Officially released tax withholding instructions by Poland's authorities

The Polish Ministry of Finance has published official guidelines on the application of the beneficial owner (BO) clause for Polish withholding tax (WHT) purposes, effective from July 9, 2025.

The guidance aims to provide clarity and a degree of legal protection akin to that of individual tax rulings, but only if the fact pattern is exactly the same. It 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.

Taxpayers and tax remitters are expected to thoroughly assess their own cases, review their documentation and procedures, and consider whether additional due diligence is necessary to ensure compliance. The guidance does not eliminate all uncertainties, so taxpayers and tax remitters should be cautious in using its protective element when analyzing specific cases.

For instance, tax remitters are expected to thoroughly examine all relevant circumstances when making payments to related parties. The mere collection of a residence certificate and a BO statement is not deemed sufficient. The guidance allows for resources from both the payment recipient and related group entities to be considered when assessing business substance, under certain conditions, but not when relying on the look-through approach.

The look-through approach allows for a different entity than a direct payment recipient to be identified as the BO, if the WHT remitter is aware at the time of payment that the funds will be passed on. This approach is optional and not binding on tax authorities.

The guidance also confirms the applicability of the look-through approach under specific conditions and provides for more clarity regarding 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).

Simplified procedures may apply to certain WHT remitters, such as financial institutions or collective rights management organizations. However, if payments are made to unrelated recipients, the scope of required verification may be less rigorous.

The guidance applies to passive income payments such as dividends, interest, and royalties, regardless of whether the tax relief is claimed under domestic law or double tax treaties. It is important to note that the BO requirement does not apply to payments for intangible services like advertising or advisory services.

For additional information concerning this Alert, taxpayers can contact Andrzej Broda, Radoslaw Krupa, Michal Lesiuk, Marcin Opilowski, Magdalena Zalech, Michal Koper, Sylwia Migdal, or the Tax Technical Knowledge Services group at Doradztwo Podatkowe Krupa sp.k., Warsaw or Ernst & Young LLP (United States), Polish Tax Desk, New York.

In conclusion, the newly published guidelines aim to provide a more structured approach to the application of the beneficial owner clause for Polish withholding tax purposes. Taxpayers and tax remitters are encouraged to thoroughly review their cases and consider the guidelines when assessing compliance.