Double Taxation Agreement between Poland and the United States: Key Benefits for Investors

The Double Taxation Agreement (DTA) between Poland and the United States is one of the international agreements that have been signed by the two countries to avoid double taxation of income earned by individuals and companies operating in both nations. The agreement applies to various types of income, such as dividends, royalties, and capital gains, among others. In this article, we will discuss the key benefits of the DTA for investors, particularly those interested in doing business in Poland or the US.

First and foremost, the DTA ensures that investors only pay tax on their income once. This means that if a US citizen or company earns income from Poland, they will not be taxed by both countries on the same income. Instead, the investor will only pay tax in the country where the income was generated. This provision helps to avoid double taxation, thereby reducing the overall tax burden for investors.

The agreement also provides for reduced tax rates on certain types of income. For example, the withholding tax rate on dividends paid by Polish companies to US investors is reduced from the standard rate of 20% to 15% under the DTA. This reduction in tax rate applies to both individuals and companies, making it easier for US investors to repatriate earnings from their investments in Poland.

Another benefit of the DTA is the provision for tax credit. If a US investor pays tax on their income in Poland, they can claim a credit against their US tax liability. This provision ensures that investors do not pay tax on the same income twice, regardless of where the income was generated. Additionally, the DTA stipulates that certain deductions and exemptions granted by one country will be recognized by the other country for tax purposes.

The DTA also provides for the resolution of disputes between the two countries. In case of a disagreement regarding the application of the agreement, investors can request assistance from the competent authorities of both countries to resolve the dispute. This provision helps to reduce the risk of investors being subject to double taxation or facing legal challenges in either country.

In conclusion, the Double Taxation Agreement between Poland and the United States provides significant benefits for investors, particularly those interested in doing business in both countries. The agreement helps to avoid double taxation, reduces tax rates on certain types of income, provides for tax credit, and outlines a framework for resolving disputes. As such, investors should familiarize themselves with the provisions of the DTA and seek expert advice when investing in either country.