Recent months have brought a number of important developments in Polish case law and tax authority interpretations concerning withholding tax (WHT) on dividends. While some rulings offer hope for a more taxpayer-friendly approach, inconsistencies and ongoing uncertainty continue to pose significant challenges. Below, we highlight key issues and recent decisions that impact cross-border payments from Poland.
The Beneficial Owner (BO) Condition in the Case of Dividends
Polish regulations provide that the withholding tax (WHT) exemption for interest and royalties applies if the recipient is the beneficial owner of such payments. A beneficial owner is an entity that:
a) receives the payment for its own benefit,
b) is not an intermediary obligated to pass the payment on to another entity,
c) conducts genuine business activity in its country of residence.
Polish regulations do not explicitly impose the BO condition in relation to dividends. Nevertheless, the Polish tax authorities commonly assert that this condition applies to dividends as well. They derive this requirement from the obligation of the Polish company to exercise so-called due diligence.
Interestingly, on May 19, 2025, a contrary tax ruling—favorable to taxpayers—was issued (ref. 0111-KDIB1-1.4010.287.2020.11.BK). It stated that when paying a dividend to its sole shareholder (in this case, a company from the Netherlands), a Polish company may apply the WHT exemption without the need to verify whether the recipient is the beneficial owner.
This might appear to signal a shift in the Polish tax authorities’ approach. Unfortunately, this is likely not the case. The ruling was issued only after the judgment of the Supreme Administrative Court (NSA) of October 9, 2024. Until then, the tax authorities had consistently maintained that the BO requirement applies also to dividends.
Despite the positive stance of Polish courts (e.g., also NSA judgment of January 9, 2025, ref. II FSK 564/22), we should unfortunately assume that the position of the Polish tax authorities will remain negative and that favorable outcomes will continue to occur only at the court level.
Look-Through Approach
The BO condition is linked to the concept of the look-through approach, which involves “looking through” an intermediary entity to identify the true beneficial owner of a payment. This concept remains highly controversial in Poland.
A recent judgment of the Provincial Administrative Court (WSA) in Poznań dated January 21, 2025 (ref. I SA/Po 650/24, not final) confirmed the negative stance of the tax authorities. The court held that there is no legal basis for applying the look-through approach and that the BO status should be assessed solely with respect to the direct recipient of the payment.
Earlier court rulings, however, had allowed for such an approach, revealing a lack of consistency in case law.
Tax authorities continue to reject the look-through approach, citing the draft tax clarifications of Ministry of Finance issued in 2023.
We hope this issue will be clarified once the Ministry of Finance finally issues a long-awaited general tax ruling on that matter, which is expected in the coming weeks.
Effective Taxation Condition
According to Polish law, the WHT exemption for interest, royalties, and dividends applies if the recipient “is not exempt from income taxation on all of its income, regardless of its source.”
Polish tax authorities have often interpreted this as a requirement for effective taxation. As a result, WHT exemption has been denied when, for example, a foreign recipient incurred losses or paid only a negligible amount of tax.
Fortunately, in two judgments issued on May 30, 2025 (ref. II FSK 1489/24 and II FSK 1518/24), the Supreme Administrative Court (NSA) confirmed that the condition is also met when a taxpayer, due to its individual circumstances, does not pay income tax in its country of residence during a given period (e.g., due to the use of tax losses).
The same interpretation was presented by the Minister of Finance in two general rulings issued at the end of 2024.
So, on this point, the legal position now appears to be clear.
Summary and Invitation to Get in Touch
Interpretative uncertainty and inconsistencies in case law mean that each cross-border transaction requires a tailored analysis. If your clients are making or receiving payments from Poland and face doubts regarding withholding tax matters—in particular, the beneficial owner status, effective taxation, or the application of the look-through approach—please don’t hesitate to reach out.
We will review specific cases, provide strategic guidance, and help you mitigate tax risks, including through applications for official WHT exemption rulings.