For many companies, June 2024 is a time when decisions are made about what to do with 2023 profit, including about its distribution.

Note the following tax issues arising in this context:

  • The mere passing a resolution authorising dividend payment may constitute a tax scheme (reportable arrangement for MDR purposes). This is due to the specific regulation in the Tax Code whereby the reporting obligation is triggered by, among other things, the mere fact that certain payments to the same foreign recipient exceed PLN 25 million in one calendar year, which includes both payments made and those reasonably expected to be made.

In practice, you will have to file form MDR-1 where the dividend amount itself is above PLN 25 million or the amount will cause this threshold to be exceeded when counted with other relevant payments (interest, royalties, broad range of service fees). Importantly, for dividend, the 30 days’ time to file MDR-1 commences on the date of the dividend resolution (when payment became expected), not on the later date of actual payout.

  • A dividend payment has to be preceded by a due diligence check to be conducted by the Polish payer for withholding tax purposes regardless of the amount paid.

In addition, passive income payments (including dividends) exceeding PLN 2 million in aggregate will generally trigger the duty to withhold tax at the standard rate (19% for dividends) in accordance with the pay and refund approach. This withholding may be waived only under very strict conditions which require the involvement of Polish payer’s management or of the competent tax authority before payment.

Non-compliance may trigger heavy fines imposed under criminal tax law on individuals in charge of the given matter (MDR) or on members of the Polish payer’s management board (WHT).

If this issue pertains to your business and you are interested in our assistance, please contact us.

This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.