A Polish company paying a dividend to a foreign shareholder must withhold 19% tax at source (WHT). This rate can be reduced to 5–15% under an applicable double tax treaty (DTT) or eliminated entirely if the recipient meets the conditions of Article 22(4) of the CIT Act. In every case, the payer files an annual IFT-2R information return with the Lublin Tax Office.
What is the withholding tax rate on dividends paid abroad?
The standard WHT rate on dividends paid to non-residents is 19% of gross income. This follows from Article 22(1) of the Corporate Income Tax Act of 15 February 1992 (Journal of Laws 2025, item 278). The tax applies to payments made to both foreign legal entities and individuals.
The company paying the dividend acts as the tax remitter. It withholds the tax at the time of payment and transfers it to its micro tax account by the 7th day of the month following the payment. The taxpayer (the foreign shareholder) receives the net amount — reduced by the WHT withheld.
From our experience at Progress Holding, many business owners are unaware of the obligation to withhold WHT on dividends paid to a foreign shareholder. Failure to withhold exposes the remitter to fiscal criminal liability and late-payment interest.
What WHT rates do double tax treaties provide?
Double tax treaties (DTTs) concluded by Poland reduce the WHT rate on dividends — most commonly to 5%, 10% or 15%, depending on the recipient’s country of residence and the size of their shareholding in the paying company.
Sample WHT rates on dividends under selected DTTs
| Recipient’s country of residence | WHT rate — company (≥ 10% shareholding) | WHT rate — other recipients | DTT legal basis |
|---|---|---|---|
| Germany | 5% | 15% | Convention of 14 May 2003 |
| USA | 5% | 15% | Treaty of 8 October 1974 |
| United Kingdom | 0% (≥ 10%) | 10% | Convention of 20 July 2006 |
| Ukraine | 5% | 10% | Convention of 12 January 1993 |
| Hungary | 10% | 10% | Convention of 23 September 1992 |
| No DTT | 19% | 19% | Article 22(1) of the CIT Act |
To apply a reduced treaty rate, the remitter must hold a valid tax residency certificate for the recipient. Without this document, the paying company must apply the full 19% rate. The current list of DTTs concluded by Poland is available at podatki.gov.pl.
When verifying the treaty rate, you must also account for the Multilateral Instrument (MLI), which modifies the provisions of many bilateral tax treaties. Always check the synthesised DTT text incorporating MLI changes, available on the Ministry of Finance website.
When is a dividend paid abroad exempt from tax?
A dividend is fully exempt from WHT when all conditions of Article 22(4) of the CIT Act are met simultaneously. This exemption implements Council Directive 2011/96/EU (the Parent-Subsidiary Directive).
5 conditions for the dividend exemption
- Payer — a company with its registered office or place of management in Poland.
- Recipient — a company subject to CIT on its worldwide income in Poland, another EU member state or an EEA state.
- Shareholding — the recipient directly holds at least 10% of shares in the paying company.
- Holding period — the shares have been held continuously for at least 2 years (the period may expire after the payment date — Article 22(4b) of the CIT Act).
- No subjective exemption — the recipient is not exempt from tax on its entire income, regardless of the source.
A general interpretation issued by the Minister of Finance on 20 November 2024 confirmed that the recipient’s use of an objective exemption for the dividend itself (based on the Directive’s implementation) does not breach condition 5. This is an important position for EU companies where dividends are exempt in the country of residence.
Documents required to apply the exemption
- Tax residency certificate of the recipient — valid on the date of dividend payment.
- Declaration by the recipient that it is the beneficial owner of the dividend.
- Declaration by the recipient that it meets the conditions of Article 22(4) of the CIT Act (subject to tax on worldwide income, not subject to a subjective exemption).
In our clients’ practice, the most common problem is obtaining the tax residency certificate on time. Foreign shareholders often do not realise they must provide it before the dividend is paid. At Progress Holding, we prepare template letters to foreign shareholders in advance so that all documentation is complete on the payment date.
How does the pay-and-refund mechanism work for dividends above PLN 2 million?
The pay-and-refund mechanism requires withholding WHT at 19% on the excess above PLN 2 million per year, even if the conditions for an exemption or reduced treaty rate are met. This applies to payments made to related foreign entities.
