If your company makes cross-border payments to Poland — or if a Polish entity pays dividends, royalties, or interest abroad — withholding tax (WHT) is almost certainly on your radar. Polish WHT rules have tightened significantly in recent years, and the compliance burden on foreign companies has grown. This guide explains how the system works, which payments are affected, and how to lawfully reduce your liability.
What is withholding tax in Poland?
Withholding tax (podatek u źródła, abbreviated WHT or PIT/CIT at source) is a tax withheld by the Polish payer at the moment of payment. Rather than the foreign recipient declaring the income themselves, the Polish company that makes the payment is legally required to withhold and remit the tax to the Polish tax authority (KAS) on behalf of the foreign payee.
This mechanism exists to ensure taxation of passive income — dividends, interest, royalties, and fees for certain intangible services — when the recipient has no other presence in Poland.
Which payments trigger WHT obligations in Poland?
Under Article 21 and Article 22 of the Corporate Income Tax Act (ustawa o CIT), the following categories are subject to WHT when paid to a non-resident:
Passive income
- Dividends and profit distributions
- Interest on loans and bonds
- Royalties and licence fees (software, trademarks, patents)
Fees for intangible services (Article 21(1)(2a) CIT)
- Advisory and consulting fees
- Accounting and bookkeeping services
- Market research and advertising services
- Management and control services
- Data processing and HR services
- Guarantees and sureties
The last category frequently catches foreign groups off guard. Payments for management services, IT support contracts, and shared service centre fees between related entities often fall within this scope.
Standard WHT rates in Poland
| Rate | Payment type | Notes |
| 19% | Dividends | Domestic rate; reduced by DTT |
| 20% | Interest | Domestic rate; reduced by DTT |
| 20% | Royalties & licence fees | Domestic rate; reduced by DTT |
| 20% | Intangible services (Art. 21) | Consulting, management, IT, HR, advertising |
| 0–5% | Varies by DTT | Requires certificate of tax residence |
These are the rates that apply in the absence of any treaty relief or exemption. In practice, most foreign recipients can reduce these rates or eliminate WHT entirely — but only if the correct procedure is followed in advance.
Double tax treaty relief: reduced rates and exemptions
Poland has over 90 double tax treaties (DTTs) in force. These typically reduce or eliminate WHT on dividends, interest, and royalties. Common treaty outcomes for major trade partners include:
- Germany → Poland dividends: 5% (holding ≥25%) or 15% standard
- Netherlands → Poland dividends: 0% under the EU Parent-Subsidiary Directive (if conditions met)
- Austria → Poland interest: 0% or 5% depending on recipient type
- UK → Poland royalties: 5% under the treaty
However, since 2022 the "pay and refund" (zapłać i wnioskuj o zwrot) mechanism has applied to payments exceeding PLN 2 million per year to a single recipient. Above that threshold, the Polish payer must withhold at the domestic rate first, and the foreign recipient subsequently applies for a refund — unless the payer obtains a prior opinion from the Head of KAS.
EU directives: Parent-Subsidiary and Interest & Royalties
Parent-Subsidiary Directive (2011/96/EU)
Dividends paid from a Polish subsidiary to an EU/EEA parent company are exempt from WHT, provided the parent holds at least 10% of shares (25% for Swiss companies) for a minimum continuous period of two years. The beneficial ownership requirement and the 'subject to tax' condition must both be satisfied.
⚠ Practical caution — 0% effective CIT rate abroad
Polish tax authorities have taken the position that if the recipient of a dividend benefits from a CIT exemption in its home jurisdiction (resulting in an effective 0% tax rate on the Polish dividend), the Polish WHT exemption under the Parent-Subsidiary Directive may be denied. This affects groups with holding structures in the Netherlands, Luxembourg, Estonia, and similar jurisdictions. The legal basis for this position is contested — it appears inconsistent with both the wording of Polish law and EU law — and administrative courts are increasingly ruling in favour of taxpayers. However, the risk remains live and should be assessed before any dividend distribution is made.
Interest and Royalties Directive (2003/49/EC)
Interest and royalties paid between associated EU companies can be exempt from WHT, subject to similar holding thresholds (minimum 25% for at least two years) and beneficial ownership rules.
