Bond holders are accustomed to receiving net interest payments. The brokerage house acts as a tax remitter, collecting and paying a flat 19% tax on the interest due to us.
However, this practice was denied by the National Tax Information. In an interpretation issued on May 8, 2023, reference number 0114-KDIP3-1.4011.148.2023.3.MG, for a bank also conducting brokerage activities, the authority found that if certain conditions were met, a brokerage office would not act as a broker.
As a reminder, under the Tax Ordinance, the taxpayer is responsible for calculating, collecting, and paying tax. Pursuant to Article 41, Section 4 of the Personal Income Tax Act (PIT), brokerage houses are required to collect a flat-rate income tax on payments (benefits) made or money or monetary assets made available to the taxpayer, such as dividends, bond interest, or discounts.
An exception to the above rule is Article 41, Section 24 of the Personal Income Tax Act, which states that payers are not obliged to collect tax on interest or discount on:
- mortgage bonds;
- bonds:
- with a maturity date of not less than one year,
- admitted to trading on a regulated market or introduced to an alternative trading system within the meaning of the Act of 29 July 2005 on Trading in Financial Instruments, on the territory of the Republic of Poland or on the territory of a country that is a party to a double taxation agreement concluded with the Republic of Poland, the provisions of which specify the rules for taxation of income from dividends, interest and royalties.
Until the end of 2022, in order to benefit from the exemption from the obligation to withhold tax, the issuer had to submit a declaration to the tax authority on exercising due diligence in informing its related entities about the impossibility of exempting from tax income from interest or discount on bonds with a maturity of less than one year and admitted to trading on a regulated market.
In 2023, however, issuers were no longer required to report related parties. Therefore, the failure to withhold tax by the entity maintaining the securities account is not contingent on meeting additional conditions.
In compliance with these regulations and issued tax interpretations, some brokerage firms have stopped collecting tax on bond discounts and interest. This doesn't mean, however, that there is no tax liability. Nothing has changed in this regard, but the obligation to settle the tax rests with the bondholder.
To do this, you must submit a PIT-38 declaration, entering the calculated tax (19%) in field 44 (in version 16 of the form). The PIT must be submitted electronically, by mail, or in person by April 30th. The tax due must also be paid by the same deadline.
The obligation to settle tax on bond income independently applies only to 2023. Under the SLIM VAT 3 change package, the provisions in force until the end of 2022 were restored from 1 January 2024.
If you have any problems with filing your annual income tax return, please contact our office.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of April 15, 2024.
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