On 3 July 2025, the Ministry of Finance published tax guidelines regarding the beneficial ownership clause for withholding tax (WHT) purposes. The aim of these guidelines is primarily to clarify the application of this clause by withholding agents, who are required to exercise due diligence in determining whether a given entity is entitled to a tax preference provided for under the CIT Act or a relevant double tax treaty.
It is worth recalling that the amended mechanism for collecting withholding tax (the so-called pay and refund) was originally intended to enter into force on 1 January 2019. However, due to controversies, the entry into force of these changes was postponed, and they ultimately became effective together with the Polish Deal as of 1 January 2022.
Over the course of these six years, guidance was issued only to a limited extent – the first time in June 2019 and the second in September 2023. In the latter, the authority narrowed the scope of clarification exclusively to identifying who qualifies as a beneficial owner. Issues relating to the application of exemptions under EU directives were instead the subject of two general interpretations issued in 2024. The current guidelines result from an analysis of comments submitted during tax consultations.
The key issue highlighted is that the status of beneficial owner constitutes a condition for applying a WHT exemption. The concept of beneficial owner appears both in international double tax treaties and is also defined in Article 4a(29) of the CIT Act. Referring to this provision, the Minister of Finance indicated that a beneficial owner must cumulatively meet three conditions:
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must receive the relevant payment for their own benefit;
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must not be obliged to transfer all or part of the payment to another entity; and
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must conduct genuine business activity in the country of residence.
The guidelines state that the first and second conditions should be considered functionally as one – failure to meet either excludes an entity from the definition, as it would lack economic control over the payment. The requirement of genuine business activity complements these conditions, indicating that the entity must have adequate resources (human, informational, or infrastructural) appropriate for its type of activity. The main purpose is to verify whether the entity has the actual capacity to meet the first two conditions. Only if all conditions are met simultaneously can the entity be considered a beneficial owner.
The status of beneficial owner in relation to a specific payment is also evidenced by assuming risks connected with it, such as the risk of default, credit risk, or interest rate risk, and such risks must also be borne for the entity’s own benefit. Therefore, if a company is established solely to assume risks related to a payment and subsequently transfers that payment to another entity, it will not be considered a beneficial owner. It will instead be regarded as an intermediary if, for example, it earns only a low margin, does not report taxable income related to the payment, passes the payment on within a short time frame, fails to reinvest received funds, has no other assets or sources of income, or does not assume any risks. However, the guidelines emphasize that the presence of any one of these factors does not automatically disqualify beneficial ownership – each situation must be assessed in light of the overall business activity and whether these indicators consistently point to the absence of beneficial ownership.
The requirement of conducting genuine business activity in practice may look different for manufacturing, service, or financial companies. However, according to the Minister, there are certain universal factors that should be considered when assessing this condition. These include: owning assets, maintaining a physical office, paying expenses related to ongoing operations, employing adequately qualified personnel, undertaking transactions on one’s own account, or having capital and personal links with the company’s “owners.” These conclusions also reflect CJEU case law, which denied beneficial owner status to companies without staff, premises, or equipment. The level of required resources will, however, vary depending on the type of company and activity carried out. It was also noted that in some cases – e.g., depending on a group’s business model – certain costs may be covered by other group entities based in EU Member States, without this affecting the beneficial owner status of the payment recipient.
The guidelines further specify which payments require verification of beneficial owner status. Pursuant to Article 26(1) of the CIT Act, this condition arises from double tax treaties or other regulations exclusively with respect to passive payments. Under Polish law, these include payments for interest and royalties (Article 21(1)(1) CIT Act), as well as dividends and other income from participation in the profits of legal entities (Article 22(1) CIT Act). Verification is therefore limited to these types of payments; it does not apply to payments for intangible services.
The guidelines also describe the circumstances that should be examined when verifying beneficial owner status. According to Article 8 of the Tax Ordinance, the withholding agent is obliged to calculate, collect, and remit the tax. Tax statutes sometimes refine these duties without modifying their essence – thus, if applying a WHT preference depends on beneficial owner status, the withholding agent bears the obligation to verify it. However, a distinction is made between related and unrelated parties. For a related entity, the agent must conduct such an inquiry that it leads to “having no knowledge justifying the presumption that there are circumstances excluding the possibility” of applying the preference. This means the agent should examine all circumstances that may determine whether the entity qualifies as a beneficial owner. In this regard, merely obtaining statements and certificates will not suffice – the agent should also review, for example, financial statements proving economic control over the payment or agreements showing possession of adequate assets and personnel. On the other hand, for unrelated entities, obtaining certificates and representations may be sufficient, provided the withholding agent exercises due diligence.
As for specific cases of beneficial owner verification, the MF addressed the concept of the Look Through Approach (LTA), under which a reduced tax rate may apply not to the immediate recipient but to another entity further up the chain that qualifies as the beneficial owner. The guidelines recognize the possibility of applying this approach at the payment stage, provided that the withholding agent exercises due diligence and establishes the actual beneficial owner, verifies that this owner recognizes taxable income in its country of residence, confirms that the payments in the chain are of the same nature, and checks that other conditions for applying the preference are met.
It was also emphasized that the application of the LTA must take into account differences arising under EU Directives versus double tax treaties. Under the Parent-Subsidiary Directive, the agent must additionally establish the chain of entities through which the dividend is passed to the beneficial owner and verify compliance with the requirements of Article 22(4-4d) CIT Act. Under the Interest and Royalties Directive, the agent must establish the chain of entities with respect to interest payments and verify compliance with the requirements of Article 21(3-6) CIT Act. Under double tax treaties, the agent must in all cases verify whether the conditions for applying the exemption under the specific treaty are met.