The payment of dividends is in principle linked to the obligation to pay the tax. Of course, we're talking about the withholding tax, also called the WHT tax.
Regulations of the Corporate Income Tax Act, hereinafter the CIT Act, provide for dividend taxation at the rate 19%, but the existing possibilities for exempting or applying a reduced rate of tax on the basis of specific provisions or a double taxation agreement mean that, in the case of many payments, there is virtually no obligation to pay the tax.
But from the beginning 2022 (introduction of a payment&refund mechanism) for amounts paid to the same taxpayer in total exceeding the limit 2,000,000 PLN The payer must, in principle, collect the tax each year, despite the fact that the conditions for exemption are met, and he or the taxpayer may subsequently apply for reimbursement of the amounts paid.
In order to avoid the need to collect taxes on payments exceeding 2,000,000 PLN, at the time of payment, additional steps must be taken: to make a statement or to obtain an opinion from the tax authorities.
These options will be presented later in the text, however First, The question will be discussed – what should be done if 2022 payments exceeding the limit have been made 2,000,000 However, the payer did not fulfil the additional conditions of the exemption nor did he pay the withholding tax within the time limit. These situations happen from our observations, because such deficiencies are relatively easy to make by applying the rules applicable in the year 2021 And in earlier years.
Deadline for payment of tax and interest
first the step to be taken is to verify that the time limit for payment of the tax collected has expired.
Payment of the tax should take place by 7. the day of the month following the month in which the tax was collected. This obligation shall be borne by the payer, in that case the dividend payment agent. Therefore, it must calculate, collect and pay to the competent tax office at the appropriate rate (19%).
If the deadline has not been respected, interest on late payment must be added to the amount of tax due. Interest shall be calculated from the day following the day on which the claim is due and the closing date shall be the date of payment, that is, the date on which the payer actually pays the fee (interest shall be charged including that date). The sum of interest on tax arrears is rounded to full gold.
A number of tax interest calculators, including a calculator made available by the Ministry of Finance, are useful tools that can help the payer calculate these amounts.
voluntary disclosure
If the payer already knows that the deadline for paying the tax has expired, he should use the so-called institution. voluntary disclosure, i.e. the notification of a prohibited act in which the payer voluntarily informs the warden of the tax office of the incomplete obligations.
The purpose of this action is to avoid penalties, so voluntary disclosure should submit to those who have failed to comply. If the fault lies with the accountant's office, voluntary disclosure submit this office, if on the management side, voluntary disclosure All those responsible for the infringement should sign.
Fold voluntary disclosure is not subject to deadlines, however voluntary disclosure will only be effective if the payer admits to committing fiscal criminal offence or fiscal misdemeanour Before the head of the tax office or customs and tax office documents the offence itself and before the law enforcement authorities begin to investigate the offence (for example, searches, checks or checks).
No uniform formula exists voluntary disclosure, but information such as:
- Composer data voluntary disclosure and the addressee (head of the tax office);
- the act committed and its circumstances;
- identification of persons who have been involved in a prohibited act;
- how to remedy the effects of their actions or identify the intended actions taken to that end.
Notice may be given in writing, orally for the record or in electronic form with a qualified signature, a trusted profile or a personal signature. voluntary disclosure sign and submit in person. It is better not to delegate this task to the proxy, as this could be understood as a notification of a criminal offence or a criminal offence, rather than a voluntary confession to the perpetrator of the act.
Of course, the mere confession is not enough to avoid the consequences of a mistake. It is necessary to carry out obligations which have not yet been regulated. What activities, apart from payment of interest tax, are concerned with WHT tax? Details can be found below.
Declarations
The withholding tax payer must, in addition to collecting and paying the amount due, make declarations to the competent tax office. Provisions two such documents: CIT-10Z and IFT-2R. Declaration CIT-10Z can be folded in a traditional way, i.e. on paper, or electronically. Declaration IFT-2R may be transferred to the Office only in electronic form.
Unlike tax payment, with the preparation of declarations CIT-10Z and IFT-2R Take your time. Completed documents shall be submitted within:
- to the end first the month of the year following the tax year in which the obligation to pay the tax arose (CIT-10Z);
- by 31 March for the previous year (IFT-2R).
The electronic forms of both declarations are available on the Ministry of Finance website.
Request for reimbursement
one of characteristic elements forming the withholding tax structure used from the start 2022 there is a pay & refund mechanism, enabling in some cases the tax collected to be recovered. The payer wishing to recover the amount he has transferred to the tax office must submit a request accordingly.
Where the payer does not reduce the amount of the tax payment but covers the amount of the tax from his own resources and the conditions for the application for reimbursement have been met, he may apply for reimbursement according to the formula WH-WCP (CIT) or WH-WPP (PIT). This is a right solely for the payer.
Where the payer collects a tax on an amount exceeding 2,000,000 PLN, the taxpayer may recover the difference between the amount collected and the amount due, taking into account the existing preferences (exemption or reduced tax rate). To this end, it applies electronically for the reimbursement of the WH-WCZ (CIT) or WH-WPZ (PIT).
