Polish companies paid dividends by their subsidiaries no longer have to provide a tax residency certificate.

This change took effect from 1 January 2011 and means that Polish shareholders who have held a specific share in the company paying the dividend for at least two years no longer need to produce the certificate when claiming exemption from income tax. Instead, they must submit a written statement that they do not benefit from an income tax exemption on any income, regardless of its source.

Although intended to make the process administratively simpler, the change has resulted in a requirement to produce one document being replaced with a requirement to produce another.

In addition, the requirement to submit a statement confirming the absence of the exemption has also been imposed shareholders from other EU countries, without removing the requirement to provide a tax residency certificate.

This is because neither the Polish tax authorities nor the company paying the dividend may be aware of a foreign shareholder’s tax status, whereas they would either know or be able to check the tax status of a Polish shareholder.

It is questionable whether these changes are consistent with the EU principle of equal treatment as they not only impose different requirements on Polish and foreign shareholders, but actually reduce the burden for Polish shareholders while increasing it for shareholders in other EU countries. 

A more sensible approach might perhaps be to start working on a pan-EU database of companies and their tax residency statuses, rather than announcing that procedures have been ‘simplified’.

Law: amended Article 22 section 4; Article 26 sections 1c and 1f of the Corporate Income Tax Act