Poland: Royalty payments to beneficial owner outside EEA not eligible for withholding tax exemption (court decision)

A court decision about whether royalty payments to beneficial owner outside European Economic Area are eligible for withholding tax

A court decision about whether royalty payments to beneficial owner

The Supreme Administrative Court, in its judgment dated 22 November 2022 (case file II FSK 614/20), held that the provisions of the Council Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different member states do not apply to situations when at least one potential beneficiary is a third party located outside the European Economic Area (EEA), not listed in the Annex to that Directive.

This means that there is no possibility to receive a withholding tax exemption on royalty payments in situations when their direct beneficiary is a company based in the EEA, but at the same time that company, as well as the paying company, are in fact owned by another company outside the EEA.

Read a November 2022 report prepared by the KPMG member firm in Poland


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