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A recent decision by the Polish Supreme Adminis trative Court clarified the application of the Poland- Switzerland tax treaty and the EU parent-subsidiary directive, as subsequently amended, to dividend pay ments made in 2011 by the Polish subsidiary of a Swiss parent company.


The Court held that dividends paid before 2012 could not benefit from the withholding tax exemption otherwise provided by the directive (Council Directive 90/435/EC of July 23, 1990).


The legal problem arose in the context of article 22b of Poland’s 1992 Corporate Income Tax (CIT) Law, which stipulates that the exemptions and deductions envisaged by the parent-subsidiary directive and con tained in articles 20-22 of the CIT law should be ap plied only if there is a legal basis — in the tax treaty or another ratified international agreement — for the Polish tax authorities’ receipt of tax information from the country in which the taxpayer has its seat or in which the income was received. 

The original text of the 1991 Poland-Switzerland tax treaty did not include such a clause. The information exchange clause was added by a new article 25a of a treaty protocol signed on April 20, 2010, which be came effective and allowed for the exchange of tax in formation related to fiscal years beginning on or after January 1, 2012. 

As a result, the statutory condition for the full with- holding tax exemption available under the parent subsidiary directive could not have been fulfilled in 2011, and, consequently, the dividends paid by the Pol ish subsidiary of the Swiss parent company in 2011 were ineligible for the withholding tax exemption in 

Poland, the Court held.