We analyse the shareholding structure, the status of the dividend recipient, the documents confirming tax residence and the conditions for applying the exemption or the rate resulting from the relevant double taxation avoidance agreement.
WITHHOLDING TAX (WHT)
Withholding tax (WHT)
The payment of a dividend, interest, royalties or remuneration for specific services to a foreign entity may involve the obligation to settle withholding tax (WHT).
Before making a payment, it is necessary to determine its nature, the status of the recipient and the basis for applying the appropriate rate, exemption or non-collection of tax. For some payments, the status of the beneficial owner of the receivable, the exercise of due diligence and the rules of the pay and refund mechanism are also relevant.
We advise businesses and capital groups on current and planned cross-border payments. We analyse the possibility of applying preferences, verify documentation, prepare applications and declarations, and support clients during tax audits and proceedings.
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Support with cross-border payments
On this page
- 01What is your situation?
- 02What does the advice involve?
- 03Scope of support
- 04Types of payments
- 05Exemption and preferences
- 06Beneficial owner
- 07Due diligence
- 08Pay and refund
- 09Opinion on the application of preferences
- 10Tax refund
- 11Review of WHT settlements
- 12When is it worth it?
- 13What does the cooperation look like?
- 14Why Russell Bedford?
- 15Team
- 16FAQ
- 17Related services
- 18Contact
What is your situation?
The method of settling WHT depends on the type of payment, the recipient of the receivable, the country of its residence and the conditions under which the exemption or preferential rate is to be applied.
What does WHT advisory involve?
We begin the analysis with the specific payment.
We determine:
- who makes the payment,
- who receives the receivable,
- what the type of payment is,
- where the recipient is tax resident,
- which domestic provisions apply,
- whether the applicable double taxation treaty provides for a preferential rate,
- whether the conditions for exemption are met,
- what documents the withholding agent holds,
- whether verification of the beneficial owner is required,
- whether the payment is subject to the pay and refund mechanism.
Only once these circumstances have been established can the method of settling the tax be determined.
For recurring payments, we also help to organise the WHT procedure within the company, the scope of the required documents and the way they are periodically updated.
Scope of withholding tax support
Analysis of the WHT withholding obligation
We verify whether a given payment is subject to withholding tax in Poland and what the legal basis for its settlement is.
We analyse the nature of the service, the contracts concluded between the parties, the status of the recipient and the circumstances in which the payment is made.
Determination of the applicable rate
We review the rate resulting from domestic provisions and the possibility of applying the conditions laid down in the applicable double taxation treaty.
Exemptions and preferences
We assess whether, in the given situation, the conditions for not withholding the tax or for applying a preferential rate are met.
The verification covers the conditions laid down in the provisions, the documentation and the situation of the recipient of the receivable.
Certificate of residence
We review what confirmation of tax residence the withholding agent should hold and whether the documents held meet the conditions for applying a given method of settlement.
Beneficial owner of the receivable
We analyse the status of the payment recipient from the perspective of the requirements relating to the beneficial owner of the receivable.
Due diligence
We help determine the scope of verification appropriate to the type of payment, the relationship between the parties and the information held.
Pay and refund mechanism
We determine whether the payment is subject to the mechanism and what steps are available before the payment is made and after the tax has been withheld.
Opinion on the application of preferences
We prepare an analysis of the conditions, the documentation and the application needed to obtain an opinion.
Withholding tax refund
We support the preparation of documents and the application where the tax has been withheld and the taxpayer or withholding agent has grounds to apply for its refund.
Audits and tax proceedings
We represent clients in cases where the authorities verify the correctness of WHT withholding, the exemptions or preferential rates applied.
What payments may withholding tax apply to?
The obligation to settle WHT must be assessed in relation to a specific type of receivable.
Dividends
Where a dividend is paid to a foreign shareholder, we analyse the conditions for applying the applicable rate or exemption, the shareholding structure and the status of the recipient of the receivable.
Interest
In the case of cross-border financing, we examine the rules for taxing interest and the conditions for applying preferences arising from the provisions or the applicable double taxation treaty.
Royalties
The analysis covers, among other things, the type of rights or intangible assets for which the payment is made and the manner in which they are used.
Services
When purchasing services from a foreign contractor, it is necessary to determine whether a given type of service falls within the catalogue of receivables covered by WHT and whether the provisions of the applicable double taxation treaty apply.
