Official tax withholding guidelines issued by the Polish government

On the 9th of July, 2025, the Polish Ministry of Finance published official guidance on the application of the beneficial owner (BO) clause for Polish withholding tax (WHT) purposes. This guidance aims to provide interpretative support for taxpayers applying WHT exemptions or reduced rates under domestic law or double tax treaties (DTTs).

The guidance offers a favorable approach concerning the use of shared resources within a capital group, provided they are in the same jurisdiction covered by the relevant legal instrument (EU Directive or a DTT). It also allows for the application of the look-through approach in certain situations, enabling a different entity than a direct payment recipient to be identified as the BO.

The look-through approach is optional and not binding on tax authorities. However, it is crucial for taxpayers and tax remitters to assess their own cases thoroughly and consider whether additional due diligence is necessary to ensure compliance to take advantage of WHT preferences.

The guidance outlines universal criteria for assessing business substance, including ownership of assets, use of office premises, employment of personnel, payment of operating expenses, availability of capital to finance operations, independent conduct of business activities, and presence of a qualified management team. A receiving entity may be considered a beneficial owner if it receives the payment for its own benefit, is not obliged to pass on the payment, and conducts genuine business activity.

The guidance differentiates the level of due diligence required from WHT remitters depending on their technical and operational capabilities. Simplified procedures may apply to certain WHT remitters such as financial institutions or collective rights management organizations. If payments are made to unrelated recipients, the scope of required verification may be less rigorous.

It is essential to note that the BO requirement does not apply to payments for intangible services like advertising or advisory services. The guidance also confirms the applicability of the look-through approach under specific conditions and allows for jurisdictional (shared) substance in certain situations.

The guidance provides for more clarity and a level of legal protection, but only if the fact pattern is exactly the same. The mere collection of a residence certificate and a BO statement is not deemed sufficient for WHT remitters. A decision should be made on which of the available WHT (clearance) procedures should be applied to confirm whether more beneficial WHT rates can be applied in a given situation.

In conclusion, the new guidance offers valuable insights for taxpayers and tax remitters dealing with WHT exemptions or reduced rates under Polish law or DTTs. It is crucial to understand the criteria for assessing business substance and the level of due diligence required to ensure compliance and take advantage of WHT preferences.