Poland: Changes to taxation rules for 2022 – amended relief at source service
Further to Announcement A21136, Clearstream Banking1 informs customers that following the final approval of amended tax regulation for 2022 Clearstream Banking’s depository Citi Handlowy (the “depository”) published an amended service of relief at source applicable effective
1 January 2022
These changes are subject to further modification upon receipt of the tax regulators interpretations, clarifications or changes to the Ordinance of the Minister of Finance.
Background
In December 2021 the Polish president approved the draft bill amending the existing withholding tax regime.
After analysis of the bill the depository confirmed that the relief at source process will continue to apply on equities, corporate bonds and T-bills for the categories of beneficiaries eligible.
However, the new bill requires to check if the investor is a related entity to the issuer. For this reason, the documentation requested by the depository had to be amended.
This new bill also allows investors to confirm the applicability of the DTT rates with the tax authorities before the payment of the taxable events. The procedure may be complicated but the obtained confirmation will be binding for Citi Handlowy.
Impact on customers
To obtain relief at source and quick refund the following eligible beneficial owners must be pre-approved by our depository who will perform due diligence based on the documentation provided for each beneficial owner. The due diligence will be performed once per beneficial owner.
Eligible beneficial owners
The following types of entities are eligible for the relief at source and quick refund service provided that they are resident in a country that has an exchange of tax information agreement with the Republic of Poland, where an applicable DTT covers the taxation of interest and dividends.
Today, exchange of tax information agreements exist for all countries that have a DTT in force with the Republic of Poland.
Based on domestic law | |||
Government bonds (treasury bills, treasury bonds, municipal bonds) | Corporate bonds, covered bonds and PLN denominated mortgage bondsa | Equities | |
Individuals (resident and non-resident) | 19% | 19% | n/a |
Foreign central banks | 0% | n/a | n/a |
Supranational or international organisations of which Poland is a member | 0% | 0% | 0% |
Based on DTTs | |||
Foreign central banks | DTT rate (0% or reduced, as applicable) | n/a | DTT rate (0% or reduced, as applicable) |
Foreign governments, foreign administrative sub-divisions and foreign local authorities | DTT rate (0% or reduced, as applicable) | DTT rate (0% or reduced, as applicable) | DTT rate (0% or reduced, as applicable) |
Foreign banks and investment firms (as defined in EU MiFiD regulations) | DTT rate (0% or reduced, as applicable) | DTT rate (0% or reduced, as applicable) | DTT rate (0% or reduced, as applicable) |
Entities specifically mentioned in the DTT signed between Poland and their country of residence | DTT rate (0% or reduced rate, as applicable). These entities are usually governmental bodies specifically defined in the treaty. | DTT rate (0% or reduced rate, as applicable). These entities are usually governmental bodies specifically defined in the treaty. | DTT rate (0% or reduced rate, as applicable). These entities are usually governmental bodies specifically defined in the treaty. |
Supranational or international organisations of which Poland is a member | 0% | 0% | 0% |
a. Only certain PLN mortgage bonds issued before 1 January 2015 are still subject to withholding tax. PLN mortgage bonds issued as of 1 January 2015 and Euro-Denominated mortgage bonds are no longer taxable as described in Announcement A21034.
Treatment of Treasury bonds (T-bonds)
Citi Handlowy expects to obtain a ruling from the National Tax Administration regarding a possible full exemption of T-Bonds. Until then, they will apply the same eligibility criteria as stated above to interest and discount paid on T-bonds traded in an organised market issued for one year or more.
Depending on receipt of interpretations, clarifications or changes to the Ordinance of the Minister of Finance, such service may be further modified during 2022.
Due diligence (pre-approval)
Eligible beneficial owners who wish to apply for relief or exemption at source or through quick refund, must first be pre-approved by the depository.
The following certification must be provided by the stated deadline to allow the depository to perform the due diligence and confirm the eligibility of the beneficial owner for the relief at source or quick refund.
