A Polish company paying dividends to a foreign parent company based in the EU may be exempt from withholding tax (WHT).[1]
When verifying eligibility for this exemption, is the company required to check whether the recipient of the dividend is its beneficial owner (BO)?
It transpires that the Director of the National Revenue Administration Information Centre (KIS) and the Minister of Finance offer completely different answers to this question. What does this mean in practice? Let’s take a look.
Withholding tax – position of the Director of the KIS: no obligation to verify the BO
In a tax ruling issued following a reconsideration of the request (taking into account the judgements of the Provincial Administrative Court in Łódź of 4 October 2022[2] and the Supreme Administrative Court of 13 August 2025[3]), the Director of the KIS stated that no provision of the CIT Act makes the tax exemption referred to in Article 22(4) conditional on the company receiving the dividend being its beneficial owner.
The Director of the KIS based their position on three arguments:
- Comparative interpretation: the condition that the recipient of a payment must be its beneficial owner is explicitly included in Article 21(3)(4) of the CIT Act (in the provision regulating tax exemptions for interest and licence fees, among other things), alongside analogous provisions (as in the case of tax exemptions for dividends[4]). Had the legislature wanted to introduce the same condition for dividends, it would have done so explicitly
- Prohibition of extensive interpretation of the remitter’s obligations: the general requirement for companies paying dividends to exercise due diligence refers to conditions that result directly from the provisions of the CIT Act. These provisions must not be interpreted extensively, in a way that goes beyond what has been explicitly specified by the legislature, and impose obligations on the remitter that do not result from these provisions
- Article 22c of the CIT Act sufficiently protecting the State Treasury against undesirable tax avoidance: the Act contains provisions that allow the tax authorities to refuse an exemption if it is used contrary to its intended purpose. For example, this would apply if a dividend were paid to a taxpayer who is not the beneficial owner solely to avoid CIT in Poland
Position of the Minister of Finance: BO verification is required
The Ministry of Finance’s tax explanations of 3 July 2025 present a different, broader position.
BO verification as part of due diligence
The purpose of the document is to clarify how remitters should apply the beneficial owner clause, given their obligation to exercise due diligence when establishing the eligibility of a given entity for tax preferences. Therefore, verification of beneficial owner status is a prerequisite for applying a preferential rate of or exemption from, WHT for certain payments.
Purpose of the PS Directive
To be eligible for the tax preference under the PS Directive, the company to which the distribution of profits is paid must be tax resident in the EU. This condition applies to the company’s status as the beneficial owner of the paid dividend.
The aim of the PS Directive is to ensure neutrality in the distribution of profits within the EU. The idea is that when a parent company (for example, a Polish company) receives a dividend from its subsidiary (for example, from Germany), this payment should not be subject to additional taxation just because the companies are based in different EU countries.
However, there is one condition: the parent company must be the beneficial owner of the money, not simply an intermediary who will immediately pass it on.
In short, for tax purposes, profits flowing between companies within a single group in the EU are to be treated in the same way as if both companies were in the same country.
Holding companies – lower requirements, but verification is still necessary
Holding companies will be subject to lower requirements – relating to assets and personnel.
In their case, the requirements will be for appropriately experienced personnel who are actually involved in the entity’s activities, have sufficient expertise, and have the necessary office equipment.
Related entities – extended scope of documentation
In the case of related entities, it will be necessary to examine all the circumstances to prove that the company in question is the beneficial owner.
Simply collecting statements and certificates will not suffice. Other available documents will need to be verified, such as agreements confirming that the counterparty is actually carrying on business (i.e. that it has assets, a registered office and employees), and financial statements showing that it is actually managing the payments it receives.
Presumption of fulfilment of the BO condition – a facilitation for remitters
If the dividend payment has already been taxed at least once within the EU, it is not necessary to check who the beneficial owner is.
This applies in two situations. The first is when tax was paid on the transfer of profits between a subsidiary and a parent company (as defined in the Parent-Subsidiary Directive), and the second is when the payment by the last parent company in the chain was taxed.
Note: the use of this simplification is voluntary – and therefore it is up to the remitter to decide whether to apply it.
The obligation to verify the beneficial owner status when paying dividends – practical conclusions
The divergence in the positions of the two institutions is of great importance in terms of the risk to the remitter.
In accordance with Article 14n § 4(1) of the General Tax Code, taxable persons who comply with tax explanations are covered by the protection set out in Articles 14k–14m. This protection also extends to remitters, meaning it is universally applicable.
The protection resulting from a tax ruling only applies to the person to whom the ruling is addressed and only to their specific circumstances.
In practice, this means that:
- Remitters with their own ruling for identical circumstances are protected and do not need to verify the BO status for dividends
- Other remitters should comply with the explanations, meaning they must verify the BO status, particularly for related entities
- For holding companies, it is sufficient to confirm that the entity has the necessary assets and personnel to engage in genuine business activities with regard to dividend payments
- Presumption mechanism – if the distribution of profits has been taxed at least once within the EU, the remitter may opt to refrain from full BO verification
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[1] In accordance with Article 22(4) of the CIT Act
[2] Case No. I SA/Łd 505/22
[3] Case No. II FSK 1510/22
[4] As referred to in Article 22(4) of the CIT Act