How it works in practice
If the total passive payments (dividends, interest, royalties) to a single related foreign entity exceed PLN 2 million in a tax year, the remitter has two options:
- Option A — withhold and reclaim. The company withholds 19% WHT on the excess above PLN 2 million, then applies for a refund of the overpayment. The refund requires a complete set of documentation proving entitlement to the preference.
- Option B — apply the preference upfront. The company applies the exemption or reduced rate, provided it files a WHT-OSC declaration or holds a valid tax authority opinion on the application of the preference (valid for 36 months).
The WHT-OSC declaration is filed by the management board of the paying company. It confirms that the company holds the documents entitling it to the preference and that it has exercised due diligence. After the end of the tax year, the board files a follow-up declaration confirming that the conditions were met for all payments made during the year.
What is IFT-2R and who must file it?
IFT-2R is an annual information return on income earned by CIT taxpayers that do not have their registered office or place of management in Poland. It is filed by every remitter that made payments to foreign legal entities subject to WHT during a given tax year.
The obligation to file IFT-2R applies in all scenarios
You must file IFT-2R regardless of whether you:
- withheld WHT at the domestic rate of 19%,
- applied a reduced treaty rate (e.g. 5% or 10%),
- applied the full exemption under Article 22(4) of the CIT Act,
- used the pay-and-refund mechanism.
IFT-2R covers payments to legal entities only. For payments to individuals (e.g. a foreign shareholder who is a natural person), the correct form is IFT-1R, due by the end of February of the following year.
How to correctly complete IFT-2R for 2025
From 1 January 2026, version 12 of the IFT-2R form applies, covering income earned from 1 January 2025. The form is available at gov.pl/web/finanse.
Step by step — completing IFT-2R
- Section A — remitter details. Enter the paying company’s NIP (tax ID), full name and registered address. Specify the tax year covered by the return.
- Section B — taxpayer (recipient) details. Provide the foreign entity’s full name, registered address, country of residence and tax identification number in the country of residence (TIN). Version 12 requires more detailed identification data.
- Section C — income and tax. Enter the type of payment (dividend), gross dividend amount, the WHT rate applied (19%, treaty rate or 0% if exempt) and the amount of tax withheld.
- Section D — basis for the preference. Indicate whether you applied the exemption (Article 22(4) CIT), a reduced treaty rate or the domestic rate. Enter the date of the tax residency certificate.
- Signature. The form must be signed with a qualified electronic signature. IFT-2R cannot be signed with a trusted profile (profil zaufany) or submitted via ePUAP.
Deadlines and filing method
| Obligation | Deadline for 2025 | Recipient |
|---|---|---|
| WHT payment | By the 7th of the month following the payment month | Remitter’s micro tax account |
| CIT-10Z (annual WHT return) | 2 February 2026* | Head of the Lublin Tax Office |
| IFT-2R (annual information return) | 31 March 2026 | Head of the Lublin Tax Office + the foreign taxpayer |
| Follow-up WHT-OSC (if applicable) | By the end of the 2nd month after the tax year ends | Head of the Lublin Tax Office |
* The deadline of 31 January 2026 falls on a Saturday, so it shifts to 2 February 2026.
Remember: IFT-2R must be filed electronically via the e-Deklaracje portal. You need a UPL-1 power of attorney authorising electronic filing. The same information must also be sent to the foreign taxpayer (the dividend recipient).
What is the difference between IFT-2R and CIT-10Z?
CIT-10Z is a return showing the total amount of WHT withheld — it is filed by the remitter and reports the aggregate tax collected. IFT-2R is an information return prepared separately for each foreign taxpayer, containing details of their income and the tax withheld.
| Feature | CIT-10Z | IFT-2R |
|---|---|---|
| Nature | Aggregate return | Individual information (separate for each taxpayer) |
| Recipient | Head of the Lublin Tax Office | Head of the Lublin Tax Office + foreign taxpayer |
| Deadline (for 2025) | 2 February 2026 | 31 March 2026 |
| When not required | When no WHT was withheld (exemption applied) | Always required — even when an exemption was applied |
| Form version | Version 7 | Version 12 (from 2026 for 2025 income) |
What does this look like in practice? Progress Holding’s experience
Based on our accounting services for over 400 foreign-owned sp. z o.o. companies at Progress Holding, we have identified the most common errors in WHT settlements on dividends.
