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Polish WHT regime has changed significantly in 2019. Namely, relief at source regime allowing for direct application of reduced rates and exemptions resulting from DTTs and EU Directives has been replaced with refund regime based on which domestic 19%/20% rates should be applicable as a rule to the majority of payments exceeding in total (including also payments for intangible services, e.g. management fees) in the tax year PLN 2M (~EUR 460k) for the given contractor and then refund application may be filed by the foreign taxpayer or, in some cases, by Polish remitter. The refund application should be examined within 6 months by the tax authorities.

Hence, the new law may at least significantly affect cash flow or in the worst cases, make application of reduced rates no longer feasible – unless exceptions to the refund regime may be applied.


Additionally, due care obligation of the tax remitter (Polish contractor) has been explicitly expressed in the law and is applicable to all kinds of payments, also below the PLN 2M threshold.

The new law entered into force starting from 1 January 2019 as a rule, but based on the special regulation of the Minister of Finance, its applicability with regard to the majority of  payments to jurisdictions with which Poland has a DTT is postponed by 1 July 2019.

Due to the fact that the new legislation provides for numerous ambiguities (notions of due care, beneficial ownership, genuine business activity, etc.) and practical difficulties with application as well as the common criticism from the business, Polish Ministry of Finance is now preparing a draft of official explanatory notes to the new provisions. The draft is expected to be issued still in May. Public consultations before publication of the final, binding version of explanatory notes has also been announced by the Ministry of Finance.

We will keep you informed on any progress, however, meantime, we would suggest your company should prepare for the new rules which will definitely start to be applicable in July 2019.