Revenue from dividends paid to partners/stockholders who are individuals is subject to personal income tax. The rules for the taxation of dividends paid to Polish tax residents dont’rise doubt. On the other hand, many questions arise in the event that the dividend is to be paid to a person without tax residence in Poland.
1. Non-residents and taxation of their revenues
It results from Article 3(1, 2) of the Personal Income Tax Act of 26 July 1991 (i.e. Official Journal of 2022, item 2647, as amended), hereinafter referred to as the Act, that a Polish tax resident is a person who has his/her place of residence in Poland. A person residing in the territory of the Republic of Poland is an individual who:
- has a centre of personal or economic interests (centre of vital interests) in Poland or
- stays in the territory of the Republic of Poland for more in 183 days in a tax year.
Residents are subject to unlimited tax liability. This means that they are liable to pay tax on all income (revenue), regardless of the location of its sources (Article 3(1) of the Act).
Persons who don’t have their place of residence in the territory of the Republic of Poland are tax non-residents. They are subject to tax liability only on income (revenue) obtained in the territory of Poland. This is the so-called limited tax liability (Article 3(2a) of the Act).
In Article 3(2) of the Act, the Polish legislator has created a catalogue of examples of sources of income (revenue) earned in Poland by non-residents. These include income (revenue) from, among others:
- work performed in the territory of the Republic of Poland on the basis of a business relationship, employment relationship, home based work or cooperative employment relationship, regardless of the place of payment of remuneration;
- an activity performed in person in Poland, regardless of the place of payment of remuneration;
- an economic activity conducted in the Republic of Poland, including throug a foreign establishment located in this country;
- a real estate located in the territory of Poland or rights to such property, including from its disposal on whole or in part or from the disposal of any rights to this real estate
- securities and derivative financial instruments which aren’t securities, admitted to public trading in the Republic of Poland within the regulated stock market, including those obtained from the disposal of these securities or instruments and from the exercise of rights arising from them;
- the transfer of the ownership of shares (stocks) in a company, all rights and obligations in a company that isn’t a legal person, or participation titles in an investment fund, a collective investment institution or another legal person, as well as rights of a similar nature or from receivables resulting from the ownership of the aforementioned – if properties located in Poland or rights to such real estate constitute, directly or indirectly, at least 50% of the value of the assets of this company, company that isn’t a legal person, an investment fund, a collective investment institution or a legal person;
- the transfer of the ownership of shares (stocks), all rights and obligations, participation titles or rights of a similar nature in a property company;
- regulated receivables, including those placed at the disposal, paid or deducted, by individuals, legal persons or organisational units without legal personality, having their place of residence, head office or management board in the territory of the Republic of Poland, regardles of the place of concluding the contract and performing the service;
- unrealised gains.
2. Taxation of dividends
A dividend constitutes a part of a capital company’s profit paid to partners/stockholders. A 19% flat-rate income tax is levied on revenues earned from dividends (Article 30a(1)(4) of the Act). The flat-rate tax is collected without reducing the revenue by tax deductible costs (Article 30a(6) of the Act).
In relation to non-residents, the above rules are modified. Indeed, Article 30a(2) of the Act states: The provisions of paragraph 1, points 1-5, 10a and 11a-11f shall apply taking into account double taxation conventions to which the Republic of Poland is a party. However, the application of the tax rate resulting from the appropriate double taxation convention or non-collection (non-payment) of tax in accordance witch such an agreement is possible provided that the taxpayer’s place of residence is documented for tax purposes by a certificate of residence obtained from him/her.
In practice, this means that, if it results from the double taxation convention applicable in a given case, the payer may apply the flat rate specified in this agreement to the taxation of dividends paid to a non-resident, and even waive tax collection. The legislator made the use of the tax rules resulting from the double taxation convention conditional upon presenting a certificate of residence by the taxpayer. If the taxpayer doesn’t present the document in question, a flat rate of tax of 19% applies.
3. Paying tax to the Tax Office and PIT-8AR
The company paying the benefit is the payer of dividend tax. The payer is obliged to transfer the tax collected to the account of the competent tax office by the 20th day of the month following that one in which the tax was levied (Article 42(1)(1) of the Act).
Moreover, the company is obliged to send the annual flat-rate income tax return PIT-8AR to the tax office. The declaration in question shall be submitted to the competent Tax Office by the end of January of the year following the tax year (Article 42(1a) of the Act). The PIT-8AR declaration should be submitted to the tax office electronically (Article 45ba of the Act).
4. Information IFT-1R and information IFT-1
In the event that the dividend was paid to a non-resident individual, it’s additionally incumbent on the payer to send IFT-1R and IFT-1 information to the Tax Ofiice and the non-resident.
The payer is obliged to prepare and send the annual IFT-1R information by the end of February of the year following the tax year (Article 42(2)(2) of the Act). On the other hand, the IFT-1 information is drawn up and sent by the payer at the written request of the non-resident within 14 days from the date of submitting the application (Article 42(4) of the Act). It should be noted here that the preparation and presentation of the IFT-1 declaration by the payer during the tax year doesn’t exclude his/her obligation to draw up and submit the IFT-1R declaration (Article 42(2)(2) of the Act in fine).
It’s necessary to send IFT-1R and IFT-1 information to the tax office competent for taxation of forein persons. The provisions of the Regulation of the Minister of Finance of 22 August 2005 on power of tax authorities (i.e. OJ 2022, item 565, as amended), hereinafter referred to as the regulation, apply here. It results from the regulation that the following heads of tax offices have local jurisdiction according to the address of the payer’s head office:
- in the Lower Silesian Voivodeship – the Head of Wrocław Psie Pole Tax Office;
- in the Kuyavian-Pomeranian Voivodeship – the Head of the Second Tax Office in Bydgoszcz;
- in the Lublin Voivodeship – the Head of the First Tax Office in Lublin;
- in the Lubusz Voivodeship – the Head of the First Tax Office in Zielona Góra;
- in the Łódź Voivodeship – the Head of Łódź-Śródmieście Tax Office;
- in the Lesser Poland Voivodeship – the Head of Cracov-Śródmieście Tax Office;
- in the Masovian Voivodeship – the Head of the Third Tax Office for Warsaw-Śródmieście;
- in the Opole Voivodeship – the Head of the First Tax Office in Opole;
- in the Subcarpathian Voivodeship – the Head of the First Tax Office in Rzeszów;
- in the Podlaskie Voivodeship – the Head of the First Tax Office in Białystok;
- in the Pomeranian Voivodeship – the Head of the First Tax Office in Gdańsk;
- in the Silesian Voivodeship – the Head of the First Tax Office in Katowice;
- in the Świętokrzyskie Voivodeship – the Head of the Second Tax Office in Kielce;
- in the Warmian-Masurian Voivodeship – the Head of the Tax Office in Olsztyn;
- in the Greater Poland Voivodeship – the Head of Poznań-Nowe Miasto Tax Office;
- in the West Pomeranian Voivodeship – the Head of the Third Tax Office in Szczecin.
5. Legal notice
The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.
