This article is for informational purposes only and does not constitute tax or investment advice. Tax regulations can change. For individual matters, consult a tax advisor or accountant.
Dividends are one of the reasons investors choose shares in listed companies. They represent a share of a company's profit paid out to shareholders. However, before the money reaches your account, the tax authorities take their cut. The rules for taxing dividends differ depending on whether the company is listed on the Polish stock exchange (GPW) or abroad.
What is a dividend
A dividend is the part of a company's net profit earmarked for payment to shareholders. The company's management recommends the amount, and the general meeting of shareholders adopts a resolution on payment. Not every company pays a dividend — some reinvest profits into growth instead.
Key dates
- Dividend (record) date — the date on which you must be a shareholder to be entitled to the dividend. The list of shareholders is checked in the KDPW (Poland's National Depository for Securities).
- Ex-date (ex-dividend day) — the trading day before the record date. Anyone buying shares on or after this day will not receive the current dividend.
- Payment date — the date the dividend is transferred to shareholders' brokerage accounts.
Tax on dividends from the Warsaw Stock Exchange (GPW) — how it works
Dividends paid by Polish companies listed on the GPW are subject to a flat-rate income tax of 19% (the "Belka tax"). The tax is withheld automatically by the payer (the brokerage or the KDPW) — the dividend arrives in your brokerage account already reduced by 19%. Investors do not need to separately declare domestic dividends in their annual PIT tax return.
Dividends from foreign companies
The situation is more complex. Foreign companies (e.g. listed on the NYSE, LSE) withhold tax at source according to their own country's law. For the US, the standard rate is 30%, but after filing form W-8BEN (confirming tax residency), the rate for Polish residents drops to 15% (under the Poland-US double taxation treaty).
If the foreign tax withheld is lower than 19%, the investor must pay the difference in Poland. This is reported in the PIT-38 annual return, based on the PIT-8C information provided by the brokerage.
PIT-38 and foreign dividends
By the end of February, the brokerage sends a PIT-8C (or an equivalent document) with data on foreign dividends and foreign tax withheld. Based on this, you fill in the PIT-38:
- Report the full gross dividend amount as income.
- Report the tax paid abroad — you can deduct it, but only up to the amount of Polish tax (19%).
- If the foreign tax was 15%, you pay an additional 4% in Poland; if it was 19% or more, you pay nothing extra.
Dividends and IKE / IKZE retirement accounts
If you invest through an IKE brokerage account, dividends from domestic companies can be exempt from the Belka tax, provided the withdrawal conditions are met (age 65, minimum 5 years of contributions). This is a significant benefit for long-term dividend investors.
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Frequently asked questions about dividends and tax
Do I need to declare Polish dividends in my PIT return?
No. Dividends from GPW-listed companies are subject to a flat-rate tax withheld by the payer (the brokerage). You do not need to declare them in your annual tax return — the tax is finally settled by the brokerage.
When do I need to file a PIT-38 for dividends?
You file a PIT-38 when you received dividends from foreign companies. In the return you report the income and the tax due (minus any tax already paid abroad). The PIT-38 filing deadline is 30 April of the following year.
What is ex-date and why does it matter?
Ex-date is the day from which buying shares no longer gives you the right to the current dividend. Shares bought on or after this date trade "ex-dividend." The share price usually drops around ex-date by an amount close to the gross dividend.
How much tax is withheld on dividends from the US?
For Polish tax residents, the standard withholding rate is 30% at source. After filing form W-8BEN (confirming residency), the rate drops to 15% under the treaty between Poland and the US. The remaining 4% up to 19% is paid in Poland via the PIT-38.
Does a dividend reduce the share price?
Yes. On ex-date, the share price is adjusted by the gross dividend amount. The opening price that day is technically lower by the dividend amount. This doesn't mean a loss — the payout and the price adjustment are two sides of the same transaction.
Can I avoid the Belka tax on dividends through an IKE?
Yes, if you invest through an IKE brokerage account and meet the withdrawal conditions (age 60–65, minimum 5 years of contributions). Then dividends and gains from selling shares are exempt from the Belka tax. This is a significant benefit in the long run.
How does the brokerage provide information for settling foreign dividends?
The brokerage sends information (PIT-8C or an equivalent document) by the end of February for the preceding tax year. You use this to complete the PIT-38. Some brokerages provide a pre-filled PIT-38 online.
Is a reinvested dividend (DRIP) taxed?
Yes. Even if a dividend is automatically reinvested into shares, it is treated as a cash payout — it is taxed at the moment it's received, regardless of whether it physically reaches your account or is reinvested.
Is a dividend ETF taxed differently from shares?
An accumulating ETF does not pay out dividends — it reinvests them automatically, deferring taxation until the units are sold. A distributing ETF pays out dividends — these are taxed like dividends from shares. An accumulating ETF can be more tax-efficient in the long run.
Do dividends count toward the health insurance contribution base?
No, dividends are not included in the health insurance contribution base for individuals earning capital income. The Belka tax is a flat-rate tax, separate from the ZUS/NFZ contribution system.