Poland: Withholding tax exemption on interest from certain Polish T-bonds
Following clarification from the Ministry of Finance, Clearstream Banking1 informs customers that effective
immediately
its local depository, Citi Handlowy, confirms that it will cease to deduct Polish withholding tax on certain T-bonds for foreign investors and Polish corporate investors.
Background
Clearstream Banking informed customers in Announcement A22001 of an upcoming exemption on T-bonds, pending clarifications from the National Tax Administration.
Citi Handlowy confirmed that a withholding tax exemption is available on interest paid from 1 January 2022 onwards by T-bonds:
- With a maturity not shorter than one year.
- Admitted to trading on a regulated market or introduced to an alternative trading system within the meaning of the Act of 29 July 2005 on Trading in Financial Instruments, in the territory of the Republic of Poland or in the territory of a state being a party to a double taxation avoidance agreement concluded with the Republic of Poland, the regulations of which define the rules of taxation of income from dividends, interest and royalties.
- Issued in the issue of a given series after 31 December 2018.
The exemption on these T-bonds will apply through relief at source to foreign corporate and individual investors and to Polish corporate investors, upon submission of the required certification within the indicated deadline.
Polish individuals are not eligible to the exemption but can obtain the reduced rate of 19% upon disclosure of their status.
Impact on customers
Relief at source
Customers wishing to apply for a relief at source of Polish withholding tax on eligible T-bonds on behalf of eligible final beneficial owners (BO), must provide the following documentation by the prescribed deadline.
For all beneficial owners requesting an exemption and for Polish individuals entitled to 19%:
- A completed One-Time Certificate for Polish T-bonds issued after 31 December 2018 (the OTC) and duly signed by the customer, and specifying, among other things, whether or not the customer is the sole BO of the Polish debt securities held in the account; must be provided before the first income/redemption payment. It remains valid until revoked. Any changes to any details must be communicated in a new OTC; and
- A Power of Attorney (PoA) if the documentation is signed by a third party. If several parties are involved, the full chain of PoAs must be provided; and
- A per-payment instruction per each tax rate provided via SWIFT (formatted MT565) or Xact Web Portal Message that includes:
- Customer account number;
- ISIN;
- Corporate action reference ID;
- Payment date;
- The total holding of securities;
- Full name, fiscal address, and TIN number of the Beneficial owner;
- Country of residence for tax purposes;
- Tax rate to apply;
- Holding for which the reduced/exempt tax rate applies.
The beneficial owner per-payment instruction must be provided before each interest payment by all customers who have no standing instruction in place (OTC box A).
Foreign individuals requesting an exemption
in addition to the above-mentioned documentation, foreign individuals must provide:
- An original certificate of residence (COR), issued by the beneficial owner’s local tax authorities in the year for which it is to be used. It must include the beneficial owner’s full name and address and remains valid until the end of the respective calendar year. Electronic certificates of residence are accepted. customers should refer to Announcement A18103 for further details on their acceptance.
Relief at source deadline
Relief at source | Deadline for receipt by Clearstream Banking |
Original certificates | At the latest, ten business days before the payment date by 10:00 CET. |
Per-payment instruction | At the latest, two business days before the payment date by 10:00 CET. |
Quick refund
A quick refund is not available
Standard Refund
A standard refund, on interests paid as of 1 January 2022, is available to customers on behalf of foreign beneficial owners and to anyone who could not meet the relief at source deadline. No standard refund is offered to Polish investors through Clearstream Banking.
The procedure and deadline for standard refund is available in Announcement A21142.
Important Note: As this is a new exemption, the Polish tax authorities may request additional documents to support the standard refund and the procedure may have to be updated based on such requests.
Further information
All forms can be found on the Clearstream website under Tax Forms to use - Poland.
For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.