, according to regulation Article 22(4d) the Corporate Income Tax Act, the exemption in question Under section 4, the following shall be used:

if the holding of the shares in question Under section 4 point 3, is derived from ownership;
for income generated from shares held under the title:

(a) ownership,

(b) other than ownership, provided that these incomes (revenues) would benefit from exemption if the holding of those shares (shares) had not been transferred.

New rules for the collection of withholding tax in the case of the payment of passive income to non-residents, in force in the Corporate Income Tax Act
1. General principles for the collection of withholding tax

In accordance with the provisions Article 26(1) the Corporate Income Tax Act legal persons, organisational units not having legal personality and natural persons who are traders who pay claims from the titles listed under Article 21(1) the Corporate Income Tax Act and Article 22(1) the Corporate Income Tax Act, up to an amount not exceeding in the tax year in force for the paying agent of those claims in total amounts 2,000,000 PLN to the same taxable person, they are obliged as payers to collect, subject to section 2 and 2b and 2d, on the date of payment of the flat-rate income tax on these payments, taking into account the deductions provided for under Article 22 section 1a1e the Corporate Income Tax Act

By Sound Article 26(2) the Corporate Income Tax Act, where income is allocated to an increase in the share capital and in the cooperatives of the participating fund, the payers concerned Under section 1, collect tax within the time limit 14 the dates from the date on which the decision of the registration court to enter into an entry for an increase in the share capital or, in the absence of a requirement to register an increase in the share capital, from the date on which the general meeting adopted a resolution on the increase in that capital and from the date on which the general meeting adopted a resolution on the increase in the share fund.

In this case, taxable persons shall not be entitled to make the declaration in question Under section 1a. Rule Article 26(2b) the Corporate Income Tax Act provides that, where and to the extent specified, Under section 2a – the collecting of the tax is subject to collecting accounts through which the charge is paid.

The tax shall be collected on the day the claim is transferred from the title at the disposal of the account holder.

By sound Article 26(2d) the Corporate Income Tax Act the payers concerned Under section 2c, collect a flat-rate income tax on the day of the transfer of the claim at the disposal of the securities account holder or of the aggregate account holder.

The application of the tax rate resulting from the relevant double taxation agreement or the non-collection of the tax in accordance with that agreement is possible provided that the place of residence of the taxable person is documented for tax purposes by a residence certificate obtained from the taxable person.

Provisions section 1c1l shall apply mutatis mutandis.

The most important subject-matter exemptions indicated in the above provisions are included in two first of these regulations.

Provision Article 26(1a) the Corporate Income Tax Act provides that the flat-rate income tax in question Under section 1, shall not be collected if the taxable persons listed under Article 17(1) the Corporate Income Tax Act, benefitting from the exemption in respect of the use of revenue for statutory purposes or other purposes set out in that provision, they shall, at the latest on the date of payment of the dues, make a declaration to the payer that they will allocate the income from dividends and from other income from corporate income for the purposes set out in that provision.

According to the content Article 26(1aa) the Corporate Income Tax Act payers shall not be required to collect interest or discount tax on:

1) bonds;

2) bonds:

(a) with a maturity of not less than one year,

(b) admitted to trading on a regulated market or entered an alternative trading venue within the meaning of the Law of 29 July 2005 on trading in financial instruments 8 , in the territory of the Republic of Poland or in the territory of a party to a double taxation agreement concluded with the Republic of Poland, the provisions of which lay down rules on taxation of dividends, interest and royalties.

In accordance with the provisions Article 26(4) the Corporate Income Tax Act taxable persons in question Under section 1a, are obliged, without a call, to pay the flat-rate tax due to the account of the tax office specified Under section 3, if the income from dividends and other income from corporate income on which the payer has not collected tax in connection with the statement in question Under section 1a, have been spent for purposes other than those mentioned under Article 17(1) the Corporate Income Tax Act However, according to Article 26(5) the Corporate Income Tax Act tax on which it provides section 4, deposits to 20.

the day of the month following that in which that expenditure was made.

The application of the rate of tax resulting from the relevant double taxation agreement or the non-collection of the tax in accordance with that agreement is possible provided that the tax residence of the taxpayer is documented for tax purposes by means of the residence certificate obtained from it.

The concept of a residence certificate does not apply under double taxation agreements, and among the countries associated with the Polish double taxation agreements are countries where the rules for issuing residence certificates differ significantly from those of EU countries, including Poland.

Such a country is, for example, the United Arab Emirates, where onshore companies, having the status of tax residents from the date of their incorporation, may apply for a residence certificate only after full expiry 3 years from the date of its registration.

Consequently, a reduced withholding tax rate should be applied to such a company, despite the absence of a residence certificate in first 3 the years of operation of such a company, provided that the conditions laid down in the national law of the United Arab Emirates for obtaining this document at the beginning of 4.

year of existence of an onshore company[9].

When verifying the conditions of application of a tax rate other than that specified under Article 21(1) the Corporate Income Tax Act or Article 22(1) the Corporate Income Tax Act, the exemption or non-collection conditions resulting from special provisions or double taxation agreements, the payer shall be obliged to exercise due diligence.

The evaluation of due diligence shall take into account the nature and scale of the payer's activities.

The broad legal definition of the term "payment" in question deserves attention under Article 26(1), 1ac, 1c, 1d, 1m, 2c and 2e the Corporate Income Tax Act By Sound Article 26(7) the Corporate Income Tax Act The payment shall be understood as fulfilling the obligation in any form, including payment, deduction or capitalisation of interest.

In turn, by sound Article 26(1c) the Corporate Income Tax Act, if the total amount of receivables from the titles listed under Article 21(1) the Corporate Income Tax Act and Article 22(1) the Corporate Income Tax Act, paid to the taxpayer in the tax year applicable to the payer, does not exceed the amount 2,000,000 PLN, legal persons and organisational units not having legal personality which make payment of claims from the titles listed under Article 21(1)(1) the Corporate Income Tax Act and Article 22(1) the Corporate Income Tax Act, in connection with the income tax exemption on the basis of Article 21(3) the Corporate Income Tax Act and Article 22(4) the Corporate Income Tax Act, apply the exemptions resulting from those provisions provided that the company concerned is documented under Article 21(3)(2) the Corporate Income Tax Act 10 either under Article 22(4)(2) the Corporate Income Tax Act 11 , established in an EU Member State other than the Republic of Poland or in another EEA State:

1) its place of residence for tax purposes, obtained from it by a residence certificate
or
2) the existence of a foreign establishment, a certificate issued by the competent tax authority of the State in which it is established or its management, or by the competent tax authority of the State in which that foreign establishment is situated.

However, according to the provisions Article 26(1f) the Corporate Income Tax Act, for claims in question under Article 21(1)(1) and Article 22(1u).p.d.o.p. paid to a company specified under Article 21(3)(2) the Corporate Income Tax Act and Article 22(4)(2) the Corporate Income Tax Act, or its foreign establishment, if the total amount of receivable from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act, paid to that taxpayer in the tax year applicable to the payer, does not exceed the amount 2,000,000 PLN, legal persons and organisational units not having legal personality who pay these claims shall apply exemptions resulting from Articles 21(3) and 22(4) the Corporate Income Tax Act, including section 1c, subject to a written statement from that company or its foreign establishment that the conditions referred to respectively have been met in respect of the amounts paid under Article 21(3a) and 3c the Corporate Income Tax Act or Article 22(4)(4) the Corporate Income Tax Act For claims in question under Article 21(1)(1) the Corporate Income Tax Act 12 , a written statement shall indicate that the company or foreign establishment is the actual owner of the receivables paid.

Compliance with the above provisions the Corporate Income Tax Act is a recipe Article 26(2e) the Corporate Income Tax Act, according to which, if the total amount of the entitlements paid for the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act exceeds the amount 2,000,000 PLN, legal persons, organisational units not having legal personality and natural persons who are entrepreneurs are obliged as payers to collect, subject to the condition section 2g, on the date of payment of the flat-rate income tax on these payments at the rate of tax specified under Article 21(1) or Article 22(1) above the amount 2,000,000 PLN:

1) taking into account the deductions provided for under Article 22(1a-1e) the Corporate Income Tax Act;
2) without the possibility of no tax being collected under an appropriate double taxation agreement, and without taking into account exemptions or rates resulting from specific provisions or double taxation agreements.

The above regulations therefore introduce the compulsory collection of withholding tax by the payer if the amount of receivables paid from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act exceed 2,000,000 PLN to the same taxpayer in the tax year applicable to the payer. It follows from these regulations that it is not possible to apply the Treaty privileges resulting from the double taxation agreement in question.

