Top Court ruled on which DTT language version prevails

This is to let you know of a resolution adopted by the Supreme Administrative Court (“SAC”), sitting in a bench of seven justices, on 28 October 2024 (case no. II FPS 1/24). The resolution concerns the legal issue of which language version of a double tax treaty (“DTT”) should be binding on the taxpayers and withholding agents who apply the treaty.

That point of law arose in the context of a dispute over the term “beneficial owner” of interest under the Polish-Swedish DTT.

The Polish version of the treaty did not use the concept of “rzeczywisty właściciel” (Polish for “beneficial owner”) whereas its English version used the phrase “beneficially owned by a resident”. This linguistic discrepancy had not been resolved until the Minister of Foreign Affairs issued an official notice to this effect on 20 November 2017.

In accordance with Article 30 of the Polish-Swedish DTT, in the case of any divergency of interpretation, the English text shall prevail.

In such circumstances, SAC adopted a resolution to the effect that the Article 30 directive to resolve any interpretation divergencies under Polish-Swedish DTT on the basis of the English text requires Polish withholding agents to follow the treaty in accordance with its English language version.

As such, the resolution suggests that, where a DTT signed by Poland gives priority to the foreign language text in resolving interpretation concerns, the taxpayers and withholding agents who apply the DTT should resort to that foreign language version, meaning they should in practice know the language.

Examples of such DTTs include those signed with Italy, Switzerland, Netherlands, Austria, Denmark, Norway, Finland, Portugal, Greece, Czechia, Croatia, Cyprus, Bulgaria, Lithuania, Estonia, Romania, Slovakia, Turkey, Israel, China, Japan, South Korea, Brazil, India, and United Arab Emirates.

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.