POLAND Law and Practice Contributed by: Agnieszka Janicka and Krzysztof Hajdamowicz, Clifford Chance
Subsidiary Directive and the Interest and Roy - alties Directive (which have been implemented into the Polish tax system), dividends, interest and royalties payable to a company with its reg - istered office in an EU country are, in principle, exempt from withholding tax, provided that the company receiving the interest (its beneficial owner) holds at least 10% (in the case of divi - dends) or 25% (in the case of interest and royal - ties) of the shares in the company making such payments for at least two years. This holding period may end after the payments have been made. The tax remitter is obliged to act with due care when verifying the requirements to apply such lower rates or exemptions on payments to a sin - gle entity of up to PLN2 million per annum. Under the withholding tax pay-and-refund mechanism, if the total amount of “passive” pay - ments (ie, dividends, interest and royalties) to a single taxpayer that is a related party exceeds PLN2 million in the relevant tax year, the tax remitters will be obliged to collect withholding tax on said payments on the day they are made, at the standard Polish rates (ie, 19% in the case of dividends and 20% in the case of interest and royalties) on the surplus over PLN2 million, with - out the possibility of waiving collection of the tax under the relevant double tax treaty and without taking into account the exemptions or reduced rates as determined under special provisions or double tax treaties. In such a case, the taxpayer or the tax remit - ter (if it paid the withholding tax from its own funds and bore the economic burden of the with - holding tax) may claim a withholding tax refund. However, a tax remitter may apply reduced with - holding tax rates or withholding tax exemptions if:
• the tax remitter provides the tax authority with a written statement confirming (under threat of tax criminal liability for breach) that all the requirements for a lower rate or an exemption have been fulfilled; or • a tax remitter or a withholding tax payer receives an opinion on the applicability of the withholding tax exemption from the tax authority, valid for three years. Significant fines apply if, in the absence of an exemption, a tax remitter does not collect the statutory withholding tax. Value Added Tax In principle, anyone whose total sales of goods and/or services (with some sector exceptions) in the previous year exceeded PLN200,000 (pro - vided that such threshold shall be reduced pro rata if the activity was conducted only for part of the previous year) must register as a VAT payer. The new threshold of PLN240,000 will come into force on 1 January 2026. The basic VAT rate is 23% (reduced rates of 8%, 5% or 0% may apply to some goods and services). VAT rules are fairly strict and under some circum - stances provide for the joint and several liability of members of the supply chain for its payment. Under certain circumstances, additional penalty rates of 15%, 20%, 30% or 100% may apply. An electronic accounting ledger detailing all VAT- able transactions must be submitted to the tax authorities on a monthly basis, or quarterly in some cases (VAT return). The split payment mechanism applies to some B2B transactions, whereby the payment that corresponds to the VAT amount of the invoice is paid into a special bank account of the sup - plier – the VAT subaccount. This mechanism is
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