The due diligence performed by the depository consists of verification of the certification provided (if correctly filled in, stamped, apostilled, etc.), specific researches on the correctness of the information provided, and compliance checks on beneficial owners. For instance, if a beneficial owner declares itself to be an investment firm, the depository will verify this information with the available registrars.
It is however the entire responsibility of the final beneficial owner to:
- Monitor its tax status and applicable tax rate,
- Verify the applicable DTT,
- Monitor the changes of circumstances impacting its tax status (e.g. change of name, address, etc.).
The due diligence verification is a key element to apply relief at source or quick refund, and customers must be aware that providing the required documentation does not guarantee eligibility for the relief at source or quick refund.
Documentation requirements
To obtain relief at source on interest, discount and dividend payments, a complete set of correctly completed documents must be provided by the required deadline. Upon submission of the relevant documentation, Citi Handlowy will perform due-diligence analysis and confirm via e-mail whether a reduced tax rate (or tax exemption) can be applied.
The documentation requirement depends on the type of entity as follows:
For individuals, only the reduced rate of 19% can be obtained upon disclosure of the status as follows:
- 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.
- 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. In the absence of this breakdown, the maximum tax rate of 20% will be applied to the entire holding.
For all other types of investors
- A one-time certificate (OTC) for Polish debt securities.
The original, completed and duly signed by the customer and specifying, among other things, whether the customer is the sole beneficial owner 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 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.
- 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.
And, depending on the type of entity:
Type of entity | Documentation required (English language only) |
Foreign central banks |
|
Foreign governments, foreign administrative sub-divisions and foreign local authorities |
|
Foreign banks and investment firms (as defined in EU MiFiD regulations) |
|
Entities specifically mentioned in the DTT signed between Poland and their country of residence |
|
Supranational or international organisations of which Poland is a member |
|
The Statement D-No relation to issuer Declaration and the COR must be provided annually before the first income payment to which it applies. All other documents are expected to be submitted once before the first income payment to which it applies. In the event of changes of address, name, status, etc., the beneficial owner has the obligation to immediately notify Clearstream Banking and provide new documentation substantiating the changes.
Important: Investors who obtained a ruling from the Polish Tax Authorities on the applicability of the DTT rates must provide a copy of such ruling together with their certification for review and evaluation. Then original or notarised copy of such ruling will be required.
Calculation of the purchase price
In addition to the above documentation, to calculate the discount price for a redemption on bonds, the purchase price must be provided. The discount price will be 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. Customers providing the purchase price without requesting a reduced tax rate do not need to provide an OTC.
The purchase price must be submitted in the per-payment instruction 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
- Purchase price
Deadline for the receipt of documents
Relief at source/due diligence
Customers applying for relief at source must be pre-approved through the due diligence process. The deadline to provide the original documentation is at the latest 10 business days by 10:00 CET before the income payment date to which it applies.
The per payment instruction must be provided at the latest two business days by 10:00 CET before the income payment date to which it applies.
Customers will be informed at the latest one business day before the payment date in the event of non-approval of a beneficial owner by our depository.
Quick refund
Customers applying for quick refund must also be pre-approved through the due diligence process.
Deadlines for receipt of the original documentation and the per-payment instruction in the case of a quick refund are:
- Original documentation: four business days before the last business day of the month in which the payment was made.
- per-payment instruction: one business day before the last business day of the month in which the payment was made.
Customers will be informed at the latest on the first business day of the following month in the event of non-approval of a beneficial owner by our depository.
Standard refund
Customers who missed the relief at source or quick refund deadline, or who were not approved as eligible for relief at source/quick refund, may apply for a standard refund. Please refer to A21142 for further details on the applicable standard refund procedure.
Translation, notarisation and apostille
Documents provided in a foreign language will be translated in Poland by a sworn translator. The cost will be charged as out of pocket expenses. To limit the cost and delay, it is recommended to use the templates provided by Clearstream Banking’s depository or to provide the documents in English if no Polish version exists.
Certain documents must be notarised and apostilled as stated in the above table.
Additional fee
An additional fee is charged by the depository for the due diligence, regardless of the outcome of such due dilligence. The cost will be charged as out-of-pocket expenses once per beneficial owner.
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.