If a Polish company has obtained a refund of withholding tax (WHT) under the Polish pay-and-refund regime, it may also be possible to recover the late-payment interest paid together with that tax. This position has recently been confirmed by the Polish courts.
Recovering WHT is not always the end of the story
Since 2022, Poland has applied the pay-and-refund mechanism to WHT on certain passive payments (dividends, interest and royalties) made to related parties. Where annual payments to a given recipient exceed PLN 2 million, the Polish payer is required to withhold WHT at the domestic rate (19% for dividends and 20% for interest and royalties) and only afterwards request a refund from the Polish tax authorities.
In practice, some taxpayers fail to apply the mechanism correctly. This may happen for various reasons – for example, because the payer was unaware that the PLN 2 million threshold had been exceeded, overlooked the obligation, or incorrectly assumed that an exemption or treaty-reduced rate could be applied directly. As a result, WHT is sometimes paid after the statutory deadline together with late-payment interest.
Many taxpayers focus on recovering the WHT itself. However, once the WHT has been refunded, it may also be possible to seek recovery of the related late-payment interest.
Courts confirm the possibility of recovering interest
A favourable ruling has recently been given by the Polish administrative courts. In its judgment of 30 May 2025 (case no. II FSK 202/25), the Supreme Administrative Court confirmed that taxpayers may seek recovery of such interest under the rules governing tax overpayments. The court did not state that interest must automatically be refunded in every case. However, it rejected the view that the WHT refund procedure itself excludes any possibility of recovering interest. The court’s reasoning is relatively simple. If the taxpayer ultimately proves that it was entitled to a WHT exemption or a reduced treaty rate and successfully recovers the WHT, there are grounds to argue that the related interest should not remain a final cost either.
Tax authorities take a different view
The tax authorities have generally adopted a more restrictive approach. Their position is that late-payment interest arises because the tax was not paid on time. In their view, the fact that the tax is later refunded does not change the fact that the payment was made after the statutory deadline. As a result, disputes have arisen between taxpayers and the tax authorities regarding the treatment of interest. The Supreme Administrative Court’s judgment significantly strengthens the position of taxpayers seeking recovery of these amounts.
Why this matters
For large multinational groups, the amounts involved may be substantial. Where WHT liabilities reach several million PLN and remain unpaid for an extended period before being settled, the related interest can become significant. In some cases, it may represent hundreds of thousands of PLN that taxpayers have not previously considered recoverable.
Groups that have already obtained WHT refunds in Poland should therefore consider reviewing whether late-payment interest was also paid and whether there may be grounds to seek its recovery.
How ABC Tax can help
ABC Tax has extensive experience in Polish withholding tax matters, including WHT refund proceedings and disputes with the tax authorities. If your group has obtained a WHT refund in recent years or is currently reviewing historic WHT settlements, we can help assess whether additional amounts – including late-payment interest – may potentially be recoverable under the latest court practice.