Last updated: 21.01.2025
Is There a Dividend Tax in Poland?
No, there is no separate dividend tax in Poland. Dividends are subject to withholding tax, which is deducted at the time of payment. In Poland, the term “dividend tax” refers to the set of withholding tax rules specifically applicable to dividends.
What Dividends are Taxable in Poland?
Dividends are payments made by a company to its shareholders, typically as a way to distribute a portion of the company’s profits. These payments can come in various forms, including cash, additional shares of stock, or other types of assets / property.
Dividends are considered taxable income, meaning they must be reported on your tax return. Not only companies but also mutual funds and exchange-traded funds (ETFs) that hold stocks can pay dividends to their investors. This makes dividends a common source of income for many investors, contributing to their overall taxable income.
Before the dividend distribution, it shall be verified whether distribution of cash as dividend is possible (whether there is accounting profit) and the amount of such distribution shall be determined.
If there is no financial profit, the companies may distribute proceeds e.g. based on the redemption of shares.
What Is the Standard Rate of Dividend Tax?
The standard rate of withholding tax on dividends in Poland is 19%, unless a Double Tax Treaty (DTT) provides an exemption or a reduced rate.
Dividend Tax Exemption – Who Qualifies?
Withholding tax exemption on dividend payments (i.e. exemption on dividend tax) made from Polish subsidiaries to companies located in Poland or other EU/EEA member state (and Switzerland) shall apply, if all of the following conditions are met:
- recipient is subject to income tax in Poland, an EU/EEA member state or Switzerland on its total income, regardless of the source of the income;
- recipient do not benefit from income tax exemption on its total income (which should be documented with written statement);
- for at least two years (uninterrupted period), recipient holds directly at least 10% (25% for companies based in Switzerland) of the capital of the company paying the dividend. Holding period can be met after payment is made;
- paying company possesses valid certificate of the tax residency of the recipient;
- a legal basis exists for a tax authority to request information from the tax administration of the country where the taxpayer is established, under a double tax treaty or other ratified international treaty to which Poland is a party;
- paying company is provided with a written statement confirming that the recipient does not benefit from exemption from income tax on its worldwide income, regardless of the source from which such income is derived.
SAAR – Dividend Anti-abuse Clause
The dividend anti-abuse clause (please see point “SAAR”) is in force since 2016. The participation exemption on paid dividends or other profits derived from a participation in Polish company shall not apply if the main aim (or one of the main aims) of the agreement or other legal transaction is to obtain tax exemption and these acts do not have genuine character.
Term ‘not genuine’ means that legal transaction has been conducted without justified economic reasons. Taking into account recent changes in Polish law, the recipient of dividends should be beneficial owner of the dividends and runs actual business activity in its country.
Reduced Rates of Dividend Tax
Double Tax Treaties (DTTs) establish various conditions for exemptions or reduced withholding tax rates on dividends. However, the key requirement is always a valid tax residency certificate. If the recipient fails to provide this certificate, a 19% withholding tax applies to the dividends paid. This rule applies broadly, including cases where taxable or qualified dividends are distributed.
If you need more information about dividend tax, dividend income, or dividend tax rates, please refer to our detailed guide on Withholding Tax (WHT).
For further assistance with reporting dividend income, managing your tax liability, or understanding how dividends are taxed under Polish and EU law, feel free to contact us at [email protected]. Our team is here to help with your tax return or any queries related to dividends reported by financial institutions or taxable distributions.
FAQ – Dividend Tax in Poland
How are dividends taxed under Polish tax law?
Dividends are taxed at a standard dividend tax rate of 19% WHT, unless a valid DDT provides reduced rate or exemption.
Who is eligible for a withholding tax (WHT) exemption on dividend income?
A withholding tax exemption applies to dividends paid from Polish companies to entities in Poland, the EU/EEA, or Switzerland if:
- The recipient is subject to income tax on total dividends and does not qualify for an income tax exemption.
- The recipient directly holds at least 10% (or 25% for Swiss companies) of the underlying stock for two years.
- A valid certificate of tax residency is provided, and financial institutions verify compliance with tax purposes.
What happens if a company has no financial profit to pay dividends?
If there is no taxable income, companies may still pay dividends through the redemption of shares. In such cases, capital gains distributions, return of capital, or stock dividends may apply, impacting the recipient’s tax liability and tax bracket.
How does the dividend anti-abuse clause impact taxable dividends?
The dividend anti-abuse clause prevents companies from structuring transactions solely to benefit from special tax treatment or avoid capital gains tax rates. If a transaction is deemed “not genuine”, the company will lose access to participation exemptions, and the dividends are taxed at the standard income tax rate.
Where can I get more information about dividend tax and reporting dividend income?
For guidance on dividend tax, capital gains, taxable distributions, and tax return filing, refer to our Withholding Tax (WHT) guide. If you have questions about how to report dividends, determine your income tax rate, or navigate taxable brokerage accounts, contact us at [email protected].
What is the difference between qualified dividends and ordinary dividends?
Qualified dividends benefit from a qualified dividend tax rate, which is typically lower than ordinary income tax rates. In contrast, ordinary dividends are taxed as ordinary income, meaning they follow the standard income tax rate of 19%.
Do all dividends receive favorable tax treatment?
Not all dividends qualify for the qualified dividend tax rate. Some nonqualified dividends are subject to standard tax rates. The classification depends on factors such as holding periods and the issuing company’s status as a qualified foreign corporation or a foreign corporation.