Penteris Tax Practice Success In WHT Refund Case

The Polish withholding tax (WHT) system operates under a pay-and-refund model, requiring tax to be withheld at the source and later refunded if the relevant conditions are met. However, navigating the refund process can be challenging due to evolving interpretations by tax authorities, as demonstrated by a recent case handled by the Penteris tax team.

The Dispute: Legal Standing and the Gross-Up Clause

Our client sought a refund of WHT based on a gross-up clause, which stipulated that the payer would bear the economic burden of the tax. The Head of the Tax Office conducted an extensive two-year review, including a detailed verification of the beneficial owner's status, an analysis of business substance, and multiple inquiries with foreign tax authorities. Despite this exhaustive process, the tax authority ultimately dismissed the claim—not based on substantive tax law, but on procedural grounds.