It deserves attention that the limit 2,000,000 PLN refers to the total amount of all receivables from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act A contrario from these regulations shows that up to the limit 2,000,000 PLN payments of dividends, interest and royalties and other liabilities may be made on the terms applicable to 30 June 2020, i.e. Treaty protection may be applied to this limit at the moment of payment of those claims. This means that a Polish payer who pays the abovementioned claims to a company resident in another EU or EEA State may pay these claims without deducting withholding tax by applying 19% the rate of this tax provided that:

1) at the latest on the date on which such payment was made, he obtained a certificate of the taxable person to whom the payment is made;
2) verify, while ensuring due diligence, whether the conditions for the exemption or application of the provisions of double taxation agreements have been fulfilled.

Where the tax year of the payer is longer or shorter than 12 months, limit amount 2,000,000 PLN, referred to under Article 26(1) the Corporate Income Tax Act, calculate as product 1/12 quotas 2,000,000 PLN and the number of months of the tax year in which these claims were paid (Article 26(2i) the Corporate Income Tax Act).

If, on the other hand, the calculation of the above limit is not possible by indicating the tax year of the payer, the rules laid down under Article 26(2e) the Corporate Income Tax Act shall apply mutatis mutandis to the financial year in force in that payer and, in the absence thereof, to the other period in force in that payer with characteristics specific to the financial year but not longer than 23 consecutive months (Article 26(2j) the Corporate Income Tax Act).

Where the payment of the claim was made in foreign currency, for the purpose of determining whether the amount of the limit in question has been exceeded under Article 26(1) the Corporate Income Tax Act, claims paid shall be converted into gold at the rate of the average foreign currency announced by the NBP on the last working day preceding the day of payment (Article 26(2k) the Corporate Income Tax Act).

In turn, if the amount of the debts paid to the same taxable person cannot be determined, it is presumed to have exceeded the amount in question under Article 26(1) the Corporate Income Tax Act (Article 26(2l) the Corporate Income Tax Act).

A regulation of great practical importance in the area under consideration is a provision Article 26(9) the Corporate Income Tax Act, which confers on the Minister responsible for public finances the power to identify by regulation a group of taxable persons, a group of payers or activities for which the application will be excluded or restricted Article 26(2e) the Corporate Income Tax Act, where the conditions for non-taxation, application of the rate of tax or exemption resulting from specific provisions or double taxation agreements are met, taking into account the existence of certain economic conditions, the specific status of certain groups of taxable persons and payers and the specificity of certain activities.

3.2. Conditional possibility of not collecting withholding tax

In accordance with the provisions Article 26(2e) the Corporate Income Tax Act, if the above limit is exceeded 2,000,000 PLN the payer making the payment of the abovementioned debts, in principle, must collect withholding tax at the rate resulting from the regulation the Corporate Income Tax Act However, the legislator predicted two exceptions to the above general rule, ordering the absolute collection of withholding tax. Non-recovery of withholding tax, despite payment of certain duties under Article 21(1) and under Article 22(2) the Corporate Income Tax Act over amount 2,000,000 PLN to the same taxpayer, it will be possible to:

on the basis of the existing opinion on the application of the exemption in question under Article 26b the Corporate Income Tax Act;
if the payer has made a statement that:

(a) has the documents required by the tax legislation for the application of the rate of tax or exemption or non-collection resulting from specific provisions or double taxation agreements,

(b) after the verification in question Under section 1, is not aware of the presumption that there are circumstances that exclude the possibility of applying a rate of tax or exemption or non-collection of a tax resulting from specific provisions or double taxation agreements, in particular that it does not have knowledge of the existence of circumstances preventing the fulfilment of the conditions in question under Article 28b(4)(4-6) the Corporate Income Tax Act

3.2.1. Opinion on the application of the exemption

Provision Article 26(2g) the Corporate Income Tax Act provides that in the case of claims in question under Article 21(1)(1) the Corporate Income Tax Act or Article 22(1) the Corporate Income Tax Act, paid to the company concerned, respectively under Article 21(3)(2) the Corporate Income Tax Act or Article 22(4)(2) the Corporate Income Tax Act, or a foreign establishment of such a company, if the total amount of receivables from the titles listed worth.

21 section 1 and Article 22(1) the Corporate Income Tax Act, paid to that taxpayer in the tax year applicable to the payer exceeds the amount 2,000,000 PLN, legal persons and organisational units not having legal personality who pay these claims may apply the exemption in question under Article 21(3) or Article 22(4) the Corporate Income Tax Act (i.e.

participation exemption) on the basis of the current opinion on the application of the exemption in question under Article 26b the Corporate Income Tax Act However, this provision shall not apply if it is apparent from the information held by the payer, including the document, in particular from the invoice or from the contract, that the taxable person concerned by the assessment of the application of the exemption does not fulfil the conditions set out in Article 21(3-9), Article 22(4-4d) and (6) the Corporate Income Tax Act or the facts do not correspond to the facts set out in that opinion (Article 26(2h) the Corporate Income Tax Act).

In accordance with the provisions Article 26b(1) the Corporate Income Tax Act, tax authority 13 , upon request by the entity concerned under Article 28b(2) the Corporate Income Tax Act (i.e.

by the taxable person or payer) shall issue, provided that the applicant demonstrates that the taxable person complies with the conditions laid down in this Article.

Under Article 21(3-9) the Corporate Income Tax Act or Article 22(4-6) the Corporate Income Tax Act – Opinion on the payer’s application of the flat-rate tax exemption on the amounts payable to that taxpayer under Article 21(1)(1) or Article 22(1) the Corporate Income Tax Act (the opinion on the application of the exemption).

By Sound Article 26b(2) the Corporate Income Tax Act The request for an opinion on the application of the exemption shall be submitted in electronic form corresponding to the logical structure available in the BIP, on the website of the body of the office serving the minister responsible for public finances.

In the same way, the request for an opinion on the application of the exemption for the presentation of further facts to the tax authority and the submission of supporting documentation is supplemented.

According to Article 26b(3) the Corporate Income Tax Act The following shall be refused an opinion on the application of the exemption:

1) failure by the taxable person to meet the conditions laid down under Article 21(3-9) or Article 22(4-6) the Corporate Income Tax Act;
2) the existence of reasonable doubts as to the actual compliance with the documentation attached to the application or the taxpayer’s declaration that he is the beneficial owner;

the existence of a reasoned presumption of a decision using Article 119a a., limiting contractual benefits, or Article 22c the Corporate Income Tax Act, where the decision is based on reasonable grounds, Article 119a o.p. or measures limiting the contractual benefit of the provision Article 14b(5c) s.p. shall apply mutatis mutandis. 14 ;
the existence of a reasonable presumption that the taxable person in question under Article 3(2) the Corporate Income Tax Act, does not engage in actual economic activities in the country of residence of that taxable person for tax purposes, with a provision Article 24a(18) the Corporate Income Tax Act shall apply mutatis mutandis.[15].

Provisions Article 26b(3)(2-4) grant the tax authorities, in principle, unlimited discretion to refuse to give an opinion on the application of the exemption.

It is sufficient to have doubts on the part of the tax authority as to the actual compliance with the documentation attached to the application or the taxpayer’s declaration that he is the actual owner of the claim or the existence of a subjective presumption of a decision using Article 119a or that the taxable person who is the recipient of the abovementioned claims does not carry out actual business activity in the country of residence.

The verification of subjective assumptions or subjective doubts of the tax authority is extremely difficult, if at all possible, especially that no provision the Corporate Income Tax Act does not indicate what grounds, apart from those explicitly indicated under the conditions of participation exemption, the tax authority should take into account when issuing an opinion on the application of the exemption.

As a result, the tax authority is not required to clearly verify the factual and legal tax situation of the taxpayer and the payer, while at the same time being able to refuse to give an opinion on the application of the exemption.

The very concept of “real business” is out of focus, and the doctrine of tax law raised numerous objections to it.[16]. This concept has been – in a highly defective way, causing serious constitutional doubts 17 – defined ‘by calculation’ under Article 24a(18) the Corporate Income Tax Act (source numbered 18).

This definition has no character exhaustive, which means that the tax obligation may be derived under this provision from analogy, presumption or even a consequence of an arbitrary, unsupported decision of the tax authority.

