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Withholding tax on insurance services


Taxpayers are still waiting for a uniform standpoint of the tax authorities and administrative courts on the taxation of payments for insurance services with withholding tax. For a long time now the courts have been ruling in favour of the taxpayer, consistently overruling tax rulings issued by the Treasury. The problematic issue has turned to be determining whether insurance services and guarantees are services of similar nature and hence subject to WHT in the same way.

Insurance services vs. guarantee

The catalogue of intangible services set out in Art. 21 (1) (2a) of the CIT Act is an open catalogue, which is indicated by the wording ‘and services of a similar nature’. This wording entitles one to claim that services of a similar nature should be deemed to be those that result in the same rights and obligations for the parties. These services should concern similar events and have similar characteristics and applications. Out of the list set out in the provision, guarantees and suretyships are the most similar to insurance. Therefore, in order to determine whether insurance falls within the category of services of a similar nature and is subject to WHT, it is necessary to compare it to guarantees and sureties. Such attempts are made by tax authorities and administrative courts; however their conclusions differ.

Tax authorities’ standpoint

For a long time, the Treasury has been treating insurance like guarantee and therefore required the Polish recipient of the service to act as a tax remitter to pay WHT on these services. The KIS Head is of the opinion that insurance services are similar in purpose and function to the service of guarantee. Thus, he includes them in the list of ‘services of a similar nature’. However, it is worth remembering that in the past tax authorities took a different viewpoint. For example, in the individual tax ruling of the Director of the Tax Chamber in Katowice of October 5, 2015 (ref. IBPB-1-3/4510-385/15/AW) it was stated that insurance services ‘as not mentioned in Article 21(1) of the CIT Act, including in particular Article 21(1)(2a) of the CIT Act, and not being of a similar nature to those mentioned there, are not subject to taxation on the terms set out in that provision’. However, the above approach has changed and the tax authorities have started to treat insurance services as identical and there is nothing to indicate that this position may change in the nearest future.

Administrative Courts’ standpoint

A different approach is presented by the administrative courts, which rule in favour of taxpayers. There are more and more judgments of the WSAs which overrule individual tax rulings that are unfavourable for taxpayers and remitters. The courts, as opposed to tax authorities, have paid attention to the differences between a guarantee and insurance and thus excluded the possibility of considering these services as similar within the meaning of the WHT provisions. In a recent judgment of February 18, 2021 (case no I SA/Go 395/20), the WSA in Gorzów Wielkopolski drew attention to an erroneous construction by a tax authority. According to the court, in the repealed ruling, the treasury only relied upon the lexicographical definition of the expression ‘guarantee’, on the basis their settlement. What is more, in the WSA’s opinion, the KIS Head did not refer to the features that legally distinguish a guarantee from insurance and did not define precisely what type of guarantee was assumed for comparison with an insurance agreement. Moreover, in the court's opinion, the ruling failed to analyse the features that significantly distinguish the two services.

Additionally, the WSA points to the comparison of the content of Art. 21 (1) (2A) and Art. 15e (1) (1) of the CIT Act. The latter regulation, in its wording, distinguishes between guarantees and insurances while using the term ‘and services of a similar nature’. Therefore, the legislator, in the same statute, but in a difference article, distinguished between both services, recognizing them as different at the same time.

Subsequent judgments of the Voivodship Administrative Courts (WSA) which are favourable for taxpayers and tax remitters indicate a unanimous position of the courts, thus creating a uniform line of rulings favourable for tax remitters. The differences between the approaches of tax authorities and the WSAs may be resolved by the NSA in its future judgments. Until then, however, tax remitters will continue to have doubts as to how to settle insurance services from foreign insurers in terms of withholding tax.


Kinga Duszna, Tax Consultant, ATA Tax Sp. z o.o.

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