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November 29, 2021

Poland ratifies protocol to revise tax treaty with the Netherlands

On 23 November 2021, the Polish President signed an act ratifying the protocol of 29 October 2020 amending the Convention between the Republic of Poland and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (the Protocol).

Changes under the Protocol

The Protocol implements a number of substantial changes to the tax treaty, which might impact many investors.

The amendments cover:

  • Introduction of a real estate clause (taxation of transfers of shares of real estate rich entities in the country where real estate is located)

  • Change in tax qualification of income from partial liquidation, buy-back of shares and from investment fund units/certificates

  • Introduction of an anti-avoidance provision in a form of a “principal purpose test”

  • New rules related to a permanent establishment

  • New rules regarding tax residence of persons other than natural persons having dual tax residence

  • Introduction of a transparent entity clause

These are only examples of changes introduced by the Protocol and a full range of amendments should be analyzed to assess the impact for each specific case.

As Dutch holding companies have been used often to structure investments into Poland, the changes, specifically regarding the real estate clause and principal purpose test, could have a significant impact on such structures.

For background on the Protocol, see EY Global Tax Alert, Poland and the Netherlands sign protocol to revise tax treaty, dated 2 November 2020.

Effective date

The Protocol will be in force as of the last day of the third month following the month when the later note confirming ratification of the Protocol according to the local legislative procedures has been passed to the other State. The Protocol will apply to tax years beginning and events taking place as of the first or following day of a year following the year when the Protocol comes into force. In practice it is most likely that the Protocol will be apply as of 1 January 2023.


For additional information with respect to this Alert, please contact the following:

EY Doradztwo Podatkowe Krupa sp.k., Warsaw

EY Doradztwo Podatkowe Krupa sp.k., Wroclaw

Ernst & Young LLP (United States), Polish Tax Desk, New York


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