The Anti-Money Laundering and Terrorist Financing Act of 1 March 2018 (AML Act) entered into force in Poland as of 13 July 2018, with some exceptions. One of them is the whole chapter regarding the Central Register of Beneficial Owners, which will not apply until 13 October 2019.
The AML Act states that the “beneficial owner” is the natural person who directly or indirectly controls a customer through entitlements, whether arising from factual or legal circumstances, which enable the person to exercise a dominant influence over the activities or conduct of the entity, or the natural person on whose behalf a business relationship is commenced or an ad hoc transaction is conducted.
For AML purposes, the term “beneficial owner” includes:
The Central Register of Beneficial Owners will become operational as of 13 October 2019. This will be a public register with free-of-charge access. The following types of business will have to submit data to it:
Partnerships or companies formed on or after 13 October 2019 will have to submit data to the register within seven days of their registration. Existing entities will have to do so until 13 April 2020.
The following disclosures will be made in the register: identification information on the company/partnership (name, legal status, registered office, National Court Register number, tax ID) and on the beneficial owner and board member or partner with authority to represent the entity (first name, surname, citizenship, country of residence, PESEL code or, for those without PESEL, date of birth, size and nature of interest held, beneficial owner's rights).
Failure to submit data to the register on time will be punishable by a fine of up to PLN 1 million (roughly EUR 233,000). Fines will be imposed on the company. The submission must be made by an authorised representative of the company or partnership, and must also include a representation that the submitted data is true, failing which the person may be held criminally liable for perjury.
DAC6 has already been implemented in Poland. The MDR reporting obligation entered into force as of 1 January 2019.
The term "beneficial owner" as defined in the AML Act is used to identify reportable arrangements for MDR purposes. A reportable arrangement arises, in particular, whenever it involves a non-transparent legal or beneficial ownership chain with the use of legal persons or unincorporated organisational units, legal arrangements or structures, including where the beneficial owners, as defined in the AML Act, are made unidentifiable.
The beneficial ownership concept is also used for income tax purposes.
In general, revenues of non-residents are taxed at source under the CIT Act at 19% (dividends) or 20% (interest, royalties and remuneration for intangible services).
To ensure that the exemption or reduced rate under the CIT Act or relevant double tax treaty applies, by the end of 2018 the WHT agent was obliged to receive the following documents from the recipient:
As of 1 January 2019, the WHT agent must also exercise and prove due diligence when verifying if conditions for a reduced rate or exemption are met, in particular by applying the extended definition of beneficial owner, i.e. entity which:
For income tax purposes, no register of “beneficial owners” within the meaning of the CIT Act is currently planned. Nevertheless, taxpayers and WHT agents may find other requirements to be a challenge.
The law is silent on how to apply the beneficial owner test and the genuine business (substance) test to certain entities, e.g. partnerships. As the new rules on withholding tax also raise many other doubts, the Ministry of Finance is currently working on tax guidance.
Further amendments to the CIT Act are expected to enter into force on 1 January 2020. When the sum of payments subject to WHT made to a CIT taxpayer during one tax year exceeds PLN 2 million (roughly EUR 466,000), then even if a due diligence is carried out, the WHT agent is in principle obliged to withhold tax from the excess at the standard rate (19% or 20%). It may then be possible to apply for a WHT refund. The CIT Act provides for only two exceptions: a special representation of the Management Board and an exemption opinion.
Since 2019 is a year of fundamental change in the “beneficial ownership” concept and in the AML and tax compliance obligations, it is thus advisable to be up-to-date with the current legal framework and the position of the Polish authorities.
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