Polish companies making passive payments - such as dividends, interest, or royalties - to foreign related parties in excess of PLN 2 million in a tax year are required to follow the mandatory withholding tax collection procedure, known as the pay-and-refund mechanism.

One way to avoid this mechanism is to secure a clearance opinion confirming the applicability of WHT preferences, enabling the tax remitter to claim an exemption or a reduced tax rate. Such an opinion is issued by tax authorities upon submission of an application supported by appropriate documentation, particularly regarding the taxpayer’s activities, and including a legal and factual justification demonstrating entitlement to the WHT preference.