In July 2025, the Polish Ministry of Finance released 37-page explanatory guidelines (the Guidelines) on the application of the beneficial ownership (BO) clause in withholding tax. While they confirm some innovative technical points – such as the look-through approach – they also take a restrictive position, requiring BO status to be demonstrated as a condition for applying the dividend exemption under the Parent–Subsidiary Directive (PSD).
This stance is controversial. The PSD does not impose a BO requirement. Moreover, in landmark rulings such as the Danish cases (Joined Cases C-116/16 and C-117/16, 2019), the Court of Justice of the European Union (CJEU) set out a two-step abuse test, in which the absence of BO may serve only as one indicator. Prior to the Guidelines, Polish courts were divided: some held that no BO condition exists under the directive, while others sided with the tax administration. The Guidelines clearly favour the stricter line.
Beneficial ownership: an imported requirement
Article 22(4) of the Polish Corporate Income Tax Act exempts dividends paid to qualifying EU parent companies from withholding tax in Poland. This provision mirrors the PSD, which aims to ensure free movement of capital within the EU and to eliminate double taxation. Crucially, the provisions do not contain an explicit BO requirement.
By contrast, a BO requirement does appear in the pay-and-refund mechanism, which applies to dividends exceeding roughly €470,000 per year. Under this procedure, tax must be withheld upfront and then reclaimed through a refund application, which must be supported by a BO statement.
The Guidelines go further. They treat BO as a substantive condition for exemption under Article 22(4). In effect, they import into the PSD framework a concept that originates in the Interest and Royalties Directive – but not in the PSD. The result is a distinctive approach in which BO becomes decisive in practice, despite being absent from the directive and domestic statutory wording.
The CJEU: a more nuanced test
In the Danish cases, the CJEU held that denial of the PSD exemption is permissible only if two elements are proven:
An objective element – the arrangements, although formally compliant, do not achieve the purpose of the directive; and
A subjective element – the arrangements were set up with the intention of obtaining an improper tax advantage.
The absence of BO may be one indicator of artificiality – for instance, in conduit structures lacking economic substance – but it cannot by itself justify denial of the exemption.
This reasoning was reaffirmed in Nordcurrent (C-228/24, 2025), in which the court stressed that both elements must be established; a finding of non-genuine arrangements is not sufficient on its own.
The Guidelines, by contrast, elevate BO to a compulsory requirement. In practice, this transforms what should be only one element of an abuse analysis into an independent condition – interpreted according to the domestic understanding of BO, which does not necessarily align with the CJEU’s judgments.
The role of explanatory guidelines
Explanatory guidelines serve as official interpretations – they do not formally bind tax authorities, but taxpayers who rely on them are protected.
On one hand, the guidelines provide a measure of certainty for compliant taxpayers. On the other, they effectively introduce requirements that the legislation in question does not contain. The outcome is that BO verification functions as a de facto legal condition created through administrative guidance.
Practical consequences
The impact on businesses may be significant. Refund proceedings are already being prolonged, and the explanations provided in the Guidelines do little to prevent these delays, effectively confirming to the tax authorities that they should carry out detailed examinations of circumstances that are not actually statutory conditions for exemption. This results in ongoing uncertainty and cash-flow constraints.
The broader issue is whether such practice still aligns with EU law and the PSD’s objective. The directive was intended to remove tax obstacles to intra-EU investment. If the exemption becomes contingent on additional requirements imposed through powerful administrative practice, its effectiveness is undermined.
A question of balance
The Guidelines reflect a trend in Poland: using administrative instruments, guidelines, or rulings to narrow the scope of EU-based exemptions. While the approach may be motivated by state revenue protection, it creates tension with the text and the purpose of the PSD.
In practice, this risks narrowing an exemption that EU law was meant to guarantee and raises doubts about whether the balance between anti-abuse mechanisms and the directive’s investment-facilitating function is maintained.
