Anna Skrobek, Joanna Parysek

The article discusses the due diligence requirements for withholding tax purposes and the related need to conduct an extended counterparty check in the case of payments below PLN 2 million. Tax authorities claim that such due diligence checks should not be limited to the recipient’s tax residence only, whether or not the payments are below the PLN 2M threshold. It is also necessary to verify if the recipient is the beneficial owner of the payment, including by applying the business substance test. However, courts disagree and rule that the beneficial owner test and the business substance test is required when payments exceed the PLN 2M threshold.