EU dividend taxation / WHT reclaims : Poland update

In a further development in the withholding tax reclaims field, Taxand has received the first positive decision for a refund to a US fund from Poland.

On the 25th of July 2012, the Polish tax authorities agreed to refund the withholding tax that had been unduly paid by the fund, in violation of the free movement of capital. In this case, the proceedings had not reached the courts, since the decision to grant the refund had been taken at first instance, at the level of the tax authorities.

The importance of this decision lies in the fact that the Polish tax authorities agreed with the arguments raised to challenge the imposition of withholding tax on the US fund. The tax authorities agreed that the US fund could be considered comparable to a Polish fund and so it should be afforded the same treatment, and that there was no justification to restrict the free movement of capital.

Although the amount reimbursed is minimal (PLN 117/EUR 28 it is important that the tax authorities have been willing to apply the principles that have already been developed by the ECJ in a string of cases, in order to reach a ground-breaking conclusion.

It is relevant to note that whilst the law in Poland is not based on precedent, and so it does not serve as a guarantee for further reimbursements, this decision can be used to strengthen the arguments for future claims.