After several postponements of the entry into force of the regulations on the withholding tax regime in the collect & refund system, it is time for another iteration. As of the new year, the regulations are to enter into force with several key amendments.
Clarification of the definition of beneficial owner and running the actual economic activity
The definitional change involves the elimination of the words „legally or actually”, which is not intended to change the legislator’s original intent. Therefore, it will still be required to demonstrate the existence of a personal-asset substrate (substance), however, taking into account the significant differences between the nature and scale of business activity conducted by different entities in the context of the payments received by them.
Narrowing down application of WHT collection procedure (collect & refund)
New WHT refund mechanism will apply only to related entities as defined in the transfer pricing regulations and to payments of passive nature. The bill also provides for the exclusion of dividends paid to Polish residents from the WHT refund mechanism.
Due diligence criterion
Due diligence will be assessed taking into account not only the nature and scale of the remitter’s business but also his relationship with the taxpayer. This change means differentiation of due diligence requirements in relation to related (more restrictive) and unrelated (less restrictive) entities.
Extension of the subject matter of opinions on the application of preferences
From the new year the opinion will also cover preferences provided for in double tax treaties (i.e. reduced withholding tax rates or exemption from withholding tax) and not only exemptions resulting from the implementation of EU directives.
Making procedural requirements dependent on substantive requirements
The requirement to present documents required in the tax refund procedure regarding the status of the beneficial owner and conduct of actual business activity applies when the obligation to examine the fulfillment of these prerequisites results from separate regulations or double tax treaties.
Use of a copy of the certificate of residence
Currently, due to the state of the epidemic, it is possible to use copies of certificates of residence, without limitation to the so-called intangible services and without limitation of the amount. The amendment provides for making this a general rule. Information arising from the submitted copy of the certificate of residence will not be able to raise reasonable doubts as to its compliance with the facts.
Other changes
The changes also cover the area of payments through entities maintaining securities accounts and omnibus accounts, payments from State Treasury bonds, and payments to permanent establishments located in Poland.
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13 września 2021
18 czerwca 2021