Consequently, under that provision, even the positive fulfilment of the conditions set out therein does not constitute any guarantee to the taxpayer or the payer that the economic activity carried out by the taxable person is ‘actual’ since the tax authority has, in the light of this regulation, almost unlimited discretion, beyond the content of the tax law.

The tax authority may take into account any non-statutory condition, applying any measure to the statutory conditions of expressis verbis indicated under Article 24a(18) the Corporate Income Tax Act and other extra-statutory conditions which, according to the tax authority, are relevant in the case in question.

Appeal by the legislator in the content Article 26b(3)(4) the Corporate Income Tax Act to the concept of ‘real business’, within the meaning of Article 24a(18) the Corporate Income Tax Act, raises reasonable doubts as to the compatibility of this regulation with Article 2 in conjunction with Article 217 Constitution of the Republic of Poland.

Doubts increase when the earlier case law of the Constitutional Court is taken into account, which in the judgment of the 24 May 1994 19 He pointed out that the law, in accordance with the principle of citizens' trust in the State and their rights, should be established and applied in such a way that "it does not become a trap for the citizen." The imprecise and imprecise tax laws constitute a fiscal trap for the taxpayer, with a significant level of unpredictability.

Judgment

A violation of constitutional requirements should be assessed as such vague and vague formulation of a provision which creates uncertainty for its addressees about their rights and obligations.

It creates an overly broad framework for authorities applying such a provision, which must in fact replace the legislator with matters which are not clear and vaguely regulated.

The legislator cannot, by vague formulation of the text of the provisions, leave the authorities to exercise excessive freedom in practice to determine the subject matter and the constitutional restrictions in question on the freedoms and rights of the individual [...] The Constitutional Court takes the view that exceeding a certain level of ambiguity of the legal provisions may constitute an essential ground for finding their non-compliance ...

with the expressed under Article 2 of the Constitution of Poland the rule of law (judgment of the Constitutional Tribunal of 11 May 2004)[20].

The taxpayer has the right to bring an action against the refusal to give an opinion on the application of the exemption to the administrative court. The tax authority shall inform the applicant in its instruction to refuse to give an opinion on the application of the exemption (Article 26b(4) the Corporate Income Tax Act).

The tax authority should issue an opinion on the application of the exemption without undue delay, no later than the deadline 6 months from the date of receipt of the application to the tax authority (Article 26b(5) the Corporate Income Tax Act).

The request for an opinion on the application of the exemption shall be subject to payment to the account of the tax authority within the time limit 7 the days from the date of submission of the application, subject to the urgency of leaving the application unanswered. The fee on the application for an opinion shall be 2,000 PLN.

According to Article 26b(6) the Corporate Income Tax Act the fee on the request for an opinion on the application of the exemption shall constitute the revenue of the State budget. The opinion on the application of the exemption shall expire:

1) with expiry 36 months from the date of its issue;
2) the last day of the month following the month in which the period in question expired Under section 8 21 , if, in accordance with that provision, the applicant has informed the tax authority of a material change in circumstances;

from the date on which the taxable person concerned by that opinion no longer fulfils the conditions laid down under Article 21(3-3c) the Corporate Income Tax Act or Article 22(4-6) the Corporate Income Tax Act, if the applicant has not informed the tax authority in accordance with section 8 (Article 26b(7) the Corporate Income Tax Act).

Obtaining a positive opinion on the application of the exemption, at the request of both the taxpayer and the payer, is tantamount to paying dividends, interest or royalties under the rules applicable to 30 June 2020 If such an opinion is obtained before payment of the abovementioned claims to companies in other EU or EEA Member States, the payer will not have to collect withholding tax on those claims.

It should be noted that the possibility of seeking an opinion on the application of the exemption applies only to payments from the titles defined Under Articles 21(1) and 22(1) the Corporate Income Tax Act to companies from EU or EEA Member States. Consequently, payments from the above mentioned titles to companies from other countries, including Polish double taxation agreements, will not be able to benefit from protection resulting from a safety opinion.

The lack of this possibility in the case of payments to companies from countries with which Poland has concluded a double taxation agreement seems to lack a certain legislative consequence on the part of the tax legislature and it is certainly not justified, since the Polish tax authorities have the possibility to verify the international exchange of information and legal assistance of documents and facts submitted by the applicant. All double taxation agreements provide, following the OECD Model Convention 22 , exchange of tax information.

3.2.2. Declaration by the payer

By Sound Article 26(7a) the Corporate Income Tax Act second where it is possible not to collect withholding tax, despite payment of certain duties under Article 21(1) and under Article 22(2) the Corporate Income Tax Act over amount 2,000,000 PLN to the same taxable person, there is a situation where the payer has made a statement that:

has the documents required by tax law to apply the rate of tax or exemption or non-collection resulting from specific provisions or double taxation agreements;
After the verification referred to Under section 1, is not aware of the presumption that there are circumstances that exclude the possibility of applying a rate of tax or exemption or non-collection of a tax resulting from specific provisions or double taxation agreements, in particular that it does not have knowledge of the existence of circumstances preventing the fulfilment of the conditions in question under Article 28b(4)(4-6) the Corporate Income Tax Act

The above statement shall be made by the head of the unit within the meaning of the Act of 29 September 1994 on accounting 23 , giving the function it performs. According to Article 26(7b) the Corporate Income Tax Act, it is not permissible to make this declaration by proxy. According to Article 26(7c) the Corporate Income Tax Act that declaration should be made at the latest on the date of payment of the entitlements from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act According to the wording of the regulation Article 26(7d) the Corporate Income Tax Act where:

1) the statement in question Under section 7a, fold one person – submission of a statement to the tax authority specified under Article 28b(15) the Corporate Income Tax Act 24 ;
2) to make the declaration in question Under section 7a, more than one person – proof of the declaration shall be provided with the notification 25 to the tax authority specified under Article 28b(15) the Corporate Income Tax Act

If the payer has made the declaration in question under Article 26(7a) the Corporate Income Tax Act, and then makes to the taxable person concerned further payment of the amounts referred to Under Articles 21(1) and 22(1) the Corporate Income Tax Act, the payer may not apply regulation Article 26(2e) the Corporate Income Tax Act, i.e.

do not deduct withholding tax until expiry 2. the month following the month in which the declaration was lodged (Article 26(7f) the Corporate Income Tax Act). In the above case, the payer, within the time limit 7.

on the day following the month in which the two-month period expired, it is obliged to make a statement to the tax authority in question under Article 28b(15) the Corporate Income Tax Act, that at the time of further payment of charges:

hold the documents required by the tax law to apply the rate of tax or exemption or non-collection resulting from specific provisions or double taxation agreements;
After the verification referred to Under section 1, did not have the knowledge to suggest that there were circumstances which precluded the application of the rate of tax, exemption or non-collection resulting from specific provisions or double taxation agreements, in particular those preventing the fulfilment of the conditions in question under Article 28b(4)(4-6) the Corporate Income Tax Act (Article 26(7g) the Corporate Income Tax Act).

In accordance with the provisions Article 26(7h) the Corporate Income Tax Act, where it is not possible to make this declaration due to non-compliance with the conditions covered by it, the payer, within the time limit referred to in the provision Article 26(7g) the Corporate Income Tax Act, pays the tax that would be due under the provisions Article 26(2e) the Corporate Income Tax Act, with interest on delay.

Declarations in question under Article 26(1ab), 7a and 7g the Corporate Income Tax Act, and the notification it provides for Article 26(7d)(2) the Corporate Income Tax Act, according to included under Article 26(7j) the Corporate Income Tax Act the provisions shall consist of an electronic form corresponding to the logical structure available in the BIP on the website of the body of the office serving the minister responsible for public finances.

Provision Article 26(10) the Corporate Income Tax Act includes a delegation to the Minister responsible for public finances to determine, by means of a regulation, how the statements in question are sent Under section 1ab and 7a and 7g, and a specific notification Under section 7d point 2, by means of electronic communication, taking into account the need to ensure the security, reliability and undeniable reliability of the data contained in those documents and the need to protect them from unauthorised access.

3.2.2.1. Declaration by the payer and tax liability

The above provisions should also be considered in the context of carnoscar liability, for as it is stated Article 56d(1) Act on 10 September 1999 Tax Penal Code[26] ((k.k.s.) who gives untruth or conceals the truth by submitting:

the statement referred to, inter alia, under Article 26(1ab), 7a or 7g the Corporate Income Tax Act;
a statement of compliance with the facts set out in the request for reimbursement referred to in Chapter 7b the Corporate Income Tax Act or in Chapter 6a the Corporate Income Tax Act or in an application for an opinion on the application of the exemption in question under Article 26b(1) the Corporate Income Tax Act and as regards compliance with the original of the documents annexed to those applications shall be subject to a fine to 720 the daily units or penalties for imprisonment, or both, together. According to Article 56d(2) k.k.s. in the case of a minor offence of a specified criminal offence Under section 1 is fined for fiscal misdemeanour.

