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 submit a WH-OSC statement, in which the tax remitter declares that, in exercising due care, it has conducted appropriate verification and holds documentation demonstrating entitlement to a preferential WHT rate or an exemption. However, signing this statement creates personal liability for the signatory, potentially exposing them to significant tax and penal-fiscal risks.

For the WH-OSC statement to be valid and effective, it is therefore essential to ensure that it is properly prepared and that complete supporting documentation is maintained, demonstrating that the conditions for applying the exemption or reduced WHT rate have been met.