Withholding tax (WHT) payers who, in 2024, after submitting the initial WH-OSC declaration, continued making “passive” payments to the same entity without withholding tax or by applying a reduced rate, must remember to submit the subsequent WH-OSC declaration.
The WH-OSC
The WH-OSC declaration serves as a confirmation of possessing the documentation required to apply preferential taxation rules to payments or further payments under corporate income tax (CIT).
This form provides an alternative to the lengthy “pay & refund” procedure, where the payer must first withhold tax at the basic rate and then apply for a tax refund from the tax authority. This procedure applies to payments classified as passive income, such as dividends, interest, and royalties, made to a single related entity and exceeding PLN 2 million in a fiscal year.
Filing the WH-OSC enables the application of a WHT exemption under the CIT Act or a preferential tax rate resulting from double taxation agreements for payments exceeding PLN 2 million to a single recipient in a fiscal year, without the need to withhold tax at the source and subsequently request a refund.
The WH-OSC must be submitted by the last day of the second month following the month in which payments to the related entity exceeded the PLN 2 million threshold. The declaration filed within this timeframe is referred to as the initial declaration.
Who must submit the subsequent WH-OSC declaration?
WHT payers who, after filing the initial WH-OSC declaration, continued making passive payments without withholding tax or by applying a reduced rate must submit the so-called subsequent WH-OSC declaration.
This obligation applies to payers who:
- Filed the initial WH-OSC declaration in 2024 due to passive payments exceeding PLN 2 million, and
- Continued making additional passive payments to the same entity in 2024 after filing the initial WH-OSC declaration.
Submitting the subsequent WH-OSC declaration is not merely a formal requirement but confirms that, at the time of each subsequent passive payment made after the initial declaration, the payer conducted the necessary verification of the conditions for applying a rate other than the basic one.
Deadline for submitting the subsequent WH-OSC declaration in 2025
The subsequent declaration must be submitted by January 31, 2025, for payers whose fiscal year coincides with the calendar year. For payers with a different fiscal year, the deadline is the last day of the month following the end of the fiscal year.
Both the initial and subsequent declarations pertain to a single fiscal year. If additional passive payments are made in 2025, a new verification and submission of the appropriate declarations will be required by January 31, 2026.
Consequences of failing to submit the subsequent WH-OSC declaration
Failure to submit the subsequent WH-OSC declaration on time will result in the loss of the right to apply preferences for further payments to the same recipient not covered by the initial declaration. Consequently, the Polish payer will have to pay the overdue tax on those subsequent payments. Additionally, the tax authority will calculate interest on the tax arrears.
