Tax Alert: Tax guidelines on WHT now available

On 9 July 2025, tax guidelines dated 3 July 2025 relating to the application of the beneficial owner clause for the withholding tax purposes (WHT guidelines) were published by the Ministry of Finance. The published document introduces significant changes compared to the previous draft guidelines. The WHT guidelines have been prepared based on an analysis of feedback received during the tax consultation with a working group of tax experts. They address key withholding tax (WHT) issues, including:

• having the status of and being covered by the definition of beneficial owner (BO) as prerequisites for enjoying preferential WHT treatment;
• scope of payments subject to the requirement of verifying the beneficial owner status;
• circumstances tested to verify the beneficial owner status;
• the criteria for assessing the applicability of a preferential rate, exemption, or non-collection of WHT;
• specific scenarios for verifying the beneficial owner status, namely:
  • the look-through approach,
  • broadened entity-related criteria for verifying the beneficial owner status,
  • presumption of meeting the BO criterion,
  • Collective Management Organizations (CMOs) and their BO status.

Significantly, the WHT guidelines include an initial caveat that any factual circumstances described in an example illustrating the fulfilment of a given condition may be assessed under Article 22c of the CIT Act (i.e., specific anti-avoidance rule, SAAR). 

Throughout the WHT guidelines, there is also a reference to the possibility of applying Article 22c in cases where the beneficial owner condition is presumed to be met. Both this concept and most examples relate to voluntary application of provisions, as interpreted in guidelines, by remitters. On the other hand, the WHT guidelines specify that only tax authorities can apply Article 22c of the CIT Act.

While the voluntary application of tax guidelines by taxpayers and remitters is a well-established practice, the lack of a statutory framework for optional rather than uniform application by tax authorities, along with the fact that other withholding tax provisions, particularly those concerning remitters' statements in the pay & refund procedure submitted under penal fiscal and financial liability, are not explicitly included within the scope of the WHT guidelines, suggests that remitters should exercise great caution when analysing and applying the WHT guidelines in the context of Article 22c of the CIT Act, even if their factual circumstances align with the examples provided.

An analysis of the most important issues discussed in the WHT guidelines can be found below.

According to the WHT guidelines, the CIT and PIT Acts outline three conditions that must be jointly satisfied for a recipient of a receivable to be considered its beneficial owner. These conditions include:

1. receiving payment for one’s own benefit,
2. having no obligation to pass the entire or part of the payment to another entity,
3. conducting genuine business activity.

According to the WHT guidelines, the first two conditions must be assessed together and interpreted as the recipient's obligation to maintain economic control over the given payment. Additionally, a non-exhaustive list of indicators suggesting that an entity acts as an intermediary and does not receive the payment for its own benefit was provided (importantly, it is not necessary for all indicators to be present simultaneously). Such indicators include, among others, realizing no or a small margin on the payments transferred, not bearing the risk associated with the payment, or not reinvesting the funds obtained.

The WHT guidelines explore in detail the condition of conducting genuine business activity. In this regard, the importance of assessing the entity’s economic substance is particularly stressed. Here, too, a non-exhaustive list of circumstances is provided that may suggest this prerequisite has not been met, such as the lack of assignment of duties or competencies to individual members of the management board, outsourcing most of the basic operational aspects, extensive use of fiduciary services, or employing only (or almost only) administrative personnel at the company.

At the same time, it is noted that a lower level of substance is required for holding companies compared to operating companies. For holding companies, it is sufficient to have experienced personnel who are genuinely involved in the entity's activities, possess adequate expertise, and are equipped with appropriate office facilities. Significantly, however, entities to which these lower requirements apply must incur costs that justify the assumption that they bear the risks associated with the payments received, such as owning and bearing the costs of bank accounts.

The WHT guidelines also explore the issue of the so-called consolidated substance. This situation involves the costs associated with the substance necessary for an entity to conduct genuine economic activity being borne by another entity whose tax residence falls within the jurisdiction providing preferential treatment. However, it is important to note:

• demonstrating that the condition of genuine economic activity is met with consolidated substance is merely an optional method for the remitter or taxpayer. Tax authorities are not obligated to accept or apply it,
• it is not possible to demonstrate the fulfilment of the BO condition based on consolidated substance for any entity other than the payee (consequently, this approach cannot be utilized when applying the look-through approach, as explained further below).

According to the WHT guidelines:

• the obligation to assess the BO condition is applicable to passive payments, which include payments from interest and royalties as specified in Article 21(1)(1) of the CIT Act, as well as payments from dividends and other revenue (income) derived from participation in the profits of legal entities with their registered office or management located in the Republic of Poland, as outlined in Article 22(1) of the CIT Act,
• for intangible services (such as advertising or advisory services) the remitter is not required to assess the BO condition,
• the obligation to assess the BO condition applies to participation exemptions provided under the CIT Act (which implement the Parent-Subsidiary and Interest-Royalties directives). It also applies to preferences arising from double tax treaties (DTT), irrespective of whether a given treaty includes such condition.