ℹ Individuals are not covered by directive exemptions
Both the Parent-Subsidiary and Interest & Royalties Directive exemptions apply only to corporate recipients. If dividends or interest from a Polish company are paid directly to an individual shareholder — even one resident in an EU member state — the domestic exemptions do not apply. The relevant DTT rate will govern instead, provided a valid certificate of tax residence is obtained.
The beneficial owner requirement
Since 2019, Polish WHT rules require the payer to verify that the foreign recipient is the actual beneficial owner (rzeczywisty właściciel) of the payment. A company that merely passes funds through — a so-called 'conduit' company — does not qualify for treaty or directive relief.
| Criterion | What to check |
| Receives payment for own benefit | Does not pass funds through to a third party |
| Not an intermediary or conduit | No legal/factual obligation to transfer funds onwards |
| Conducts genuine economic activity | Has real premises, staff, decision-making authority |
| Business substance | Operations proportionate to scope; not isolated from economic logic |
Failure to verify beneficial ownership — and subsequent application of a reduced rate — exposes the Polish payer to joint and several liability for unpaid tax, plus interest and potential penalties.
The look-through approach: who is the real beneficial owner?
Where the direct recipient of a payment is a holding or intermediary company, Polish tax authorities apply the look-through approach. If the intermediary entity is legally or factually obliged to pass the funds on to another party — for example, in back-to-back loan structures — the authorities will look past the direct recipient and apply the DTT of the country where the ultimate beneficial owner is resident.
This is particularly relevant for multi-tier holding structures where an intermediate EU holding company receives dividends or interest from Poland but immediately on-passes them upstream. The risk: the intermediate entity fails the beneficial owner test, the Polish WHT is assessed at the domestic rate, and the payer bears joint and several liability.
In assessing beneficial ownership, Polish tax authorities examine the actual course and circumstances of the transaction — including whether financing was arranged back-to-back with a related-party loan, which directly links the recipient to a conduit role.
Pay & Refund: payments above PLN 2 million
For qualified payments to a single recipient that exceed PLN 2 million per tax year, the paying company is required to withhold at the full domestic rate and remit that tax to KAS. The foreign recipient then applies for a refund.
ℹ Key limitation: Pay & Refund does NOT apply to all payment types
The pay and refund mechanism applies exclusively to payments between related parties, and only to dividends, interest, and royalties. Management fees, advisory fees, and other intangible service payments — even where they exceed PLN 2 million annually — remain subject to the standard rules (apply the treaty rate directly, with due diligence documentation) and are not caught by the pay and refund regime.
How to avoid the pay & refund mechanism
There are two routes for the payer to avoid defaulting to the domestic rate above the PLN 2 million threshold:
- Submit a formal statement (as the remitter) confirming due diligence has been completed and the conditions for a reduced rate or exemption are met; or
- Obtain a WHT preference opinion from the Head of KAS in advance.
How to obtain a WHT preference opinion
Applications must be submitted electronically via the Ministry of Finance Public Information Bulletin. The applicable form depends on the applicant type:
- WH-WOP — for remitters (paying companies)
- WH-WOZ — for taxpayers (foreign recipients)
- WHWOE — for disbursing entities handling securities accounts
Supporting documents typically required include: a valid certificate of tax residence, a business register excerpt, banking confirmation, a beneficial owner declaration, articles of association, financial statements, and the relevant loan or licensing agreement. The Head of KAS has up to 6 months to issue an opinion.
Reclaiming overpaid WHT in Poland
If WHT was withheld at the domestic rate but the foreign recipient was entitled to a reduced rate or exemption, a refund can be claimed. The procedure involves:
- Submitting a WHT refund application (wniosek o zwrot podatku) to the competent tax office
- Providing a certificate of tax residence, confirmation of beneficial ownership, and evidence of entitlement to the relief
- The tax authority has 6 months to process the application (or 3 months in straightforward cases)
Where WHT was withheld incorrectly in prior years, it is also possible to apply for reclaim through a correction of the payer's declaration. Our team has successfully recovered WHT for clients where the original refusal was based on procedural grounds — including cases where VAT registration in Poland was used to argue a fixed establishment existed.