These regulations give rise to significant risks for those making the above-mentioned declarations. Carnoscar liability is based on the principle of guilt, although it may sometimes be the responsibility for the action of a person third, i.e. a taxpayer. First of all, it should be noted that the taxpayer, who is the recipient of dividends, interest or royalties paid by Polish payers, is not obliged to provide information other than those resulting from double taxation agreements.

It is easy to imagine a situation in which verification of certain facts will be made difficult by reason of the reluctance, which is not a Polish tax resident of the recipient of the abovementioned claims, to disclose information other than those which, in the light of the relevant double taxation agreement, are sufficient to avoid the collection of taxes at source or to collect it at a reduced rate.

Consequently, a situation may arise in which the verification carried out by the payer will, having a limited character, be subject to errors, and the finding of such a fact by the tax authority or the prosecution with a high probability will result in the imposition of charges, on the basis of Article 56d(1) or (2) k.k.s., the person making such a statement.

This verification concerns the taxable person and is carried out by the payer and therefore the taxable person may be subject to criminal liability by acting or failing the taxable person (persons) third), which may consider that, in so far as it goes beyond the requirements of a particular double taxation agreement, it is not obliged to provide any information to the paying agent.

While, in the event of doubts as to the reliability of the verification carried out and the facts confirmed in the statement of the reasonableness of the non-receiving (or collecting it at a reduced level) of the person representing the payer should depart from the statement, it is much more difficult to assess the case where the payer has paid all due diligence in carrying out the above-mentioned verification, and nevertheless has proved to be defective.

It also deserves to be noted that the payer ‘does not have the knowledge to justify the presumption that there are circumstances that exclude the application of a tax rate or exemption or non-collection of a tax resulting from specific provisions or double taxation agreements’. The term ‘knowledge justifying supposition’ is vague.

It may be assessed and subject to various interpretations by the authorities of the State. It is difficult to set a border in a precise manner, which would provide legal security for those making the above-mentioned declaration.

A particular fact may constitute a ‘knowledge justifying the presumption’ for tax authorities that there are circumstances that exclude the possibility of applying a rate of tax or of exempting or not collecting withholding tax, and for a payer who acts in good faith, it may not constitute such ‘knowledge’. Nature Article 56d(1)(2) k.k.s.

in conjunction with regulations the Corporate Income Tax Act, to which that provision refers, it should be assessed as intended to discourage taxpayers from making the declarations referred to in that provision.

3.2.2.2. Declaration by the payer and additional tax liability

Irrespective of the risk of criminal liability on the basis of Article 56d(1)(2) K.k.s., tax authorities have the possibility to impose an additional tax liability on the basis of Article 58a(1)(5) as stated in the above provision, when issuing a decision using Article 30(1) o.p.

27 , when the statement referred to, inter alia, under Article 26(7a) or (7g) the Corporate Income Tax Act it was not correct, the payer failed to carry out the required verification or the verification made by the payer was not adequate to the nature and scale of the payer’s activities, while the tax authority also establishes an additional tax liability under the provisions of this Chapter.

In accordance with the provisions Article 58b(3) o.p., in a specific situation under Article 58a(1) point (o) above, the additional tax liability is determined as 10% the tax base for which the payer applied a lower tax rate or did not collect a tax.

This additional tax liability will be charged in formal terms to the taxpayer, although the payer will be obliged to pay it as the paying agent of the claims in question. Under Article 21(1)(1) or Article 22(1) the Corporate Income Tax Act, and at the same time will be required to collect withholding tax.

Conditions for imposing the so-called additional tax liability on the basis of Article 58a(1)(5) s.p. largely coincides with the conditions of carnal liability with Article 56d(1)(2) k.k.s. Consequently, the scope of tax and criminal tax liability for any irregularity relating to the submission of a statement or application, under the current rules on the collection of withholding tax, is exceptionally wide.

This fact prejudges, in the author's opinion, the hidden intention of the legislator, which boils down to the desire to deter the payers and their representatives from making such statements and thus to pay the tax at source.

In that case, given the content Article 28b(7) the Corporate Income Tax Act, the tax authorities may extend the procedure to verify the conditions necessary for the repayment of the withholding tax, equivalent to the State's own lending by taxable persons subject to a limited tax obligation in Poland for the receivables in question.

Under Article 21(1)(1) or Article 22(1) the Corporate Income Tax Act (source numbered 28). The above-mentioned legislative arrangements can therefore be considered as a specific tax shield, in this case applied by the State.

3.3. Payment of tax and information and declaration obligations of payers

In accordance with the provisions Article 26(3) the Corporate Income Tax Act the payers in question Under section 1, are required to transfer the amount of the tax by 7.

the day of the month following the month in which, in accordance with section 1 and 2-2b and 2d and 2e – the tax has been collected on the account of the tax office by which the head of the tax office competent at the place of establishment of the taxable person performs his tasks or, in the case of the income in question, under Article 7b(1)(1) point (f) the Corporate Income Tax Act 29 – to the account of the tax office by which the head of the tax office competent according to the place of the payer performs his tasks.

In the case of taxable persons subject to a limited tax obligation in Poland and taxable persons entitled to securities entered in collective accounts whose identity has not been disclosed to the payer in the manner provided for in the law in question under Article 4a(15) the Corporate Income Tax Act, for the account of the tax office by which the head of the tax office competent in matters of taxation of foreign persons performs his tasks.

The payers are also obliged to send to taxpayers:

subject to an unlimited tax obligation in Poland – information on the amount of tax collected;
subject to a limited tax obligation in Poland, and to the tax office – information on the payments made and the tax collected, drawn up according to the established formula. The obligation to send this information to taxable persons and to the tax office does not arise in the case and to a certain extent Under section 2a sentence first.

By Sound Article 26(3a) the Corporate Income Tax Act, the payers are required to send the information in question Under section 3 point 1, when the amount of tax collected is transferred and the information referred to in provision numbered 3 point 2, by the end of month 3 of the year following the tax year in which the payments in question were made Under section 1, also when the payer during the tax year compiled and transmitted the information as foreseen Under section 3b[30].

According to Article 26(3c) the Corporate Income Tax Act, if the payer ceases to operate before the expiry of the period referred to Under section 3a, the payer provides specified information Under section 3 point 2 by the date of cessation of operations.

According to Article 26(3d) the Corporate Income Tax Act, the information in question Under section 3 point 2, draw up and transfer also the entities which pay the amounts due from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act, where, under a double taxation agreement or law, no tax collection is required, with provisions section 3b and 3c shall be applied mutatis mutandis.

By Article 26(3e) the Corporate Income Tax Act, if the sum of the claims paid to the taxable person from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act, the value of which exceeds the amount in the tax year applicable to the payer 2,000,000 PLN, includes claims on which according to section 1d no tax has been collected, the payer is obliged to notify the amount and type of charges paid to the taxable person concerned in the tax year of that payer from whom the tax has not been collected, giving the identification of the taxable person operating through a foreign establishment located in the territory of Poland, in particular: the full name, address and tax identification number of the taxable person and the address of the foreign establishment of the taxable person.

In accordance with the guidelines, under Article 26(3f) the Corporate Income Tax Act, This notification shall also be made in the event of further payment to the taxable person in the tax year of claims on which, according to section 1d the tax has not been collected.

Notification Under section 3e, shall be deposited with the head of the tax office responsible for the taxation of foreign persons within the time limit 7.

on the day of the month following the month in which the payment of entitlements from the titles listed was made Under Articles 21(1) and 22(1) the Corporate Income Tax Act In addition, according to Article 26(3g) the Corporate Income Tax Act, provisions Article 26(3e)(3f) the Corporate Income Tax Act shall apply mutatis mutandis to payments on which the tax has not been collected on the basis of section 1a, the notification is submitted to the head of the tax office responsible for the tax office of the taxpayer and, in the case of taxable persons subject to a limited tax obligation in Poland, to the head of the tax office responsible for the taxation of foreign persons.

According to Article 26(8) the Corporate Income Tax Act information on the payments made and the tax collected in question under Article 26(3)(2) and sections 3b–3d the Corporate Income Tax Act, shall be sent to the tax office by electronic means in accordance with the provisions of o.p.

