Investing in Poland from the level of the Netherlands or through a Dutch holding company is becoming more and more troublesome

First of all, there are significant anti-abusive provisions upcoming in the local Polish and Dutch regulations as of 2021:

• new business substance requirements for service companies in the Netherlands – minimum EUR 100k of annual wage expenses, office space for the period of 2 years;
• introduction on WHT on interest and royalties paid from DutchCo to low tax jurisdictions;
• implementation of obligatory WHT remittance in Poland (pay-and-refund regime); although the government announced that these regulations will be loosened, no draft aft was published yet.

And if it was not enough, on Friday both countries signed a protocol amending the Double Tax Treaty. The amendment includes:

• real estate clause – right for Poland to tax income on the sale of shares in a Polish real estate company;
• new permanent establishment definition;
• new provisions on determining ultimate tax residency;
• transparent entity clause;
• general anti-abusive clause.

We will let you know once it is known when exactly new DTT regulations come into force.