We would like to remind you that in official WHT explanations the Polish Ministry of Finance underlined that receiving an opinion or a memorandum from a licensed tax adviser obligatory prepared as a result of analysis of documents, business substance and financial flows of payment’s recipient should be considered as carrying out due diligence which is obligatory for the purpose of applying WHT preference as of 2019. This is especially important now, under the new WHT pay-and-refund regime which is effective in Poland as of 2022.
Similarly, such an opinion or a memorandum may be used in the process of applying for WHT refund. As explained by the tax authorities, providing opinion or memorandum to the tax authorities should make the litigation process more effective and result in faster refund of the WHT paid.
Please be informed that in the recent months ASB has helped their Clients in obtaining positive WHT decisions from the tax authorities. Moreover, all applications for WHT opinions - which allow a tax remitter to apply WHT exemption or reduced WHT rate without applying the restrictive WHT pay-and-refund mechanism – submitted by ASB for their Clients were positive.
At the same time we have observed that the tax authorities and administrative courts start to understand the business, given the rulings issued recently, e.g.:
- the ruling of the Supreme Administrative Court in which it was stated that fulfilling due diligence by a tax remitter should also encompass activities aiming at carrying out the due diligence to the extent possible; this means obtaining relevant information which is available to a tax remitter for the purpose of WHT due diligence; this does not mean the obligation to carry out full due diligence by a tax remitter in each case;
- the ruling of the Provincial Administrative Court in which it was explained that holding companies are very peculiar form of carrying out business activity and it is not reasonable to require robust level of business substance from them while analyzing the possibility to apply WHT exemption or reduced WHT rate.
Should you need our support in applying for WHT refund or would like to grant your Polish entity the possibility to apply WHT preference for 3 years without the obligation of applying WHT pay-and-refund mechanism, please kindly reach out to us.