Certificate of tax residence - basic information
According to Art. 4a point 12 of the Corporate Income Tax Act (CIT) and Art. 5a point 21 of the Personal Income Tax Act (PIT) - a certificate of tax residence should be understood as a certificate of the taxpayer's place of residence (legal person) or of the taxpayer's place of residence (natural person) for tax purposes. It is issued by the competent state tax administration authority according to the place of the taxpayer's seat / residence. The purpose of the certificates is to counteract the abuse of the provisions of the agreements on the avoidance of double taxation. According to the position of the tax office, the e-certificate will also be the basis for the application of these provisions. Previously, electronic certificates were honored only when paper certificates were not issued by the authorities of another country.
When and who issues a certificate of tax residence in Poland?
The certificate documents the past or present condition. This means that it cannot determine tax residence at a future date.
Pursuant to Art. 306l of the Tax Ordinance, the tax authority (tax office), at the taxpayer's request, issues a certificate (certificate) about his place of residence or seat for tax purposes in the territory of the Republic of Poland. It is applicable to entities concluding transactions with foreign contractors.
Similarly, tax administration authorities of a foreign state issue such certificates.
Electronic certificate of tax residence
Polish entrepreneurs do not have to apply for a paper certificate from foreign contractors. On June 26, 2017, the head of the National Revenue Administration changed the current position of the paper-based tax office:
Therefore, if, under the law of a given country, it is possible to obtain a certificate of the place of residence for tax purposes both in paper and in electronic form, both forms are issued by the competent tax authority of a given country and have an equivalent status under the law of that country, the payer will be authorized to recognize such certificate of residence in any of these forms. Such an electronic form of residence certificate will therefore be the basis for the payer to apply the provisions of the treaty on avoidance of double taxation.
At the same time, it should be noted that a copy of the tax residence certificate, e.g. downloaded from the contractor's website, does not constitute a residence certificate referred to in art. 26 sec. 1 of the CIT Act, therefore, in such a case, the payer is obliged to collect withholding tax on payments made to the non-resident. "
What elements should a tax residence certificate contain?
The legal provisions do not contain additional provisions relating to the form that a certificate of residence should have. This means that any document that meets the criteria set out in Art. 4a point 12 of the CIT Act or Article 5a point 12, therefore a certificate is a document which:
- contains identification data of the entity (e.g. name, surname, name, address), date of issue and, if applicable, the period for which the certificate is valid,
- certifies the seat for tax purposes of the entity in a given country,
- it is issued by the competent tax administration authority in a given country.
The certificate of residence must confirm the fact of tax residence on the date of obtaining the income. Issues related to the validity date of a residence certificate that does not contain a validity period are regulated in Art. 26 sec. 1i-1l of the CIT Act.
Pursuant to Art. 194 § 1 of the Tax Ordinance, official documents drawn up in the form prescribed by law by public authorities appointed for this purpose constitute evidence of what was officially stated in them.
Therefore, an official document will be such a certificate of residence, which was drawn up in the form prescribed by the law of a given country by a body appointed for that purpose.
Must there be an original or is a copy of the certificate sufficient?
From the beginning of 2019, you can use both the original and the copy of the tax residence certificate to confirm the registered office of the contractor for tax purposes. However, for the copy to be accepted by the office, the following conditions must be met:
- withholding tax collection must apply to services provided in the form of consulting, accounting, market research, legal services, advertising services, management and control, data processing, employee and personnel recruitment services, guarantees and sureties, and benefits of a similar nature,
- the amount of receivables paid to the same entity may not exceed PLN 10,000 PLN in a given calendar year,
- information resulting from the submitted copy of the certificate does not raise reasonable doubts as to compliance with the facts.
If at least one of the above conditions is not met, only the certificate in its original form is used.
How is the tax residence certificate updated?
The tax residence certificate is valid as long as the facts confirmed in it remain unchanged. In recent years, tax authorities have confirmed this position, the best example of which is the interpretation of the Director of the Tax Chamber in Warsaw of April 26, 2010:
In the current legal status, under the provisions of the Personal Income Tax Act, there are no regulations defining the validity period of a residence certificate. Therefore, it should be considered that the certificate is valid as long as the facts contained therein remain unchanged. Of course, this rule does not apply in situations where the content of the certificate specifies its expiry date, indicating the tax year, or specifically indicates the period for which the certificate was issued.
For what purpose is a certificate of tax residence issued?
Foreign taxpayers obtaining income from Polish sources in a situation where they have a certificate of tax residence may apply concessionary taxation rules resulting from international agreements. Having this document is a necessary requirement, otherwise such an entity automatically loses the possibility to benefit from tax preferences in this regard.