Poland: Changes to taxation rules for 2019 – limited relief at source service

29.01.2019

Further to Clearstream Banking's1 Announcement A18165, we inform customers that following the final approval of the amended taxation rules and their implementation as of 1 January 2019, resulting in the decision of Clearstream Banking’s depository to stop its service of relief at source and quick refund, the Polish Ministry of Finance issued an Ordinance that confirms the exemption of certain institutions and the payments from monitoring the PLN 2 million threshold. The Ordinance came into force on 1 January 2019.

Based on the provisions of the Ordinance, Clearstream Banking’s depository Citi Handlowy (the “depository”) published a new service of relief at source limited to certain entities and applicable effective

29 January 2019

This limited service is described below under “Impact on customers”.

Background

The new tax regulations entered into force on 1 January 2019, introducing among other changes a PLN 2 million threshold per year, investor and withholding tax agent above which the statutory tax rate applies.

On 31 December 2018, the Ministry of Finance published an Ordinance with the following effects:

The new tax regulations do not apply to:

  • Interest and discount received by non-residents on bonds issued by:
    • The state treasury and offered on foreign markets;
    • Bank Gospodarstwa Krajowego S.A. and offered on foreign markets, dedicated to finance specific programmes as defined in the Ordinance.
  • Interest and discount from bonds issued by the state treasury on the Polish market, if purchased after 7 November 2015 and received by foreign central banks;
  • Interest, discount and dividends received by entities founded by state agencies of contracting countries unless the relevant contract states otherwise;
  • Interest, discount and dividends received by supranational organisations, where the Republic of Poland is a member;
  • Interest, discount and dividends received by entities who signed agreements of cooperation with the Republic of Poland, if they are already exempted from income tax based on different regulations;
  • Income paid to entities exempted from tax (on interest, discount or dividends), if the name of such entity is mentioned in the respective double taxation treaty (DTT) signed by the Republic of Poland.

The application of the PLN 2 million threshold is delayed until 30 June 2019 for:

  • Non-residents from counties that set up a legal base for exchange of tax information with the Republic of Poland provided that the applicable DTT covers the taxation of interests, dividends and licenses; and
  • Dividends paid to Polish residents.

The setup of a PLN 2 million threshold for all income (interest, discount, dividends) paid on securities deposited on omnibus accounts and on securities accounts only applies for the 2019 tax year.

In addition, Clearstream Banking obtained the confirmation that even though relief at source and quick refund services are no longer available from 1 January 2019, the procedure to apply the maximum withholding tax rate on bonds based on the status of the final beneficial owner (BO) (19% for individuals and 20% for legal entities) as well as the calculation of the discount price for redemptions remain unchanged.

Impact on customers

Effective 29 January 2019, the following procedure of relief at source and disclosure applies to the eligible beneficiaries.

This procedure excludes the Euro-mortgage bonds that are deposited with the CSD and for which we still expect clear guidelines.

Procedure for exempt entities

Based on the Ordinance, the depository confirmed that they continue to grant exemption at source to the following entities only on condition that the relevant documentation is provided by the prescribed deadline. Relief at source for exempt entities on bonds issued until 31 December 2014 will be reviewed on case-by-case basis with each issuer.

Eligible exempt entities:

  • Central banks receiving interest and discount from bonds issued by the state treasury on the Polish market and purchased after 7 November 2015:
    As Clearstream Banking’s depository has no possibility to know when the securities were purchased they decided to restrict this exemption to securities that are issued after 7 November 2015.
  • Entities whose name is mentioned in the DTT signed between their country of residence and the Republic of Poland:
    The exemption applies to interest, discount and equities.
  • Supranational and international organisations of which the Republic of Poland is a member: The exemption applies to interest, discount and equities.

Required documentation

The required documentation depends on the status of the BO as follows:

  • For central banks:
    • A One-Time Certificate (OTC) for Polish debt securities:
      The original, completed and duly signed by the customer and specifying, among other things, whether or not the customer is the sole BO of all the Polish debt securities held in the account, must be provided once before the first income/redemption payment. It remains valid until revoked. Any changes to any details must be communicated in a new OTC.
    • 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 CORs are accepted; please refer to for further details on their acceptance.
    • A Beneficial Owner list (BO list) via the BO Upload facility that includes:
      • The complete data of the central bank;
      • The applicable withholding tax rate;
      • The common code or ISIN;
      • The nominal amount or number of securities; and
      • The applicable tax rate.

