Ratification of Protocol to double tax treaty between Poland and the Netherlands has been completed

In March 2022, the Dutch authorities announced that the procedures for ratification of the Protocol to the double tax treaty between Poland and the Netherlands (the “Protocol”) were completed. 

On the Polish side, the bill on the ratification of the Protocol was already signed in 2021 by the President of Poland. However, for the provisions of the Protocol to be effectively in force and applied, corresponding actions were required on the Dutch side. According to the information provided by the Dutch Ministry of Foreign Affairs - the ratification process of the Protocol in the Netherlands was finalized in March 2022.

The Protocol will become effective after both countries exchange notes confirming the ratification of the Protocol, which is very likely to occur in the nearest future. 

Therefore, it is rather clear that the provisions of the Protocol will apply to tax years, periods and events occurring from 1 January 2023.

The Protocol, especially due to the introduction of the so-called real estate clause to the double tax treaty, will have a significant impact on Polish real estate structures held through entities located in the Netherlands. 

According to the Protocol any gains derived by a tax resident from the Netherlands from the transfer of shares in a Polish company should be subject to taxation in Poland if, at any time during 365 days preceding the transfer, these shares derived more than 75 per cent of their value directly or indirectly from real estate property situated in Poland. This means that a transfer of shares in a Polish real estate rich company by its Dutch shareholder made after 1 January 2023 will be subject to taxation in Poland. 

More information about the content of the Protocol could be found in our tax alert HERE.

If you would like to learn more about the issues discussed above, please do not hesitate to contact us.