10.1.1 the Owner is incorporated and is tax resident in Ireland?
DTT – yes: withholding tax– no. According to the DTT between Poland and Ireland, lease payments as a rule are treated as business profits and are not taxable in Poland.
10.1.2 the Owner is incorporated and is tax resident in the United Kingdom?
DTT – yes, withholding tax – two possibilities, depending on the main area of activity of the Owner and significance of lease agreements in its business portfolio:
- When aircraft leasing is incidental to the main area of activity of the Owner that mainly operates aircraft in international traffic – leasing revenues are, as a rule, not taxable in Poland;
- Otherwise: withholding tax: yes; rate: 5% – under certain circumstances, that consider, for example, providing an original copy of the tax residence certificate of the Owner or lessor.
10.1.3 the Owner is incorporated and is tax resident in Hong Kong?
DTT – no; withholding tax: yes; rate: 20% under certain conditions.
10.1.4 the Owner is incorporated and is tax resident in Singapore?
DTT – yes, withholding tax – two possibilities, depending on the main area of activity of the Owner and significance of lease agreements in its business portfolio:
- When aircraft leasing is incidental to the main area of activity of the Owner that mainly operates aircraft in international traffic – leasing revenues are, as a rule, not taxable in Poland;
- Otherwise: withholding tax: yes; rate: 2% under certain conditions.
10.1.5 the Owner is incorporated and is tax resident in Malta?
DTT – yes; withholding tax: yes; rate: 10% under certain conditions.
10.1.6 the Owner is incorporated and is tax resident in the Channel Islands?
DTT – no; withholding tax: yes; rate: in general – 20%.
10.1.7 the Owner is incorporated and is tax resident in the Isle of Man?
DTT – no; withholding tax: yes; rate: in general – 20%.
10.1.8 the Owner is incorporated and is tax resident in Mauritius?
DTT – no; withholding tax: yes; rate: in general – 20%.
10.1.9 the Owner is incorporated and is tax resident in Bermuda?
DTT – no; withholding tax: yes; rate: in general – 20%.
10.1.10 the Owner is incorporated and is tax resident in the Cayman Islands?
DTT – no; withholding tax: yes; rate: in general – 20%.
Generally, in Polish tax jurisdiction an Airline which is a lessee is required to withhold and account for tax from lease payments in case if the Owner does not have its registered office or management in the territory of the Republic of Poland. In principle, the lease of an aircraft is deemed by Polish tax authorities as a use of an industrial or transport device and the revenues from such are subjected to withholding tax in the rate of 20%.
Those provisions may, however, be altered by the double taxation agreements to which the Republic of Poland is a party. The lack of such results in the necessity of application of the abovementioned general provisions. Note: each particular case should be considered separately, because tax obligation in the considered scope may differ according to main area of activity of the parties of an agreement, shareholder relation between the parties, etc.
Please note, that since 2019 r. additional conditions regarding withholding tax were introduced to the Polish law. In the case when Polish company makes payments, which according to Polish law are subject to withholding tax, and applies an exemption or reduced withholding tax rate or does not collect tax, it should exercise an appropriate level of due diligence in checking whether the recipient is able to benefit from DTT.
In cases when the paying company is applying an exemption or reduced withholding tax rate under a DTT this obligation includes determining if the recipient is the beneficial owner of the payment.
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