Additional criteria to apply for tax exemptions on dividends in Poland as of 2015


Poland has introduced additional conditions for applying the withholding tax exemption on dividend payments. It results from implementation of the Council Directive 2015/121 (amending the Parent-Subsidiary Directive).

A new Article 22c, added to the Corporate Income Tax Act (CIT Act) as of 31 December 2015, will exclude the application of the tax exemptions, if dividend income and other revenue from a share in profits of corporate entities is received in connection with the execution of an agreement or other act in law the purpose of which was to obtain the exemption from CIT, and such exemption when obtained does not result only in the elimination of double taxation of such income, and the activities in question are not genuine.

The lack of genuine nature should be understood as a situation where the activity is not effected for valid commercial reasons.

The tax authorities will therefore be entitled to verify the nature of agreements and transactions concluded before dividends distributions. The artificial nature of a legal structure may be shown by:

  • excessive complexity
  • lack of economic content
  • intermediary structures or inadequate or unnecessary legal structure
  • mutually compensating elements, hiding a true purpose and meaning of an economic transaction

The amendment transposes to Polish law a general anti-abusive clause, provided for in Directive 2015/121, which the European Commission justifies by the need to tackle aggressive tax planning and gaining undue advantages by entities from differences in the national tax systems and from international rules.