Other cross-border payments
Not every payment abroad is subject to WHT. The nature of the receivable should be determined on the basis of the actual scope of the service, and not solely on the name used on the invoice or in the contract.
Exemption or preferential withholding tax rate
The possibility of applying an exemption or a lower rate requires verification of the conditions relating to the specific payment and its recipient.
A payment to a foreign entity or the holding of a certificate of residence does not in itself determine the method of settlement.
We analyse, among other things:
- the type of receivable,
- the country of residence of the recipient,
- the applicable double taxation treaty,
- the conditions laid down in domestic provisions,
- the ownership structure,
- the period of holding the shares, where relevant to the application of the exemption,
- the status of the recipient of the receivable,
- the documentation held by the withholding agent,
- the scope of the required due diligence.
The aim is to establish the basis for a specific method of settlement and the documents that should confirm its correctness.
Beneficial owner of the receivable
The status of the beneficial owner of the receivable may be of significant importance when applying preferences in withholding tax.
The assessment should not be based solely on a statement received from the counterparty. What matters are the circumstances concerning the manner in which the payment recipient operates, its role in the transaction and what happens to the receivable received.
The Minister of Finance published, in 2025, explanations concerning the application of the beneficial owner clause for WHT purposes, which further emphasises the importance of properly documenting this analysis.
As part of our support:
- we determine the scope of information needed for verification,
- we analyse the documents and the transaction structure,
- we assess the role of the entity receiving the receivable,
- we help prepare the documentation of the verification process,
- we identify areas requiring additional clarification.
Due diligence in WHT
A withholding agent applying a preference should have information enabling it to justify the settlement method adopted.
The scope of verification depends on the circumstances of a specific payment. The relationships between the parties, the amount and frequency of payments, the group structure, the type of receivable and documents concerning the recipient may be relevant.
We help create WHT procedures that specify:
- which payments are subject to verification,
- which documents need to be collected,
- who is responsible for checking them,
- when the documents should be updated,
- what additional steps are needed for higher-risk payments,
- how to document the analysis carried out.
Such an orderly process is particularly important in companies making regular payments to foreign entities.
Pay and refund mechanism
The pay and refund mechanism applies to certain receivables covered by the CIT Act, in particular dividends, interest and royalties paid to a related foreign entity.
Where such payments to the same taxpayer in a tax year exceed 2 million PLN in total, the mechanism may require tax to be withheld at the statutory rate on the amount above that threshold. The current regulations also provide solutions allowing a preference to be applied in certain cases without prior withholding of tax, including where the conditions concerning an opinion on the application of the preference or an appropriate withholding agent's statement are met.
Before the threshold is exceeded, we analyse:
- which receivables are taken into account when determining it,
- whether the recipient is a related entity,
- whether the payments are subject to the mechanism,
- which preferences may apply,
- what documentation needs to be prepared,
- whether it is justified to apply for an opinion on the application of the preference,
- what obligations will arise for the withholding agent.
In the case of larger and regular payments, it is worth carrying out this analysis before making the payment, rather than only after the statutory threshold has been exceeded.
Opinion on the application of preferences
An opinion on the application of the preference may allow certain preferential WHT collection rules to be applied once the authority confirms that the required conditions are met.
The procedure requires the submission of information and documents concerning both the payment itself and the entity receiving it. The authority may examine, among other things, the actual nature of the recipient's activity and its status as the beneficial owner of the receivable.
Applications for an opinion are submitted electronically.
We support with:
- assessing whether it is justified to apply for an opinion,
- analysing the conditions for applying the preference,
- preparing the required data and documents,
- drafting the application,
- preparing responses to the authority's questions during the proceedings.
Withholding tax refund
If WHT was withheld even though the conditions allowing an exemption or a lower rate to be applied are met, it is possible to apply for a refund of the relevant part of the tax, in part or in full.
As part of the procedure, the basis for the refund must be demonstrated and documentation must be presented concerning, among other things, the recipient of the receivable, the payment and the basis for making it.
The Ministry of Finance indicates that in a procedure related to pay and refund, the application may require, among other things, documents concerning tax residence, transfers, the obligation to pay and the fulfilment of the conditions for the preference.
We help determine the scope of the materials needed, prepare the application and conduct correspondence with the authority.
Review of WHT settlements
The authorities may verify both the obligation to withhold tax itself and the basis for applying an exemption or a preferential rate.
The subject of the analysis may include contracts, residence certificates, statements, documentation concerning the recipient of the payment, financial flows and the manner in which the withholding agent verified the counterparty.
