On 8 January 2020 this year On 8 January 2020, the Voivodship Administrative Court in the judgment ref. I SA/Gl 1083/19 shared the position of the Director of National Revenue Information, in which it was found that the payer, in addition to meeting the conditions specified in art. 22.4 of the CITIT, is also obliged to verify the taxpayer’s statements referred to in art. 28b of the CITIT.
The dispute concerned the interpretation of Article 26(1) and (7a) of UCIT with respect to the obligations of the remitter making payment of dividends to a company having its registered office in the European Union, if the income obtained at source is subject to the exemption resulting from Article 22 paragraph 4 of UCIT and the amount of payments in a given tax year exceeds PLN 2,000,000.
In disputable issues, the possession by the payer of the statements made by the taxpayer referred to in Art. 28b par. 4 pt. 5-6 of UCIT may constitute an important evidence of exercising diligence. Nevertheless, the “care” required by the legislator from the payer (art. 26 par. 1 of the LLU) cannot be reduced to obtaining the said statements. The payer should verify such statements taking into account the publicly available information, such as those coming from the media, the trade press. Increased vigilance of the payers should also be maintained when making certain types of payments to specific tax jurisdictions (e.g. interest payments to a country with which the double tax treaty does not provide for the collection of withholding tax in Poland). It should be noted that the notion of “due diligence” is of an individual nature and always requires reference to a specific factual situation.
When submitting the declaration pursuant to Art. 26 par. 7a of UCIT. The remitter is obliged to verify the taxpayer’s statements indicated in art. 28b sec. 4 points 5-6 of UCIT. The justifications are that the statement that the remitter’s requests as to whether the taxpayer meets the conditions for taking advantage of tax preferences under the simplified procedure must be preceded by a verification carried out with due diligence. The refund used in Article 26(7a)(2) of UCIT. “The phrase used in Article 26(7a)(2) of the UCIT does not allow the following calculation to be omitted, nor does it justify the position that this part of the sentence is not relevant to the preceding part. It should be submitted that it contains those elements about which there is no doubt that they have been covered by the provision of the relevant legal rule. With regard to the case at hand, it should be stated that the payer, apart from the conditions of tax exemption under Art. 22 par. 4 of CIT Act. is also obliged to verify the taxpayer’s statements referred to in art. 28b sec. 4 points 5-6 of UCIT.
Therefore, in disputable issues, the verification of the taxpayer’s statements may consist in the possession of a report prepared by an independent auditor, within the scope of the payee’s activity (examination of documents and the actual business substance), and in the case of related entities, e.g. obtaining group documents indicating financial flows, as well as the business substance and the role of individual entities in the group structure.
Author: Izabela Lipka – Tax consultant