New approach to the beneficial owner (BO) clause in withholding tax
August 8, 2025
The Ministry of Finance has published guidance on the application of withholding tax (WHT) regulations, with particular attention given to the beneficial owner (BO) clause. The document is an attempt to clarify existing interpretative uncertainties and sets out practical criteria to be considered when verifying the conditions for applying preferential rates or exemptions from WHT.
Withholding tax: who is the beneficial owner?
The guidance indicates that a beneficial owner is an entity that actually receives the payment and has economic control over it. This means that the entity does not act as an intermediary, agent, or conduit for passing the funds further. In addition, it must conduct genuine business activity in its place of establishment, which implies having operational facilities, staff, and bearing the responsibilities and risks associated with the relevant category of income (e.g., interest, dividends).
The verification of the beneficial owner applies exclusively to passive payments.
The Ministry clarifies that the obligation to verify beneficial owner status applies solely to payments of interest, royalties, dividends, and other income from participation in the profits of legal entities. Payments for intangible services, which are treated as business profits, do not require the application of the BO clause when relying on a double taxation treaty.
Look-through approach – when is it permissible?
In certain cases, the so-called look-through approach is permissible. This allows the identification of the beneficial owner not as the direct recipient of the payment, but as a higher-level entity within the group structure. However, this possibility requires strict conditions to be met and documented, demonstrating that the ultimate beneficiary satisfies all the BO criteria, even though the payment is made to another intermediary entity.
Consequences for the payer and withholding tax
First and foremost, payers should verify whether a given payment falls into the category of passive payments. Only in such cases will it be necessary to examine the BO status. If the payment concerns, for example, advisory, marketing, or IT services, there is no need to analyse who the beneficial owner is.
When verifying BO status, factual factors should be taken into account. These include the recipient’s business structure, the manner in which the funds are used, possession of office premises, employment of staff, and the conduct of genuinely substantive activities. The mere existence of a holding company or membership in a corporate group does not in itself determine BO status. It is necessary to demonstrate the entity’s economic independence.
Look-through approach and withholding tax procedures
In cases where the beneficial owner is not the direct recipient of the payment, the payer may consider applying the look-through approach. However, this requires exercising particular due diligence and maintaining appropriate documentation.
The guidelines provided in the explanations may serve as a basis for payers to develop internal procedures for assessing the conditions for applying WHT preferences, taking into account the type of transaction, the entities involved, and the tax risks.
Summary of key changes in withholding tax (WHT)
- The new guidance significantly narrows the scope of cases in which the payer must analyse the beneficial owner’s status, focusing exclusively on passive payments.
- The look-through approach may be applied but requires a thorough understanding of the group structure and documented status of the ultimate recipient.
- BO verification is based on economic facts rather than solely on legal form—real business activity matters, not just the formal structure.
- Compliance with the guidance can reduce the risk of errors and enhance the security of international settlements. However, many areas still remain that may raise, and indeed do raise, interpretative doubts.
Tags beneficial owner, rzeczywisty właściciel, wht, withholding tax Poland
