Executive summary

On 9 July 2025, the Polish Ministry of Finance published official guidance addressing specific aspects related to the application of the beneficial owner (BO) clause for Polish withholding tax (WHT) purposes. The long-awaited guidance provides interpretative support for taxpayers applying WHT exemptions or reduced rates under domestic law or double tax treaties (DTTs).

It specifies the types of payments to which the BO requirement applies and outlines the due diligence obligations for WHT remitters. It also introduces indicative criteria for assessing sufficient business substance and sets out conditions for applying the look-through approach.

Detailed discussion

Scope of BO clause application

The guidance confirms that the BO requirement applies to passive income payments — such as dividends, interest and royalties — regardless of whether the tax relief is claimed under domestic law (implementing respective European Union (EU) directives) or DTT.

Additionally, the guidance confirms that the BO condition does not apply to payments for intangible services, such as advertising or advisory services.

Definition of beneficial owner

The guidance clarifies that a receiving entity may be considered a BO if it meets all the following conditions:

1. Receives the payment for its own benefit (i.e., it has economic control over the income)
2. Is not obliged to pass on the payment (in whole or in part) to another entity
3. Conducts genuine business activity supported by adequate human, technical and financial resources (business substance)

The first two conditions must be assessed jointly and are intended to exclude conduit entities. The third condition is assessed based on the nature of the entity's operations.

The guidance outlines some 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.

The guidance provides a degree of flexibility for holding or financing companies, allowing them to meet the business substance requirement with a lower level of tangible substance if the entity bears relevant economic risks.

Shared substance within a group

The guidance offers a favorable approach concerning the use of shared resources (e.g., office space, personnel) within a capital group, provided they are in the same jurisdiction covered by the relevant legal instrument (EU Directive or a DTT).

This means that, when assessing business substance, resources from both the payment recipient and related group entities may be considered, under certain conditions. However, this does not apply when relying on the look-through approach.

Due diligence obligations

The guidance differentiates the level of due diligence required from WHT remitters when assessing the BO condition, depending on their technical and operational capabilities. For example:

• Tax remitters are expected to thoroughly examine all relevant circumstances when making payments to related parties, as the mere collection of a residence certificate and a BO statement is not deemed sufficient.
• If payments are made to unrelated recipients, the scope of required verification may be less rigorous.
• Simplified procedures may also apply to certain WHT remitters, such as financial institutions or collective rights management organizations.

Look-through approach

The guidance allows for application of the look-through approach in certain situations, enabling 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.

Implications

The guidance provides for more clarity and a level of legal protection akin to that of individual tax rulings, but only if the fact pattern is exactly the same. Therefore, although the guidance can be very useful when analyzing specific cases, its protective element should be used with caution.

Moreover, as the guidance does not eliminate all uncertainties, taxpayers and tax remitters should assess their own cases thoroughly, review their documentation/procedures and consider whether additional due diligence is necessary to ensure compliance to take advantage of WHT preferences. Based on this, 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.