Poland’s Ministry of Finance has proposed extending the temporary exemption from the withholding tax “pay & refund” mechanism for technical payers and financial intermediaries until 31 December 2028, citing implementation challenges and the need to align with the EU FASTER Directive.
Poland’s Ministry of Finance has published draft corporate income tax and personal income tax regulations for consultation that would extend the temporary exemption from the “pay and refund” withholding tax mechanism for so-called technical payers. These include financial intermediaries that manage securities or omnibus accounts, such as custodian banks and brokerage houses.
The Polish Ministry of Finance has proposed extending the suspension of the “pay & refund” withholding tax mechanism for technical entities and financial issuers through 31 December 2028. The measure addresses persistent technical obstacles that have blocked implementation of the mechanism’s core requirement: immediate tax collection on payments exceeding 2 million PLN before allowing refunds or exemptions.
The mechanism’s repeated postponements stem from practical difficulties in verifying complex ownership structures and payment thresholds. Financial institutions and technical payers lack adequate systems to confirm taxpayer relationships with the precision the mechanism demands. Rather than imposing the compliance burden now, authorities have determined that extending the suspension allows time to build the data infrastructure necessary for implementation.
The extension is designed to align Polish regulations with the new EU FASTER Directive (Council Directive (EU) 2025/50), which aims to simplify relief procedures for withholding taxes.
By maintaining this exclusion, the government intends to reduce administrative burdens for thousands of companies and financial institutions while permanent legal solutions are developed.