      It must be provided before each interest payment.

  • For entities whose name is mentioned in the DTT:
    • An OTC for Polish debt securities and/or an OTC for Polish dividends:
      The original, completed and duly signed by the customer and specifying, among other things, whether or not the customer is the sole BO of all the Polish securities held in the account, must be provided once before the first income/redemption payment. It remains valid until revoked. Any changes to any details must be communicated in a new OTC.
    • An original 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 CORs are accepted; please refer to A18103 for further details on their acceptance.
    • A Beneficial Owner list (BO list) via the BO Upload facility, including:
      • Complete data of the exempt entity;
      • The applicable withholding tax rate;
      • The common code or ISIN;
      • The nominal amount or number of securities; and
      • The applicable tax rate.

      It must be provided before each interest payment.

  • For supranational and international organisations:
    • An OTC for Polish debt securities and/or an OTC for Polish dividends:
      The original, completed and duly signed by the customer and specifying, among other things, whether or not the customer is the sole BO of all the Polish securities held in the account, must be provided once before the first income/redemption payment. It remains valid until revoked. Any changes to any details must be communicated in a new OTC.
    • A Beneficial Owner list (BO list) via the BO Upload facility including:
      • Complete data of the exempt entity;
      • The applicable withholding tax rate;
      • The common code or ISIN;
      • The nominal amount or number of securities; and
      • The applicable tax rate.

           It must be provided before each interest payment.

For supranational and international entities, the depository will assess the eligibility based on the BO list and may require additional supporting documentation. If accepted, the status of exempt entity will be granted until revoked. It is the responsibility of the BO to declare any change of situation.


Upon receipt of the above documentation, the depository may request additional documentation confirming the status of the beneficiary. This additional documentation must be notarised and apostilled.

Procedure for disclosure of individuals/legal entities and the purchase price

The maximum 20% withholding tax rate will be applied to all types of BOs holding debt securities unless Clearstream Banking receives a partial disclosure from the customer by the prescribed deadlines. This disclosure is also needed to provide the purchase price of the securities in order to apply the correct tax rate to the discount price rather than to the full redemption price.

Documentation requirements

  • An OTC for Polish debt securities, completed and duly signed by the customer and specifying, among other things, whether or not the customer is the sole BO of all the Polish debt securities held in the account, must be provided once before the first income/redemption payment. It remains valid until revoked. Any changes to any details must be communicated in a new OTC.
  • A Beneficial Owner list (BO list) via the BO Upload facility including:
    • The portion of holding held by individuals and taxed at 19 % (undisclosed natural person); and
    • The portion of holding held by legal entities and taxed at 20% (undisclosed legal person)
      This information is only required for interest payments. Dividends, however, are taxed at 19% regardless of the status of the BOs.
      If receiving such breakdown before payment date, Clearstream Banking will apply the correct rate to the interest or redemption payment based on the status of the BO.
      In the absence of this breakdown, the maximum tax rate of 20% will be applied to the entire holding.
    • The purchase price of bonds in order to calculate the discount price on which the maximum tax rate will be applied.
      The discount price is the result of the redemption price minus the purchase price. If no actual purchase price is submitted by the customer on behalf of the BO, the maximum tax rate will be applied on the whole redemption amount.

Important note: OTCs currently in place are no longer valid and must be replaced by the new templates for all income payments as of 29 January 2019. (see below Attachment section). All OTCs in the previous format will be end dated of that date.

Deadline to provide the documentation

The documentation for the application of the exemption at source or for the disclosure of individuals/legal entities and the purchase price must be provided to Clearstream Banking prior to the payment date by the deadline specified in the related SWIFT MT564.

Standard refund

A new process for standard refund was recently published by our local depository. Clearstream Banking is still analysing it and will inform customers as soon as all points are clarified. 

Further information

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.