3.4. Reimbursement of the duty paid

In accordance with the provisions Article 28b(1) the Corporate Income Tax Act the tax authority shall, upon request, reimburse the tax collected in accordance with Article 26(2e) the Corporate Income Tax Act The amount of tax to be recovered shall be determined on the basis of exemptions or rates resulting from special provisions or double taxation agreements to which the Republic of Poland is party. An application for a refund may be made by:

1) the taxable person, including those subject to a limited tax obligation in Poland, who, in connection with the receipt of the tax on which the tax was collected, achieves taxable income in accordance with the provisions of this Act;
2) according to Article 28b(2) the Corporate Income Tax Act the payer, if he paid the tax from his own resources and borne his economic burden.

The application for refund shall contain a statement of compliance with the facts set out in the application and of compliance with the original documentation attached to the application. Based on Article 28b(3) the Corporate Income Tax Act the obligation to make the above declaration also exists at a further stage of the procedure with regard to the subsequent facts presented and the supporting documentation provided. By virtue of the provisions Article 28b(4) the Corporate Income Tax Act, the application for a refund shall be accompanied by documentation to establish its validity, in particular:

1) certificate of residence of the taxable person, with provisions Article 26(1i)(1j) shall apply mutatis mutandis. 31 ;
2) documentation on bank transfers or other documents indicating the manner in which the payment of the tax was made or transferred;
3) documentation relating to the obligation to pay dues;
4) a statement by the taxable person that the conditions referred to respectively have been met in respect of the amounts paid under Article 21(3)(4) point (b), section 3a and 3c the Corporate Income Tax Act or Article 22(4)(4) the Corporate Income Tax Act;

a statement by the taxable person that, in respect of the activity in respect of which the application for reimbursement is made, the taxable person is the taxable person and a statement by the taxable person that the company or foreign establishment is the actual owner of the receivables paid, in the case in question under Article 28b(2)(1) the Corporate Income Tax Act;
a statement by the taxable person that he has an actual economic activity in the country of residence of the taxable person for tax purposes to which the income obtained is linked, in the case in question under Article 28b(2)(1) the Corporate Income Tax Act, where receivables are obtained in connection with an economic activity, with a provision Article 24a(18) the Corporate Income Tax Act apply mutatis mutandis;
documentation indicating the contractual arrangements by which the payer paid the tax on his own resources and incurred the economic burden of that tax in the case in question under Article 28b(2)(2) the Corporate Income Tax Act;
justification of the applicant that the conditions to be declared are met Under points 5 and 6.

As concluded under Article 28b(5) the Corporate Income Tax Act, on the tax refund, the tax authority shall issue a decision determining the amount of the refund, subject to section 10.

By Sound Article 28b(6) the Corporate Income Tax Act tax refund, subject to section 7, occurs without undue delay, but no later than the time limit 6 months from the date of receipt of the application for reimbursement. Provision Article 139(4) s.p. shall apply mutatis mutandis.[32].

Term specified in the sentence first runs again from the date of impact of the amended tax refund application.

According to the content Article 28b(7) the Corporate Income Tax Act, where the information available indicates a high likelihood of irrevocabity of the return and the possibility of obtaining information prejudging the validity of the refund under national law has been exhausted, so that verification of the validity of the refund is not possible within the time limit in question.

Under section 6, the tax authority may extend the time limit for tax reimbursement until the conclusion of the verification of the application for tax refund in the framework of tax control, customs-tax control or tax proceedings, including the control in question Under section 9.

Provision Article 28b(8) the Corporate Income Tax Act provides that, in order to verify the return, the tax authority shall, as soon as it receives the request for reimbursement, take action consisting in particular of:

request for tax information to the competent authority of another country, including the fulfilment by the taxable person of the conditions to be declared under Article 28b(4)(4-6) the Corporate Income Tax Act;
verification of the conformity of the data indicated in the application and of the data held by the tax authority or obtained at the request referred to Under point 1, with the conditions of non-collection, exemption or rate of tax resulting from specific provisions or double taxation agreements to which the Republic of Poland is party and to determine whether a taxable person subject to a limited tax obligation in Poland carries out actual economic activities in the country in which it is established for tax purposes, with provisions Article 24a(18) the Corporate Income Tax Act and Article 26(1h) the Corporate Income Tax Act shall be applied mutatis mutandis.

According to Article 28b(9) the Corporate Income Tax Act, where this is justified by the circumstances, in particular where, despite the action taken, doubts have not been clarified as to the fulfilment by the taxable person of the conditions resulting from specific provisions or double taxation agreements, non-tax collection, application of exemptions or rates of tax, verification of the merits of the application for reimbursement may also include carrying out tax checks in the territory of the taxpayer's home country for tax purposes.

As concluded under Article 28b(10) the Corporate Income Tax Act, if the application for reimbursement is without doubt, the tax authority shall immediately recover the amount indicated in the application without a decision.

If tax refund in the manner referred to in the sentence first, have been unduly or more than due, no proceedings shall be initiated in cases of fiscal criminal offence and fiscal misdemeanour.

As indicated under Article 28b(11) the Corporate Income Tax Act the procedures, the application for reimbursement of the tax shall be made in an electronic form corresponding to the logical structure available in the BIP on the website of the body office serving the minister responsible for public finances.

In the same way, the application for a tax refund is supplemented by further facts to the tax authority and supporting documents.

As concluded under Article 28b(12) the Corporate Income Tax Act, if the application for a refund of tax has not been accompanied by the documentation in question under Article 28b(4) the Corporate Income Tax Act, the tax authority calls on the applicant to remedy the deficiencies within the time limit 14 days from the date of service of the notice, with instructions that failure to remedy these deficiencies will leave the application for a refund without consideration.

In the case of leaving the request for reimbursement unexamined, a decision is issued for which a complaint may be made.

By Article 28b(13) the Corporate Income Tax Act tax not reimbursed by the tax authority within the period referred to under Article 28b(6) the Corporate Income Tax Act, shall be remunerated in the amount corresponding to the carry-over fee.

In accordance with the guidelines Article 28b(14) the Corporate Income Tax Act the tax refund shall be made to the applicant's bank account or to the applicant's cooperative savings and credit account. Where a refund is made to an applicant's account located outside the country, the refund shall be reduced by the reimbursement costs.

According to Article 28b(15) the Corporate Income Tax Act the tax authority responsible for tax reimbursement is the head of the tax office competent according to the taxable person’s registered office and, in the case of taxable persons subject to a limited tax obligation in Poland and taxable persons who are entitled to securities recorded in collective accounts whose identity has not been disclosed to the payer in the manner provided for in the Act in question under Article 4a(15) the Corporate Income Tax Act, Head of the tax office competent in matters of taxation of foreign persons[33].

Analysis of compliance the Corporate Income Tax Act with European law and the provisions of double taxation agreements

The regulations in question introduce the compulsory collection of withholding tax by the payer if the amount of receivables paid from the titles listed Under Articles 21(1) and 22(1) the Corporate Income Tax Act exceed 2,000,000 PLN to the same taxpayer in the tax year applicable to the payer.

From these regulations the Corporate Income Tax Act it follows from the expressis verbis that, in such a case, it is not possible to apply the Treaty privileges resulting from the double taxation agreement in question.

In the light of the provisions Article 91(2) The Constitution of the Republic of Poland, double taxation treaties as international agreements ratified with the prior consent of the Sejm, expressed in the form of a bill, occupy in the hierarchy of sources of law commonly applicable to laws – whose provisions are excluded in the event of conflict with international agreements.

None of the agreements concluded by Poland on the avoidance of double taxation provides in the Corporate Income Tax Act, additional conditions to ensure Treaty protection for taxable persons of Contracting States.

Regulations Article 10-12 double taxation agreements, following the OECD Model Convention, regulate the taxation of dividends, interest and royalties paid between taxable persons of contracting countries.

These provisions do not provide for the possibility of making the application of the rates of withholding tax laid down in a given double taxation agreement more or less of excluding the possibility of applying those rates in the internal law of Contracting States.

Double taxation agreements provide that, in the case of payment of dividends, interest or royalties, those claims may be taxed at source, but the tax in the country of origin may not exceed the value indicated in the contract in question.

An eligible case in the light of the regulation of double taxation agreements is the case of compliance with the eligibility exemption criteria, i.e. the holding of a direct capital share by the recipient company in the capital of the paying company. In this case, the reduced rate of withholding tax will apply, most often at 5%.