In this context, the following scenarios have been identified, along with the circumstances that need to be examined:

1. payments to related entities: it is necessary to thoroughly examine all relevant circumstances, meaning that merely obtaining statements and certificates is insufficient and the remitter must verify other available documents that confirm the fulfilment of each element of the definition, thereby constituting the remitter's "knowledge” (this may include, for example, contracts demonstrating the existence of substance),
2. payments to unrelated entities: the facts can be established by examining a certain range of circumstances (such as a certificate of residence or a declaration); tax authorities may verify the BO condition based on a broader range of circumstances; however, if the remitter does not examine these circumstances, this does not necessarily indicate a failure to exercise due diligence,
3. special cases: certified WHT remitters, responsible for payments related to certain dematerialized securities, including those recorded in omnibus accounts (certain simplifications are provided, allowing for the verification of BO status based on a specified list of documents), Collective Management Organizations.

The examination of the applicability of a preferential rate, exemption, or non-collection of WHT should adhere to criteria consistent with due diligence. The criteria vary depending on the nature and scale of the remitter's business, as well as the relationship between the remitter and the taxpayer, making them unique for each individual case.

The WHT guidelines provide detailed guidance on special conditions for examining the beneficial owner condition. The Ministry of Finance emphasized that these conditions are optional, and tax authorities are not obligated to apply any of the concepts presented. Additionally, it was stressed that compliance with the WHT guidelines in this respect involves appropriately indicating, in tax returns, tax forms or applications, the entity whose beneficial owner status forms the basis for the preference.

The most important concepts are presented below with a brief description.

According to the WHT guidelines, the look-through approach (LTA):

• allows the remitter of the payment to apply an exemption or preferential tax rate even if the beneficial owner of the payment is not its direct recipient, but the payment is transferred to the BO through intermediaries,
• can only be applied if there is no change in the legal nature of the payment (e.g., the recipient does not pay out interest revenue as a dividend) and the recipient meets the conditions provided for the tax preference in question. In particular, before applying the LTA, the remitter should, as a matter of due diligence, establish:
  • the beneficial owner of the payment,
  • whether the beneficial owner recognizes taxable revenue in their country with respect to the payment obtained,
  • whether the payments transferred in a chain of entities are of the same nature (exact identity in amount is not necessary),
  • whether the conditions provided for the relevant tax preference, as discussed in the WHT guidelines are met,
• in respect of interest, the condition for the application of the LTA is that the payment is effectively taxed in each jurisdiction to which it is transferred,
• the application of the LTA may occur when the BO is an EU entity. However, if it turns out that, in the case of payments outside the EU, the payments are taxed, the tax remitter is not obliged to establish the BO,
• the application of the LTA is only possible when the transfer of the payment can be ‘traced’. However, in other cases (e.g., if the recipient of the payment is not the BO but reinvests the funds received), other concepts allowing for preferential taxation are permissible.

The WHT guidelines provide for other special cases for examining the beneficial owner condition, including, among others, the extended BO assessment. According to the WHT guidelines, the examination of the BO condition under this approach that may be also referred to as hypothetical LTA is possible when:

• the entity receiving the payment is not its BO,
• it is not possible to apply the LTA solely due to the lack of knowledge of the subsequent payment, i.e., the other LTA conditions are met, but it is not known whether there will be a transfer of the payment by the entity to which the payment is paid, and
• both entities, i.e., the entity receiving the payment and the entity to which the payment would be transferred, are established in a territory covered by a single legal regime of WHT preference.

In addition, for the BO condition to be met, it is necessary to demonstrate that:

• circumstances exist that enable the entity to which the payment would be transferred to require the entity that would receive the payment to transfer it,
• the entity to which the payment would be transferred can independently decide on the destination of the payment in question 'from the level' of the entity receiving the revenue and runs a genuine business activity with respect to the payment, i.e., the entity under examination is the BO of the payment under consideration.

An example of a structure where the application of the extended subjective scope of examination of the BO condition may be justified are special purpose vehicles established within the same area for economic reasons (e.g., for risk separation).

The Ministry of Finance also included the presumption of fulfilment of the BO condition based on the Parent-Subsidiary Directive among the special cases for examining the beneficial ownership condition. Under this concept:

• it is not necessary to examine the BO condition in relation to a dividend payment that is taxed at least once within the EU,
• the possibility for the remitter to apply this presumption cannot impact the formal statutory obligations of the taxpayer.

The WHT guidelines emphasize that the beneficial owner clause is not strictly an anti-abuse clause unlike the GAAR clause, or the clause contained in Article 22c of the CIT Act – the SAAR clause. The aforementioned anti-abuse clauses are only applied by the tax authorities.

It should be emphasized that entities applying the WHT guidelines enjoy protection even if the interpretation of the law changes. Importantly, this protection is formally provided only in respect of events that take place after their issuance. It should be noted, however, that the WHT guidelines are not binding on remitters, and the theses contained therein may be challenged, for example, in proceedings before an administrative court.

The WHT guidelines are of significant importance for taxpayers and remitters of withholding tax. An analysis of the WHT guidelines leads to the conclusion that payments subject to WHT will continue to require detailed analysis, as not all areas of concern have been addressed.

The KPMG team can support you in interpreting the new guidance, identifying key changes and areas, and assessing their impact on your existing business.

If you have any questions or require further assistance, please do not hesitate to contact us.