5 most common errors — Progress Holding data
| Error | Frequency | Consequence |
|---|---|---|
| No tax residency certificate on the payment date | 38% of companies | Obligation to apply the 19% rate instead of the preferential rate |
| Failure to file IFT-2R when an exemption was applied | 27% of companies | Fine of up to 180 daily rates (Article 80(1) of the Fiscal Penal Code) |
| Missing beneficial owner declaration | 31% of companies | Risk of the exemption being challenged during an audit |
| Overlooking the PLN 2 million threshold (pay and refund) | 15% of companies | Remitter liability for unwithheld tax + interest |
| WHT payment to the wrong account | 12% of companies | Late-payment interest until the funds are rebooked |
We see particularly many problems in companies whose shareholders are based outside the EU. Where the Article 22(4) exemption is not available, the only option to reduce the tax is a DTT. Yet many remitters fail to check the bilateral treaty text or to verify the impact of the MLI on its provisions.
We have handled hundreds of WHT settlements and know that a correct procedure requires advance planning. The residency certificate, declarations and DTT analysis should be ready before the dividend resolution is adopted — not after.
How much does WHT and IFT-2R handling cost at Progress Holding?
At Progress Holding, we handle the entire WHT process for dividends — from DTT analysis, through documentation preparation, to filing CIT-10Z and IFT-2R. Accounting services for a sp. z o.o. covering these obligations start at PLN 799 net per month. Preparing or amending a single return (e.g. CIT-10Z) costs PLN 250 net. Expert consultations on dividend payment structures are PLN 350 net per session.
Frequently asked questions
Do I need to file IFT-2R if the dividend is exempt from WHT?
Yes. The obligation to file IFT-2R exists regardless of whether you withheld tax or applied an exemption. IFT-2R serves an informational function — it allows the tax authorities to monitor income flows from Poland to foreign taxpayers.
Where do I file IFT-2R — my local tax office or Lublin?
You file IFT-2R exclusively with the Head of the Lublin Tax Office (Naczelnik Lubelskiego Urzędu Skarbowego w Lublinie). This is the only office competent for WHT collection from non-residents. The form is submitted electronically via the e-Deklaracje portal with a qualified electronic signature.
Can a foreign individual benefit from the Article 22(4) exemption?
No. The dividend exemption under Article 22(4) of the CIT Act is available only to companies subject to CIT in EU or EEA member states. Foreign individuals may only benefit from a reduced WHT rate under the applicable double tax treaty.
What happens if I do not file IFT-2R on time?
Failure to file IFT-2R on time is a fiscal misdemeanour under Article 80(1) of the Fiscal Penal Code. It carries a fine of up to 180 daily rates. If you file voluntarily after the deadline (voluntary disclosure), you may avoid the penalty, provided the tax office has not yet initiated proceedings.
How do I calculate whether I have exceeded the PLN 2 million threshold for pay and refund?
The PLN 2 million threshold covers the total of all passive payments (dividends, interest, royalties) made in a tax year to a single related foreign entity. The gross amount counts — before deducting WHT. The threshold applies to each related entity separately.
Can I sign IFT-2R with a trusted profile (profil zaufany)?
No. IFT-2R must be filed exclusively via the e-Deklaracje portal and signed with a qualified electronic signature. Trusted profiles and the ePUAP platform are not accepted for this form. The person signing must hold a UPL-1 power of attorney.
Withholding tax on dividends paid abroad requires a precise analysis of three regulatory layers: the Polish CIT Act, the applicable DTT and EU legislation. Every error — a missing certificate, overlooking the PLN 2 million threshold or failing to file IFT-2R — has real financial and criminal consequences. Correct WHT settlement is not a matter of filing one form but an entire process that begins before the dividend is paid.
Need professional support with WHT on dividends? Contact us at Progress Holding: +48 603 232 418 or office@progressholding.pl. We have been servicing foreign-owned companies for over 10 years — we will help you avoid costly mistakes.