Conditions for application Article 10-12 the double taxation agreement in question is that the recipient of the abovementioned claims is resident for tax purposes In the second the Contracting State, i.e. to have the status of tax resident in it.

In addition to the above requirements, there are no additional criteria for the application of reduced withholding tax rates.

Given that the provisions the Corporate Income Tax Act introduce a number of additional criteria for the non-resourced tax on the payment of the abovementioned claims or for the reimbursement of the tax collected, it can be concluded that the provisions Article 26(1) and (2e) the Corporate Income Tax Act are incompatible with the provisions Article 10-12 Polish double taxation agreements.

Nor can the above provisions be recognised the Corporate Income Tax Act for detailing the regulation of double taxation agreements, as those agreements do not introduce any quota thresholds on which the application of or refusal to grant Treaty protection would be subject.

There is also no requirement in double taxation agreements to make any claims by the payer or the taxable person between whom the abovementioned claims are paid.

Resignation from the so-called relief atsource, when a possible check on whether the taxpayer (and the payer) has exercised the tax advantages of the provisions of the double taxation agreement in question, to the tax-refund mechanism, i.e.

to collect a tax with the right to claim a refund after prior verification of the rights it holds, is a solution that distorts the wording of the provisions of the double taxation agreements, as there is a tax collection contrary to the rules of the double taxation agreement.

It should also be noted that the introduction of a requirement for the payer to make a statement on the information, facts and legal status relating to the taxpayer constitutes a transfer of the burden of tax liability, but also of the criminal tax liability to the payer, which has limited ability to verify data on the entity third (a taxable person), who may not wish to provide such information, except those which, in the light of the regulation of the respective double taxation agreement, are sufficient to benefit from the resulting Treaty protection.

In the formal sense, the liability of the payer for the declaration is the responsibility for his action or omission, i.e.

due verification of the data indicated under Article 26(7a) the Corporate Income Tax Act, However, in a material sense, this is a liability on the basis of the limits of liability for own actions or omissions and the liability for the taxpayer and the veracity of the data it provides, of which only part constitutes grounds for the use of Treaty protection and reduced rates of withholding tax.

Nor does any of the double taxation agreements provide for a mechanism for the collection of withholding tax and its subsequent recovery at the request of a taxable person who, in the event of compliance with the conditions for the participation exemption set out in that double taxation agreement, may reasonably benefit from that exemption, and the State of the payer's tax residence has no right to collect withholding tax at a higher rate than its rate indicated in the respective double taxation agreement, even if it was to reimburse that taxpayer.

The above legislative actions of the Polish legislator constitute a specific attempt to force responsibility on the part of the individual, which is in the power of the Polish state and law. The taxpayer, which is the recipient of dividends, interest or royalties paid by the Polish entity, is a nonresident, and the possibility to hold him liable is limited, especially if the taxpayer has fulfilled the conditions to benefit from the reduced rate of withholding tax on the abovementioned duties laid down in the double taxation agreement.

Unless the payer makes a statement that it has the documents required by the tax legislation for the application of the rate of tax or exemption or non-collection resulting from specific provisions or double taxation agreements, there is no doubt as to compliance with the provisions of the double taxation agreements, as their content is referred to, the editorial board of the provision Article 26(7a)(2) the Corporate Income Tax Act goes beyond the provisions of double taxation agreements.

This provision requires the payer to make a declaration that, following the verification in question, under Article 26(7a)(1) the Corporate Income Tax Act, is not aware of the presumption that there are circumstances that exclude the application of the rate of tax or exemption or non-collection of the tax resulting from specific provisions or double taxation agreements, in particular that it does not have knowledge of the existence of circumstances preventing the fulfilment of the conditions in question under Article 28b(4)(4-6) the Corporate Income Tax Act In this regard, the provision raises the greatest concerns Article 28b(4)(6) the Corporate Income Tax Act, which requires the payer to verify whether the taxable person carries out ‘real economic activity’ in the country of residence for tax purposes.

Where a request for reimbursement of the tax collected at source on the payment of dividends, interest or royalties is made under the scheme Article 28b(2)(1) the Corporate Income Tax Act, the taxable person is required to make a declaration that he is engaged in ‘actual economic activity’, i.e.

in the case of a declaration made under the procedure Article 26(7a)(2) the Corporate Income Tax Act, Thus, in order to prevent the collection of the withholding tax, the payer is obliged to verify whether the taxable person’s condition of ‘real business’ has been fulfilled.

The term ‘real economic activity’ is also referred to in the provision Article 26b(3)(4) the Corporate Income Tax Act, granting the tax authority the possibility to refuse to give an opinion on the application of the exemption in the event that there is a reasonable presumption that a taxable person subject to a limited tax obligation in Poland does not carry out actual economic activities in the country of its registered office for tax purposes.

This provision provides for appropriate application of the rules Article 24a(18) the Corporate Income Tax Act, in the light of which it is impossible to determine clearly what ‘actual economic activity’ is and what statutory and non-statutory conditions must be fulfilled in order for the economic activity carried out to be ‘actual’ in the fiscal assessment.

Moreover, the tax authorities of the State of the taxpayer's tax residence, which is the recipient of the passive income paid by the Polish entity, may find that the taxable person carries out a ‘real’ business activity at a time when the Polish tax authorities make a different assessment.

Moreover, many countries do not have the concept of "real economic activity" in their legislation, so they are unable to make such an assessment of their taxpayers' economic activities.

5. Summary

New regulations the Corporate Income Tax Act, concerning the collection of withholding tax in the case of dividends, interest and royalties paid to non-residents, raise considerable doubts as to the compatibility with double taxation agreements, EU law and with the basic law.

Moreover, some legislative chaos is introduced by the MF Regulation 23 December 2019, which deferred entry into force only of the provision Article 26(2e) the Corporate Income Tax Act, while a number of new regulations the Corporate Income Tax Act, relating to the collection of withholding tax in the event of payment of passive income to non-residents in formal terms, has entered into force.

In practice, however, these other regulations the Corporate Income Tax Act in close, direct, systemic and functional relation to content Article 26(2e) the Corporate Income Tax Act will constitute a "dead right" until the content enters into force Article 26(2e) the Corporate Income Tax Act At the same time, these new regulations the Corporate Income Tax Act, relating to the collection of withholding tax in the case of payment of income to non-residents who are not directly related to the content Article 26(2e) the Corporate Income Tax Act, effective from 1 January 2019 This will include, for example, a recipe Article 26(1) the Corporate Income Tax Act

Assuming that the regulations under consideration the Corporate Income Tax Act will enter into force 1 January 2020, from that date on, in the case of payments of those amounts not exceeding 2,000,000 PLN to one taxable person in the course of the tax year applicable to the payer – the unchanged withholding tax rules applicable before 1 July 2020 and in accordance with the rules of international tax law.

Overshoot of the above-mentioned quota threshold on payment of the claims referred to one ed 30 June 2020 will result in the application of a new statutory regime on the collection of withholding tax.

In this case, the compulsory collection of withholding tax of the amount resulting from the provisions the Corporate Income Tax Act, without taking into account the provisions of double taxation agreements.

The legislator predicted two exceptions to this rule.

first of which there is an opinion on the application of the exemption, second in turn – submission by the payer of an appropriate statement under the severity of the fiscal penalty and with an additional penalty in the form of an additional tax liability of 10% the taxable amount in case the declaration made is not true, the payer has not carried out the required verification or verification made by the payer is not adequate to the nature and scale of the payer's activities.

In the case of an opinion on the application of the exemption, the tax authority may refuse to issue it, inter alia, if it reasonably assumes that the taxable person who is the recipient of the abovementioned claims does not carry on an actual business activity in the country of residence for tax purposes.

Reference in this case to the provisions Article 24a(18) the Corporate Income Tax Act, to be used for appropriate purposes Article 26b(3)(4) the Corporate Income Tax Act, extends to this regulation, which is too far-reaching for the constitutional standards of a democratic rule of law, the discretion of tax authorities, which may, on the basis of non-statutory grounds, consider that the taxpayer does not carry out "real business".

This legal disadvantage is also affected by regulation Article 26(7a) the Corporate Income Tax Act, because this provision Under point 2 order the payer to make a declaration that, following the verification in question, Under section 1, is not aware of the presumption that there are circumstances that exclude the possibility of applying a rate of tax or exemption or non-collection of a tax resulting from specific provisions or double taxation agreements, in particular that it does not have knowledge of the existence of circumstances preventing the fulfilment of the conditions in question under Article 28b(4)(4-6) the Corporate Income Tax Act Provision Article 28b(4)(6) the Corporate Income Tax Act requires the payer to verify whether the taxable person carries on a ‘real economic activity’ in the country of residence for tax purposes.

