Court of Justice oth the EU resolved the Polish forign investment funds case (C-190/12). The WHT paid by third-country investment funds on distributed dividends may be reclaimed. Following this ruling, the Polish Supreme Administrative Court repeated the CJ EU’s guidelines. The case is now to be handled by the tax authorities.

1. CJ EU ruling – foreign investment funds may
recover WHT paid in Poland
On April 10, 2014, the Court of Justice of the European Union (CJ EU) has
ruled the foreign funds have been discriminated against under the Polish
regulations (C-190/12). The tax paid on distributed dividends may be
reclaimed.
Following this ruling, the Polish Supreme Administrative Court repeated the
CJ EU’s guidelines. The case is now to be handled by the tax authorities.
The Polish government was joined in the proceedings by other governments seeking to
present the numerous arguments posing an obstacle to the application of tax exemption
to foreign funds.
The local Polish funds enjoyed tax exemption on the dividends, the US fund has to pay
15% WHT (as it was possible to claim the benefits of the PL-US Double Tax Treaty).
The Court agreed the Polish provisions are against the EU freedom of the movement of
capital.
Provided there is a basis for the two States to exchange tax information and mutual
administrative assistance in tax matters, the foreign fund has every right to prove it is
operating under the same regulations and restrictions as comparable Polish funds eligible
for the tax exemption. There is such a basis for exchange of information between Poland
and the US (under the art. 23 of the DTT as well as under the art. 4 of the OECD
Convention on Mutual Administrative Assistance in Tax Matters. Now the local court will
assess whether the agreed mechanism for the exchange of information enables the tax
authorities to verify the information provided by the investment fund.
The local Supreme Administrative Court has just issued its ruling which generally follows
the CJ EU’s guidelines. It remains to be seen how the tax authorities, in particular the
Minister of Finance will handle the case from now on.
This ruling is a cue for foreign funds to join the tax refund proceedings. Many funds i.a.
from the USA, Canada and Switzerland have been active in Poland and are likely to file
their refund requests now.
In Poland the reclaim procedure may currently concern taxes paid in 2009 and later on.
However, many funds initiated their tax refunds proceeding in the last 4 years which
means they were able to cover earlier periods as well.
For any questions concerning the above contact our partners:
Maria Kukawska, partner Mariusz Machciński, partner
maria.kukawska@stonefeather.pl mariusz.machciński@stonefeather.pl