We support the client from the first summons.
The scope of work may include:
- analysing the settlements covered by the audit,
- reviewing the documentation held,
- assessing the basis for the rate or exemption applied,
- preparing responses to summonses,
- drafting explanations and evidentiary requests,
- participating in actions conducted by the authority,
- preparing an appeal,
- representation at further stages of the dispute.
When is it worth analysing WHT?
It is worth carrying out the verification before making the payment, particularly when:
the company makes a payment to a foreign entity for the first time
a dividend payment is planned
the group changes its financing method and interest payments arise
the business acquires rights or licences from a foreign entity
the company starts using the services of a foreign counterparty
an exemption or a preferential rate is to be applied
the beneficial owner status needs to be confirmed
the annual value of payments to a related entity is approaching the threshold relevant to the pay and refund mechanism
the recipient of the payment or the group structure changes
the tax authority requests documents concerning earlier WHT settlements
The earlier the settlement rules are established, the easier it is to gather the documents before the payment deadline.
What does the cooperation look like?
Identification of the payment
We determine the type of receivable, the recipient, its country of residence, the value of the payment and the relationships between the parties.
Analysis of the legal basis
We check the domestic regulations and the applicable double taxation avoidance agreement.
Verification of the conditions for the preference
We assess the possibility of applying an exemption, a reduced rate or non-withholding of tax, and the scope of the documentation required.
Preparation of documents
The scope may include the due diligence procedure, documentation concerning the beneficial owner, an application for an opinion on the application of the preference, statements or documents needed for a tax refund.
Settlement and further support
We help implement the settlement method adopted and answer questions that arise with subsequent payments.
Why Russell Bedford?
International taxes analysed together with law
WHT settlement may depend on agreements concluded between entities, the ownership structure and the nature of the business activity. In such matters, tax advisers and lawyers work together.
Support before payment and during a dispute
We advise on planned payments, prepare documentation and conduct cases in which the authority challenges the settlement method adopted.
Service to capital groups
WHT payments often occur in financing, dividend payments and the use of intellectual property within a group. We analyse them in the context of the entire structure.
International cooperation
Russell Bedford Poland is part of Russell Bedford International. For projects involving several countries, we can cooperate with advisers operating in the jurisdiction of the payment recipient.
The team leading WHT projects
Withholding tax matters are handled by tax advisers supported by lawyers and experts specialising in international taxation.
The team's experience covers the analysis of cross-border payments, the application of exemptions and preferences, verification of the status of payment recipients, pay and refund procedures, and the conduct of tax audits and proceedings.
Mikołaj Stanisławski
Advocate | Partner, Russell Bedford Tax Department
Mikołaj Stanisławski is an advocate and partner in the Russell Bedford Tax Department. He has 10 years of experience in tax advisory. Since the beginning of his career, he has supported corporate entities, smaller-scale entrepreneurs and individuals.
He specialises in income taxes, with particular emphasis on corporate income tax (CIT), personal income tax (PIT), tax planning and restructurings. He also supports clients in the areas of value added tax (VAT), withholding tax and fiscal criminal matters.
Specialisations
- Corporate income tax (CIT)
- Personal income tax (PIT)
- Value added tax (VAT)
- Withholding tax (WHT)
- Tax planning
- Restructurings
- Mergers and acquisitions (M&A)
- Tax and customs-fiscal audits
- Tax proceedings
- Fiscal criminal proceedings
- Sale of goods on European Union and third-country markets
Frequently asked questions about withholding tax
Withholding tax is a flat-rate tax collected by the withholding agent on certain types of payments to foreign entities. The scope of the obligation depends on the type of receivable and the regulations applicable to the specific payment.
Related services
Tax advisory
Ongoing advisory for companies and capital groups, including on cross-border payments and transactions.
View serviceAudits and tax proceedings
Representation of taxpayers during verification activities, tax audits, customs-fiscal audits and tax proceedings.
Criminal fiscal proceedings (KKS)
Support for persons responsible for a company's tax settlements.
Transfer pricing
Advisory on the principles of settlements between related entities.
View serviceLet's talk about WHT settlement
Before the conversation, it is worth establishing the type of payment, the recipient of the receivable, the country of its residence and the planned or already made payment amount.
On this basis, we can determine the scope of the analysis, the documents needed and further steps.
The information presented on this page is of a general nature and does not constitute tax advice. The manner of settling WHT requires an analysis of the specific payment, its recipient and the documents held by the withholding agent.