The payer shall bear the risk of tax penalty on the basis of due diligence in this respect. Article 56d(1) or (2) k.k.s. due to the vague and vague definition of the concept of ‘real business’.

In the light of non-enumeric calculations under Article 24a(18) the Corporate Income Tax Act The prejudicing of the taxable person’s economic activity as ‘actual’ cannot be clearly established as ‘actual economic activity’ and as (which) statutory and non-statutory conditions must be fulfilled in order for the economic activity to be ‘real’ in the fiscal assessment.

It is impossible under the above regulation to set a clear line between ‘real’ and ‘unreal’ activities. Moreover, the very phrase ‘knowledge justifying the presumption’ is vague and may be assessed by different interpretations from the authorities of the State.

In this case, it is also difficult to precisely set a border that would ensure the legal security of those making the above-mentioned declaration.

Certain facts may, in the interpretation of the tax authorities, constitute a ‘knowledge justifying the presumption’ that there are circumstances which exclude the possibility of applying the rate of tax or exemption or non-collection of the withholding tax, and for the payer, acting in good faith and in due diligence, these facts may not constitute such ‘knowledge’.

The above design elements of the adjustment Article 26(7a)(2) the Corporate Income Tax Act, and Article 26b(3)(4) the Corporate Income Tax Act Content Article 28b(4)(6) the Corporate Income Tax Act Reference to regulation Article 24a(18) the Corporate Income Tax Act, they decide, according to the author, that the regulation is unconstitutional in the light of the provisions Article 2 in conjunction with Article 217 Basic Act.

Another provision bearing the above legal defect resulting from the reference to content Article 24a(18) the Corporate Income Tax Act, is a recipe Article 28b(8)(2) the Corporate Income Tax Act, according to which, in order to verify the refund of the tax collected, the tax authority immediately upon receipt of the request for reimbursement takes action in particular to verify whether the taxable person subject to a limited tax obligation in Poland for the benefit of his passive income carries out ‘real economic activity’ within the meaning of Article 24a(18) the Corporate Income Tax Act, in the country where it is established for tax purposes.

In addition, on the ground Article 28b(8)(1) the Corporate Income Tax Act the tax authority is obliged to request tax information from the competent authority of the State of tax residence of the taxpayer, inter alia, as regards the fulfilment by the taxable person of the conditions which are the subject of his claims.

Under Article 28b(4)(4-6) the Corporate Income Tax Act Thus, the assessment of the Polish tax office will be subject to the question of the ‘real’ or ‘unreal’ nature of the economic activity carried out by the taxpayer second A contracting country.

This evaluation will be made on the basis of Article 24a(18) the Corporate Income Tax Act, and thus Polish national law, which in this case – contrary to the provisions of a given double taxation agreement and against possible national legislation second States associated with the Polish double taxation agreement will apply to determine the legal consequences of dividends, interest or royalties paid from Poland.

Analyzing regulations the Corporate Income Tax Act, regulating taxation at the source of passive income paid to non-residents, there is a certain internal contradiction of these regulations.

On the one hand, Article 22a the Corporate Income Tax Act provides that provisions Article 20-22 the Corporate Income Tax Act apply taking into account double taxation agreements to which the Republic of Poland is party, and second recipe Article 26(2e)(2) the Corporate Income Tax Act excludes the possibility of no tax being collected on the basis of an appropriate double taxation agreement, and without taking into account exemptions or rates resulting from special provisions or double taxation agreements, if the total amount of the charges paid under the titles listed above Under Articles 21(1) and 22(1) the Corporate Income Tax Act exceeds the amount 2,000,000 PLN.

The exclusion of the application of ratified international agreements under the ordinary law should be considered as a violation of the constitutional hierarchy of sources of law commonly in force and a breach of the provisions of double taxation agreements.

In this case, taxpayers who are resident in the countries associated with the Polish double taxation agreements and who are subject to a limited tax obligation in Poland in connection with the obtaining of claims from Polish payers, may legitimately require the protection of the treaty as defined in the wording Article 10-12 the international agreement concerned.

It should be stressed that none of the double taxation agreements concluded by Poland provide for a threshold of amounts on which the application of the Treaty protection resulting from the provisions of the international agreement would be subject.

Furthermore, none of the above-mentioned agreements requires an opinion on the application of the exemption as a condition for the use of reduced rates of withholding tax on the payment of passive income between taxable persons of contracting countries.

Moreover, none of the double taxation agreements concluded by Poland require the payer or the taxpayer to make statements determining the use of Treaty protection.

In this context, recourse to the concept of ‘real economic activity’ within the meaning of the double taxation agreements should be considered to have gone beyond the framework of double taxation agreements.

Article 24a(18) the Corporate Income Tax Act, Since double taxation agreements do not use this concept and do not make Treaty protection conditional on such an assessment of the economic activities of taxpayers.

The mechanism for collecting withholding tax and its subsequent recovery at the request of the taxpayer does not exist in double taxation agreements.

The taxpayer of the State associated with the Polish double taxation agreement, in the event that the criteria laid down in the agreement are met, can reasonably expect that Poland in its national law will not refuse to grant treaty protection or make it subject to additional conditions which would be vain to seek in the double taxation agreement.

In the absence of appropriate rules in double taxation agreements, Poland, as the State of the payer's tax residence, has no right to collect withholding tax greater than its rate indicated in the respective double taxation agreement, even if it was to return this excess to the taxpayer concerned.

________________________________________________________

[1] Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable to parent companies and subsidiaries of different Member States, Official Journal of the European Union L, No. 345/8.

[2] Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States, Official Journal L 157 of 26 June 2003, p. 49.

[3] i.e. Journal of Laws of 2019, item 865.

[4] Regulation of the Minister of Finance of 31 December 2018 amending exemption or restriction regulations Article 26(2e) Corporate Income Tax Act (Journal of Laws of 2018, item 2545).

[5] Regulation of the Minister of Finance of 23 December 2019 amending exemption or restriction regulations Article 26(2e) Corporate Income Tax Act (Journal of Laws of 2019, item 2528), hereinafter referred to as ‘MF Regulation of 23 December 2019”.

[6] According to point 1 preamble to Directive 2003/49 in the framework of a single market having a domestic character, transactions between companies of different Member States should not be subject to more unfavourable tax conditions than those applicable to the same transactions between companies of the same Member State. Provision point 3 preamble to Directive 2003/49 provides that it is necessary to ensure that interest and royalties are taxed only once in a Member State. According to point 4 preamble to Directive 2003/49 the abolition of interest and royalties in the Member State in which they are created, collected by or through the deduction at source, is the most appropriate means of removing these formalities and problems and ensuring equal treatment of taxation between national and cross-border transactions. The abolition of such taxes is particularly necessary for such payments between related companies of different Member States as well as between permanent establishments of such companies.

[7] Official Journal of the European Communities L 207 of 18 August 2003, as amended.

[8] i.e. Journal of Laws of 2020, item 89.

[9] Broader on this subject: R.A. Nawrot, Problems of the certificate of tax residence as a document confirming the tax residence of natural and legal persons, Part I and Part II, "Monitor of Customs and Tax Law" 2015, No 11 and 12.

[10] i.e. a company which is subject to an EEA tax in another EU Member State or in another EEA State on the income tax on all of its income, regardless of where it is achieved, which is the recipient of the abovementioned claims.

[11] i.e. a company which is subject to income tax in the whole of its income in the Republic of Poland or in an EU Member State other than the Republic of Poland or in another EEA State, regardless of where it is achieved, which is the recipient of the abovementioned claims.

[12] i.e. interest receivables, copyright or related rights, rights to inventive projects, trademarks and designs, including the sale of those rights, claims for the provision of the secret of a recipe or production process, for the use or use of industrial equipment, including means of transport, commercial or scientific equipment, for information related to experience gained in the industrial, commercial or scientific field (know-how).

[13] Under regulation Article 26b(10) the Corporate Income Tax Act, the tax authority responsible for issuing opinions on the application of the exemption shall be the head of the tax office competent according to the place of residence of the taxable person, and in the case of taxable persons subject to a limited tax obligation in Poland and taxable persons who are entitled to securities entered in collective accounts whose identity has not been disclosed to the payer in the manner provided for in the law in question. Under Article 4a(15) the Corporate Income Tax Act – the head of the tax office competent in matters of taxation of foreign persons.

