On 8 June 2023, CJEU ruled in case C-322/22, stating the incompatibility with EU law of the Polish Tax Code provisions concerning interest on WHT overpayments refunded to investment funds from third countries (countries from outside EU and EEA).

Third-county investment or pension funds seek to reclaim Polish WHT, citing the incompatibility between Polish national law and EU law found by CJEU in its judgment of 10 Apr 2014 in case C-190/12.

This tax is considered to be overpaid and interest on the overpayments is governed by Article 78(5) of the Polish Tax Code (Ordynacja podatkowa), which says that such interest accrues:

  • from when the overpayment arises (i.e. tax is withheld) to when the tax is refunded, on condition that the refund request is filed within 30 days from when the CJEU’s judgment is published in the Official Journal of the European Union, or
  • from when the overpayment arises (i.e. tax is withheld) to a date falling 30 days after publication of the CJEU’s judgment in the Official Journal of the European Union, if the refund request is filed more than 30 days after such publication.

The judgment relied upon by third-country funds was handed down in 2014 so they obviously are no longer able to file their requests within 30 says from its publication in 2014.

This has spurred Polish courts to action and by and large they modified the deadline so that interest is due but … only if the refund request is filed within 30 days from when the tax was withheld (since the 30-day period after publication of the 2014 judgment already passed).

As filing an overpaid tax refund request within such a time is practically impossible, third-country funds have for all practical purposes been deprived of their right to reclaim WHT with interest.

Now CJEU has held that the above-cited Tax Code provisions and their modification by Polish courts are incompatible with Union law.

CJEU’s ruling is that a national provision is incompatible with EU law if, when a request for a refund of overpaid tax is submitted more than 30 days after publication of the relevant judgment of CJEU, the provision limits the running of the interest on the overpayment due to the taxable person to the 30th day after the publication, or even excludes interest entirely in a situation where that overpayment was incurred by the taxable person after that 30th day.

This is a fundamental decision in terms of interest on overpayments that have arisen after CJEU’s finding of incompatibility between national law and EU law, and opens a path for taxpayers to claim interest on those overpayments.

While the judgment refers to overpaid WHT decisions based on requests by a US fund, it may also offer grounds for claiming interest on tax overpayments which are found due to incompatibility of other national regulations (including VAT regulations) or in favour of other taxpayer categories.

The time to act after publication of the judgment being relatively short, you may wish to review both your past and future tax refund cases for an opportunity to claim interest where you have been deprived as taxpayers of the right to receive tax refunds with interest based on incompatibility of Polish law with EU law.

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.