Dividends and interest from abroad – another favourable ruling by the Supreme Administrative Court

On 24 June 2025, the Supreme Administrative Court (SAC) once again questioned the tax authorities’ approach to the taxation of foreign dividends and interest.

The case concerned the possibility of deducting tax paid abroad from the Polish flat-rate tax (19%). For years, tax authorities have argued that such a deduction is limited to the rate specified in the relevant double taxation agreement.

Taxpayers versus the tax authorities

More and more taxpayers disagree with this position, arguing that the provisions of the PIT Act do not explicitly provide for such a limitation. Importantly, administrative courts are increasingly ruling in their favour.

The ruling of the Supreme Administrative Court of 24 June 2025 is already the second in recent years to settle this issue in favour of taxpayers. Earlier, on 28 February 2023, the Supreme Administrative Court also ruled that there were no grounds for limiting the amount of the deduction to the rate resulting from an international agreement.

The SAC’s new position – a step further

In its latest ruling, the SAC went a step further. In its oral justification, it clearly stated that the right to deduct foreign tax does not depend at all on the existence of a double taxation agreement. This is an important reservation in the court’s reasoning.

The judges emphasised that the provision on the basis of which foreign tax on, inter alia, interest or dividends may be deducted is unconditional – it allows for the deduction of foreign tax in all cases, regardless of an international agreement. The only limitation provided for in the Act is that the deduction may not exceed the amount of tax calculated at a rate of 19% on income (revenue) derived, inter alia, from interest or dividends.

The courts say ‘yes’, the authorities still say ‘no’

The emerging trend in case law should be considered clearly favourable to taxpayers. Unfortunately, it is not yet reflected in the practice of tax authorities, which continue to push an unfavourable position (e.g. in individual interpretations), such as the interpretation of the Director of the National Tax Information Service of 30 January this year.

Such discrepancies between the interpretation and case law are particularly problematic for taxpayers. They create uncertainty and may lead to overpayments, which many would like to avoid by correctly fulfilling their tax obligations.

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Legal basis:

• Article 30a(1)(4) in conjunction with Article 30a(1)(9) of the Personal Income Tax Act.

Rulings and interpretations:

• Judgment of the Supreme Administrative Court of 24 June 2025, ref. no. II FSK 1302/22.
• Judgment of the Supreme Administrative Court of 28 February 2023, ref. no. II FSK 1171/22.
• Individual interpretation of the Director of the National Tax Information of 30 January 2025, ref. no. 0115-KDIT1.4011.785.2024.2.MN.