Major changes in Poland’s double tax treaties (“DTT”) with the Netherlands, Malta, and Germany have been introduced. The most important of these changes are outlined below:
- DTT with Netherlands:
- changes to permanent establishment definition to eliminate abuse of the preparatory or auxiliary activities exemptions and the practice of contract/business splitting, changes to dependent agent definition;
- more precise rules on taxation of PE;
- introduction of so-called real estate clause;
- taxation of fiscally transparent entities;
- introduction of the principle purpose test, which is a sort of an anti-avoidance rule.
The changes to Dutch DDT will be applied as of 1 January 2023 or as of the tax year beginning in 2023.
- DTT with Malta:
- broader definition of dividend;
- interest tax rate reduced from 5% to 4% if payee beneficially owns the interest;
- technical services, meaning payments in connection with any services in the nature of management or advisory services (subject to certain DTT exceptions), to be taxed similarly to royalties;
- more precise drafting of the real estate clause;
- changes to taxation of directors’ remuneration;
- modification of the double taxation avoidance method.
The changes to Maltese DDT will be applied as of 1 January 2023 or as of the tax year beginning in 2023.
- DTT with Germany:
- Poland and Germany signed termination of the additional agreement on the taxation of remote work carried out by cross-border workers during the COVID-19 pandemic.
- Pursuant to the agreement, a worker of one state working remotely for an employer of the other state was treated for tax purposes as working in the state in which they would have normally worked in the absence of the anti-crisis measures. This effectively meant that the worker was deemed to work and stay in the other state on condition their remote work was caused by the COVID-19 pandemic.
- The parties agreed that the agreement would apply only to the time between 11 March 2020 and 30 June 2022. As of 1 July 2022 the tax treatment of natural persons will again be regulated by the DTT.
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