On 30 December 2019 a decree was published in the Polish Journal of Laws (Dz.U.2019 poz. 2528) about amending the regulation on the non-application or limited application of Article 26(2e) of the country’s Corporate Income Tax Act. It extends the time during which Article 26(2e) of the Corporate Income Tax Act will not be applied until 30 June 2020, meaning this is the third postponement of certain key elements of the Polish withholding tax reform.
As written in an earlier article, the Ministry of Finance in Poland published a draft act on 23 October 2018, which introduced a Polish withholding tax reform. The changes were to come into force on 1 January 2019, but the Polish Finance Minister deferred the effective date of key amendments of the Polish withholding tax reform first until 1 July 2019, then again until 1 January 2020. However, just a few days before this date, a further postponement was published in the Journal of Laws (Dz.U.2019 poz. 2528).
Elements of the Polish withholding tax reform already in force
According to the latest official publications, withholding agents will not have to apply the new withholding mechanism in Poland until 30 June 2020. This mechanism requires agents to withhold tax at the standard statutory rates (20% for interest, royalties and intangible services and 19% for dividends) when taxable payments made to the same taxpayer exceed PLN 2 million (roughly EUR 460,000) during a tax year.
The regulation deferring certain parts of the Polish withholding tax reform entered into force on 1 January 2020. However, it will not affect certain requirements that have already been in force since 1 January 2019, including those concerning:
- due diligence verification of conditions for preferential tax treatment, and
- identification of beneficial owners.
Changes in the Personal Income Tax Act
Another regulation was published in the Journal of Laws on 30 December 2019 (Dz.U. 2019 poz. 2529) with effect from 1 January 2020, i.e. the Finance Minister regulation of 23 December 2019 amending the regulation on the non-application or limited application of Article 41(12) of the Personal Income Tax Act. This one postpones the new withholding rules in the Personal Income Tax Act for the period from 1 January 2020 until 30 June 2020. Withholding agents are still required to apply the new Personal Income Tax Act withholding rules to payments made between 1 July 2019 and 31 December 2019.
If you would like to know more about the Polish withholding tax reform, please visit the homepage of WTS&SAJA Sp. z o.o., the exclusive representative of WTS Global for Poland.