[14] Provision Article 14b(5c) o.p. provides that the authority empowered to issue an individual interpretation asks the Head of the KAS for an opinion in respect of the matter in question Under section 5b, Unless the facts or future events correspond to the issue which was the subject of the opinion of the Head of the KAS previously obtained. The opinion of the Head of the KAS, which is the subject of an issue corresponding to the factual or future event presented in the request for an individual interpretation, together with the request of the body entitled to issue an individual interpretation for its issue, shall be annexed to the file after the removal of the identity of the applicant and the other entities indicated therein.

[15] This provision contains a defective definition of ‘by non-subscription calculation’ of the concept of ‘real business’.

[16] see B. Kuźniacki, Taxation of Foreign Controlled Companies (CFC) Necessity of reform, Warsaw 2017; B. Kuźniacki, CFC multiple income tax avoidance mechanism, Tax Review 2016, No 9; R.A. Nawrot, International tax avoidance and its regulations in Polish law, Warsaw 2018.

[17] More about this in: R.A. Nawrot, International Avoidance..., op. cit., p. 488–511. 18 By Sound Article 24a mouth.

[18] the Corporate Income Tax Act When assessing whether a foreign controlled entity carries on an actual business activity, account shall be taken in particular of whether:

the registration of a foreign controlled entity involves the existence of an undertaking in which that entity actually carries out activities constituting an economic activity, including in particular whether the entity has premises, qualified personnel and equipment used in its business;
the foreign controlled entity does not create a detached structure;
there is a correlation between the scope of the activities carried out by the foreign controlled entity and the actual premises, personnel or equipment held by that entity;
Whereas the agreements concluded are in line with the economic reality, have economic justification and are not manifestly contrary to the general economic interests of the entity;
the foreign control body itself performs its basic economic functions using its own resources, including those present on the site of the managers. In turn by content Article 24a(18a) the Corporate Income Tax Act When assessing whether the actual economic activity is material, account shall be taken in particular of the ratio of the revenues generated by the foreign controlled entity from the actual business activity to its total income.

19 reference no. K 1/94, Legalis.

20 reference no. K4/03, Journal of Laws of 2004, item 1288.

21 Provision Article 26b(8) the Corporate Income Tax Act provides that in the event of a material change in the facts which may affect the fulfilment of the conditions for the benefit of the exemption in question under Article 21(3) or Article 22(4) the Corporate Income Tax Act, the applicant within the time limit 14 the days from the date on which he learned or, with due care, should know that this change has taken place, shall inform the tax authority thereof.

The applicant concerned under Article 28b(2)(1) the Corporate Income Tax Act (i.e.

a taxable person, including a taxable person subject to a limited tax obligation in Poland, who, in connection with the receipt of the tax on whom the tax has been collected, achieves taxable income in accordance with the rules the Corporate Income Tax Act) at the same time informs the payer of the material change in the circumstances referred to in the sentence first.

22 Model Tax Convention on Income and on Capital, conformed version, 21 November 2017, OECD publishing, publ. https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-condensed-version-2017_mtc_cond-2017-en#page5 (access: 22 March 2020), hereinafter referred to as the OECD Model Convention.

[23] i.e. Journal of Laws of 2019, item 351.

24 According to the above provision, the tax authority responsible for tax reimbursement is the head of the tax office competent according to the place of residence of the taxpayer, and in the case of taxable persons subject to a limited tax obligation in Poland and taxable persons who are entitled to securities entered in collective accounts whose identity has not been disclosed to the payer in the manner provided for in the Act in question under Article 4a(15) the Corporate Income Tax Act, the head of the tax office competent in matters of taxation of foreign persons.

25 In accordance with the provisions Article 26(7e) the Corporate Income Tax Act in the notification referred to Under section 7d point 2, the statement in question is confirmed Under section 7a, has been deposited by all persons obliged to submit it. The notification shall be submitted within the time limit in question. Under section 7c, one of the persons who made the declaration in question Under section 7a. The application may not be filed by a proxy.

[26] i.e. Journal of Laws of 2020, item 19.

27 Provision Article 30(1) o.p. provides that a payer who has failed to carry out certain duties under Article 8 (i.e. the calculation and collection of the tax from the taxable person and its payment in due time to the tax authority) is responsible for the tax not collected or tax not paid.

28 True, as prescribed Article 28b(13) the Corporate Income Tax Act, tax not reimbursed by the tax authority within the period referred to under Article 28b(6) the Corporate Income Tax Act, is subject to interest in the amount corresponding to the carry-over fee, but the basic time limit for the examination of such an application by the tax authority is as follows: 6 months (Article 28b(6) the Corporate Income Tax Act), according to the content Article 28b(7) the Corporate Income Tax Act the tax authority may extend the time limit for tax reimbursement until the completion of the verification of the application for tax refund in the framework of tax control, customs-tax control or tax proceedings, which in practice may result in a real interest-free return of the withholding tax almost independently of the time since its collection.

29 i.e. the equivalent of the profit of the legal person and the company in question under Article 1(3) the Corporate Income Tax Act (i.e.

a limited partnership or board established in the territory of the Republic of Poland or a non-legal entity established or managed in another country, if it is treated as a legal person under the tax law of that other country and is subject to taxation in that country on all of its income, irrespective of where it is achieved, to increase its share capital, the equivalent of the balance sheet surplus of the cooperative to increase the share fund and the equivalent of the amounts transferred to that capital (fund) from other capitals (funds) of that legal person or company.

30 Provision Article 26(3b) the Corporate Income Tax Act provides that at the written request of a taxable person subject to a limited tax obligation in Poland, the payer, within the time limit 14 the days from the date on which the application is lodged, shall be obliged to draw up and forward to the taxable person and to the tax office by which the head of office responsible for the taxation of foreign persons performs his tasks, the information in question Under section 3 point 2.

31 According to Article 26(1i) the Corporate Income Tax Act, if the place of residence of the taxable person for tax purposes has been documented by a residence certificate not containing its period of validity, the payer shall, at the time of collection of the tax, take this certificate into account for subsequent periods twelve months from the date of its issue. By content Article 26(1j) the Corporate Income Tax Act, if during the period 12 months from the date of issue of the certificate referred to Under section 1i, the place of residence of the taxable person for tax purposes has changed and the taxable person is obliged to immediately document the place of residence for tax purposes with a new residence certificate.

32 In accordance with the provisions Article 139(4) o.p. to specified time limits Under section 1-3 (e.g.

the obligation to deal with a case requiring evidence without undue delay, but not later than one month, and a case particularly complex – no later than within 2 no account shall be taken of the time limits provided for in the tax legislation for the performance of certain operations, periods of suspension of proceedings and periods of delay caused by the party’s fault or for reasons beyond the authority’s control.

33 According to the wording of the regulation Article 28b(18) the Corporate Income Tax Act The Minister competent for public finances in order to improve the treatment of tax return cases may, by means of a regulation, determine the jurisdiction of the local tax authorities in those cases in a way different from that specified Under section 15, with a view to the efficient and efficient performance of the tasks referred to in this Article.

The article comes from the book “Changes in Taxes and Accounting 2020 taking into account the anti-crisis shield" under the ed. prof. adjunct. dr. hab. Artur Hołda, published by C.H. Beck Publishing House: https://www.ksiegarnia.beck.pl/19149-zmiany-w -tax-and-account-2020-with-including-disc-anti-crisis-artur-hold

Taxation at source of dividends, interest and royalties paid to non-residents

1. Introduction

1.1. Passive income and double taxation agreements

1.2. Order to collect withholding tax and collision with overriding acts

2. Conditions for participation in the Corporate Income Tax Act

2.1. Preliminary remarks

2.2. Conditions for the waiver of participation interest and royalties

1) the paying agent is:

either

4) the actual owner of the abovementioned receivables is:

(a) the company in question Under point 2

either

(a) ownership,

1) bonds;

2) bonds:

(a) with a maturity of not less than one year,

3.2. Conditional possibility of not collecting withholding tax

3.2.1. Opinion on the application of the exemption

Judgment

3.2.2. Declaration by the payer

3.2.2.1. Declaration by the payer and tax liability

3.2.2.2. Declaration by the payer and additional tax liability

3.3. Payment of tax and information and declaration obligations of payers

3.4. Reimbursement of the duty paid

5. Summary

________________________________________________________

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