What is worth remembering about due diligence in the context of withholding tax in Poland? We have prepared another infographic infographic erstellt, in which we explain this complicated problem. If you have any questions, remember that you can contact us anytime.
Case: tax rigor in the area of more stringent due diligence requirements for payment of receivables that are subject to WHT.
Results: When verifying the conditions giving entitlement to WHT exemption or WHT preferential rate, the Polish company is now required to exercise a special due diligence, which will be assessed according to the nature and size of the conducted business.
Necessary verification activities:
- documents received in terms of their compliance with the factual circumstances;
- tax residence (place of profit’s taxation) of the receivable’s recipient (foreign company);
- status of foreign company receiving receivables in terms of a definition of so called “beneficial owner”, including through the prism of conducting actual business activity by this entity.
Failure to exercise a special due diligence requirement may result in establishing an additional tax liability on the tax payer in the amount of 10% of each time applicable tax base, in relation to which the tax payer has incorrectly applied a tax exemption or preferential tax rate.
Łukasz Dachowski, LL.M., attorney at law (PL)/tax advisor (PL)/Partner
Magdalena Stefaniak-Odziemska, tax advisor (PL)