What's Happening?
In July 2025, Poland's Ministry of Finance released new guidelines on the application of the beneficial ownership clause in withholding tax. These guidelines require beneficial ownership status to be demonstrated for applying the dividend exemption under the Parent-Subsidiary Directive (PSD). This approach is controversial as the PSD does not explicitly require beneficial ownership. The guidelines have sparked debate, with some Polish courts previously divided on the issue. The guidelines favor a stricter interpretation, potentially conflicting with EU law and the PSD's objectives.
Why It's Important?
The new guidelines could significantly impact businesses operating in Poland and the broader EU. By imposing additional requirements not explicitly stated in the PSD, Poland risks undermining the directive's goal of facilitating intra-EU investment and eliminating double taxation. This could lead to increased administrative burdens and cash-flow constraints for companies, affecting their ability to operate efficiently. The tension between Poland's approach and EU law raises concerns about the balance between anti-abuse measures and investment facilitation, potentially affecting cross-border economic activities.
What's Next?
The implementation of these guidelines may lead to prolonged refund proceedings and increased scrutiny by tax authorities. Businesses may face uncertainty and delays in obtaining tax exemptions, impacting their financial planning and operations. The EU may need to address these tensions to ensure alignment with the PSD's objectives and maintain the free movement of capital within the union. Stakeholders, including businesses and policymakers, will likely engage in discussions to resolve these issues and ensure compliance with EU law.
