US, Poland Sign Revised DTA

by Mike Godfrey, Tax-News.com, Washington
14 February 2013

On February 13, 2013, in a ceremony held at the Polish Ministry of Finance in Warsaw, the United States Ambassador, Stephen Mull, and Poland’s Deputy Finance Minister, Maciej Grabowski, signed a revised double taxation agreement (DTA) between their two countries.

The new tax treaty replaces the existing DTA, signed in 1974, and brings the bilateral relationship into closer conformity, with current US tax treaty policy. Specifically, the new agreement contains a comprehensive limitation on benefits provision, that is consistent with many recently concluded US tax treaties, and that is intended to ensure that only residents of the US and Poland will enjoy the DTA’s benefits.

The new DTA also provides for reductions in withholding taxes on cross-border payments of dividends, interest and royalties. The withholding tax on dividends will not exceed 5%, if the beneficial owner is a company that directly owns at least 10% of the voting stock of the company paying the dividends, or 15% in all other cases, while there is a cap of 5% on the withholding taxes on interest and royalties.

The agreement incorporates the new methods for attributing business profits to a permanent establishment, which have been recently developed by the Organisation for Economic Co-operation and Development, and are consistent with US tax treaty policy.

Furthermore, within provisions consistent with the international standard for tax information exchange, the new DTA provides for the full exchange of tax information between the two countries’ competent authorities.