On 11 May 2020. Director of National Revenue Information in the interpretation 0111-KDIB1-3.4010.43.2020.2.BM stated that in order to take advantage of the exemption referred to in Article 22.4 of the CIT Act, it is insufficient to meet the conditions indicated in Article 22.4-6, Article 22b and Article 26.1c and 1f of the CIT Act. A payer who wants to apply the exemption under art. 22 par. 4 of the CIT Act and does not collect the withholding tax is obliged to carry out a full verification of the conditions that allow to take advantage of this exemption, while exercising due diligence. This means that the remitter is obliged to verify whether the company receiving income from the dividend meets all the conditions to take advantage of the withholding tax exemption. Due diligence cannot be limited to verifying only the conditions for using the exemption under art. 22 sections 4-6 of the CIT Act.
It follows from the position of the Director of National Treasury Information that in order to take advantage of the dividend exemption, in addition to the conditions set forth in Art. 22 Section 4 of the CIT Act, the remitter is obliged to verify the entity receiving the exemption, i.e. to obtain a statement from the entity that it is the actual recipient of the receivables paid, and to verify this statement with respect to the entity’s compliance with the conditions for applying the exemption.
Let us recall that in the judgment of 11 March 2020, case ref. I SA/Wr 977/19, the Provincial Administrative Court in Wrocław referred to the verification of the status of the beneficial owner in the situation of using the exemption from withholding tax on dividends paid pursuant to art. 22 sec. 4 of uCIT, stating that there is no obligation to verify the status of the beneficial owner when exempting dividends from withholding tax.
The court held that the prerequisites for the exemption were set forth only in Art. 22 par. 4 of the CIT Act, so if the taxpayer fulfilled the requirements set forth therein, he may take advantage of this preference.
Author: Izabela Lipka – Tax consultant