Warsaw was slapped with a €500,000-a-day fine last year for failing to close a controversial lignite mine near the Czech Republic.
Brussels says it will start withholding EU payments to Poland over its failure to pay daily fines imposed by the bloc's top court last year.
In September, the European Court of Justice (ECJ) ordered Warsaw to pay €500,000 per day for failing to follow a ruling which said operations must cease operations at its Turów lignite mine and power plant close to the Czech Republic's border.
A spokesperson for the European Commission told Euronews that a notification had been sent to the Polish government on Tuesday that said the money would be taken in 10 days' time from the country's regular EU funds to offset the financial penalties imposed previously by the ECJ.
"The Commission has informed Poland that it would proceed with the offsetting of payments for penalties due under case C-121/21 Czechia v Poland on Turów lignite mine," the spokesperson said.
"The offsetting is for penalties covering the period 20/9/2021-19/10/2021. The Commission will proceed with the offsetting after 10 working days from this notification," he added.
Poland says it "will use all legal means to appeal", saying that there is "no legal or factual basis" for the penalty.
The amount in question is said to total roughly €15 million for the stated period.
The case against the open-pit brown coal mine was raised by the neighbouring Czech Republic, which says it negatively impacts the environment and drains water from local villages, arguing that Warsaw ignores these issues.
Poland’s government says the mine fuels a power plant that generates some 7% of the nation’s energy and that it is needed to meet the country's energy demands. It has so far refused to shut it down.
However, Warsaw and Prague signed a deal to settle the matter last week.
The president of Poland, Andrzej Duda, was in Brussels on Monday in an attempt to de-escalate tensions, following an announcement that it will dismantle its controversial judicial disciplinary chamber, which Brussels says can be used to punish judges for failing to fall in line with political decisions.
It is the subject of another ruling and fine, in this case, €1 million euros per day.