New deadlines for withholding tax

At the end of August 2022, the Regulation on the Extension of Certain Deadlines Related to Meeting the Obligations Resulting from Withholding Tax came into force.

This regulation extends the validity period of a statement made by members of the management board of remitters regarding the withholding tax (WHT) mechanism until the end of the tax year. As a result, remitters will be entitled to apply the preferential WHT rate or WHT exemption, respectively, on the basis of the originally filed WH-OSC statement until the end of their tax year[1], rather than until the end of the second month following the month in which the statement was filed, as was the case under the regulations until recently.

According to the regulations in force on 1 January 2022, the deadline for filing the original statement was the end of the tax payment deadline for the month in which the PLN 2 million threshold was exceeded.

At the same time, the related and dependent deadline for filing a follow-up declaration was also extended. Here, the deadline was extended to the last day of the month following the end of the remitter’s tax year (previously, the deadline was the seventh day of the month following the end of an additional two months).

According to the Ministry of Finance, the extension of the deadline is intended to mitigate the negative effects of the previous regulations, according to which the deadline for filing the original statement expires on the due date of payment of tax for the month in which the PLN 2 million threshold was exceeded.

This is because, since the beginning of 2019, a new withholding tax mechanism has been in force regarding payments exceeding PLN 2 million in a given year. If the threshold is exceeded, the remitter is required to withhold tax on the excess over PLN 2 million, without being able to benefit from preferences arising from double-tax treaties and special provisions, i.e. the pay & refund mechanism now applies. The legislation allows for two exceptions to the obligation to apply the pay & refund mechanism:

• a WHT preference opinion (issued by the tax authorities); and
• a statement from the remitter that all conditions for applying an exemption are met (WH-OSC).

These changes are introduced by the Regulation on the Extension of Certain Deadlines Related to Meeting the Obligations Resulting from Withholding Tax of 29 August 2022 (Journal of Laws of 2022, item 1829).

[1] For remitters who have their tax year equal to the calendar year, this will be 31 December 2022.