Criminal liability: the personal exposure of directors
⚠ Personal criminal liability — directors and board members
Polish law imposes personal criminal liability on the individuals — typically board members or executives — who sign WHT-related statements and declarations. Foreign directors signing these documents on behalf of a Polish entity are equally exposed.
Filing a false or misleading statement in connection with WHT compliance can result in:
- A fine of up to 720 daily rates — equivalent to approximately PLN 41.3 million (from 1 July 2024)
- Imprisonment, or both
For minor infringements (where the exposure does not exceed five times the minimum wage — PLN 21,500 from 1 July 2024), the penalty is a fine ranging from PLN 430 to PLN 86,000.
The statements affected include:
- The due diligence declaration submitted when applying a reduced rate below PLN 2 million
- The statement submitted with a WHT refund application
- The application for a WHT preference opinion
- The remitter's formal statement above the PLN 2 million threshold
Common risk areas for foreign groups
Software licence fees
Payments for cloud SaaS subscriptions, ERP licences, and similar services to related parties frequently trigger WHT under Art. 21 — even where the recipient argues these are 'service' rather than 'royalty' payments.
Management fees
Polish tax authorities continue to challenge intra-group management charges. The domestic rate applies unless the treaty specifically provides relief, and beneficial ownership verification is required. Note: management fee payments are not subject to the pay & refund mechanism, even above PLN 2 million.
The PLN 2 million threshold
Companies that underestimate cumulative annual payments to a single foreign entity often find themselves in the pay and refund mechanism when they expected the standard treaty rate to apply automatically.
Permanent establishment interaction
If your company's WHT analysis reveals that a foreign entity may have a permanent establishment in Poland, the WHT question changes significantly — PE income is taxed as CIT, not withheld at source.
Back-to-back structures and the look-through approach
Where a foreign holding company receives interest or dividends from Poland and is simultaneously financed by a related party loan, Polish tax authorities are likely to apply the look-through approach and deny beneficial owner status to the intermediate entity.
How getsix can help
Our tax advisory team advises foreign companies and their Polish subsidiaries on all aspects of WHT compliance and planning. We regularly assist with:
- WHT opinions and formal rulings from KAS
- Beneficial ownership analysis and documentation
- WHT reclaim applications (including contested refusals)
- Structuring cross-border payments to achieve treaty compliance
- Coordination with DTT relief for dividends, interest, and royalties
- Due diligence procedures for payments below and above PLN 2 million
Need help with WHT compliance?
Related Services
- withholding tax services Poland
- double taxation agreements with Poland
- corporate income tax in Poland
- WHT 2023 rules and changes
- WH-OSC statement filing
Frequently asked questions
Does WHT apply to services provided by a foreign company to a Polish entity?
Only to the specific categories listed in Article 21 CIT — principally intangible services (consulting, management, advertising, accounting, data processing). Standard goods purchases or construction services are not subject to WHT.
Can a Polish company apply the treaty rate without obtaining a formal opinion?
Yes, for payments below PLN 2 million per year per recipient, the payer can apply the reduced treaty rate directly, provided they have collected due diligence documentation. Above PLN 2 million (for related-party dividends, interest, and royalties), the pay and refund mechanism applies unless a prior statement or WHT opinion is in place.
How long does a KAS WHT opinion take?
Typically 6 months. Well-prepared applications with complete documentation tend to progress faster.
What happens if WHT was not withheld and it should have been?
The Polish payer bears joint and several liability for the unpaid tax. In practice, KAS typically assesses the payer — not the foreign recipient — for unpaid WHT plus statutory interest (currently 8% per annum).
Are individuals covered by the Parent-Subsidiary Directive exemption?
No. Directive exemptions apply only to corporate recipients. Dividends or interest paid to an individual shareholder — even one resident in the EU — are subject to the relevant DTT rate, not the directive exemption.
Does the pay & refund mechanism apply to management fees?
No. Pay & refund applies only to related-party payments of dividends, interest, and royalties. Intangible service payments such as management and advisory fees are not within scope, regardless of the annual amount.