The application for a refund shall be accompanied by documentation to establish its legitimacy. , i.e. confirmation of compliance with the conditions of application of the exemption. This is in particular:
- the certificate of residence of the taxable person (in some cases copies of it may be made);
- documentation on bank transfers or other documents indicating the manner in which the payment of the tax was made or transferred;
- documentation relating to the obligation to pay dues;
- the taxpayer’s statement of compliance with the particular conditions or the payer’s justification for their fulfilment;
- documentation indicating the contractual arrangements for which the payer paid the tax on his own resources and incurred the economic burden of that tax (where the application is made by the payer).
The tax authority has 6 months to make a refund.
Competent tax office
The term ‘appropriate tax office’ in principle means local jurisdiction. In the case of withholding tax, this is different. Tax with interest as well as voluntary disclosure and declarations CIT-10Z and IFT-2R heads to one entity – Lublin Tax Office in Lublin.
Unfortunately, it is currently futile to search for information about the withholding tax on the website of the abovementioned office, as since October 2022 Updating work is ongoing. Therefore, the remark that the amount of tax due should be paid on the individual tax account of the payer (so-called micro-account) must be found in other sources.
General rules and exemptions
The above was discussed the steps to be taken after the dividend has been paid in the event of a failure to meet tax obligations. However, what can be done before paying off the debt to a foreign entity in order to avoid having to apply for it? It'll be a source tax exemption.
The good news for Polish companies is that it is not always necessary to collect tax on the dividend paid. The exemption may be applied on the basis of a double taxation agreement concluded between Poland and the country of residence of the recipient of the dividend or through the existing Polish legislation.
Article 22(4) The CIT Act indicates the conditions for receiving the exemption which the company must meet in total:
- paying dividends and other revenue from the participation of legal persons is a company established or managed in the territory of the Republic of Poland;
- Receipts on dividends and other income on the share of profits of the legal persons concerned Under point 1, is a company which is subject in the Republic of Poland or in a Member State of the European Union other than the Republic of Poland or in another State belonging to the European Economic Area, taxed with income 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 in question Under 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.
The exemption shall apply provided that the company receiving the income (revenue) from dividends from legal persons established or managed in the territory of the Republic of Poland has shares in the company paying these claims continuously for a period of time 2 years.
It should be borne in mind that the revenue obtained by the sub-contractor for participation in the profits of the limited partnership and limited partnership-share company established or managed in the territory of the Republic of Poland is not exempt.
If the double taxation agreement excludes the obligation to collect withholding tax or allows the tax to be collected at a lower rate, the payer is required to obtain a residence certificate from the counterparty. If the counterparty does not provide a certificate, the payer shall collect the withholding tax.
Statement by WH-OSC
The WH-OSC statement is a statement by a corporate tax payer that the conditions for non-tax collection, exemption or tax rate are met.
In such a document the payer declares 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 application of the rate of tax or exemption or non-collection resulting from specific provisions or double taxation agreements.
A statement by the payer shall be lodged with the tax authority designated no later than the date of payment of the tax for the month in which the amount was exceeded. 2,000,000 PLN, the execution of that obligation after payment does not relieve the payer of the obligation to exercise due care before it is carried out.
In preparing such a statement, The company should ensure that any data contained in them is in line with reality. Criminal and fiscal sanctions are provided for the submission of a false statement.
Opinion on the application of preferences
second an option to avoid the need to collect WHT tax is to obtain an opinion on the application of the preferences that have been regulated under Article 26b CIT Act.
For the purpose of issuing such an opinion by the tax authority, the payer, the taxable person or the person making the payment of the claim through the entities operating the securities accounts or the aggregate accounts shall submit an application for an opinion on the payer’s application of the flat-rate income tax exemption, on the receivables paid to the taxable person or on the application of the tax rate resulting from the relevant double taxation agreement or non-tax collection in accordance with such an agreement.
The application shall provide a description and the information necessary to support the fulfilment of the conditions for the application of the exemption or the application of the reduced rate.
The application shall be submitted in electronic form and 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 amount of the fee on the application for an opinion on the application for a preference shall be 2,000 PLN.
Unfortunately, the opinion is not unlimited. The opinion on the application of the preferences shall expire:
with expiry 36 months from the date of its issue;
last day of the month following the month in which the deadline expired 14 the days from the receipt of a material change in the facts if, in accordance with that provision, the applicant has informed the tax authority of a material change in the circumstances;
from the date on which the taxable person concerned by that opinion no longer fulfils the conditions for exemption or the conditions for applying the double taxation agreement, if the applicant has not informed the tax authority within the time limit 14 days after finding out about it.
The withholding tax and the related payment & refund mechanism are an interesting solution for companies operating in Poland, but the multiplicity of options and options can cause problems with the application of these regulations. Therefore, if you have any doubts, please feel free to contact us. Russell Bedford Poland Sp. z o.o. is able to help you with these duties.
Leszek Dutkiewicz
Partner. Director of the office in Katowice. From 2011 related to the firm Russell Bedford Poland. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.