The Anti-Abuse Clause and the Parent-Subsidiary Dividend Exemption
May the tax authority deny the dividend withholding tax exemption to a company that formally satisfies all the conditions set forth in Article 22(4) of the Polish Corporate Income Tax Act, invoking instead the anti-abuse clause contained in Article 22c?
The Voivodeship Administrative Court in Gdańsk answered in the affirmative – yet simultaneously, aligning itself with an increasingly robust line of Supreme Administrative Court jurisprudence, rejected the tax authority’s central doctrinal premise: that beneficial ownership constitutes a prerequisite for the dividend exemption at all.
The judgment – less a breakthrough than a consolidation of an emerging consensus – warrants the attention of any enterprise maintaining an international holding structure involving Dutch, Cypriot, or Maltese entities.
The Multi-Tiered Shareholder Structure and Withholding Tax on Dividends – Facts of the Case
The case concerned a Polish limited liability company (L. Sp. z o.o.) which, in April 2018, distributed a dividend of PLN 2,000,000 to its sole shareholder – the Dutch company V. B.V. The paying agent did not withhold the 19 percent flat-rate corporate income tax, applying the exemption under Article 22(4) of the CIT Act, which implements the EU Parent-Subsidiary Directive (2011/96/EU).
The shareholder structure exhibited the classic multi-tiered architecture well known to practitioners of international tax planning: Polish operating companies → Dutch holding company V. B.V. → Cypriot company N. Limited (with its board of directors resident in Malta) → two Polish tax-resident natural persons. The tax authorities – first the Head of the Pomeranian Customs and Fiscal Office in Gdynia, subsequently the Director of the Tax Administration Chamber in Gdańsk – determined that V. B.V. was not the beneficial owner of the dividend received, and that the entire structure served to obtain unjustified tax advantages.
Holding Company Without Substance – What the Tax Authority Found
The evidentiary record, assembled through the exchange of tax information with the administrations of the Netherlands, Cyprus, and Malta, enabled the authorities to reconstruct in considerable detail how the structure actually operated. The findings pertained to both tiers – the Dutch V. B.V. and the Cypriot N. Limited – and together painted a portrait of a quintessential shell company.
The Dutch V. B.V. employed no staff, held no real estate or office equipment, and leased no premises. Its management board consisted of another Dutch company, B. B.V., whose activity was confined to the absolute minimum necessary to maintain the managed entity’s formal existence. The revenues of V. B.V. between 2016 and 2018 consisted almost exclusively of dividends from Polish subsidiaries (approximately EUR 3 to 4.4 million annually), and its sole “investment” activity amounted to depositing the funds in a bank account.
The situation of the Cypriot N. Limited was analogous: while the company’s declared purpose was holding activity, its only revenues were dividends and passive financial income. Notably, in 2017–2018 alone, V. B.V. received dividends from Polish companies totalling in excess of PLN 32 million, of which a mere 13 percent ultimately reached the natural persons – Mr. and Mrs. K. – through N. Limited. The latter paid flat-rate tax on the dividend received in 2018 in the aggregate amount of PLN 743,298, but the Court found this argument insufficient: the taxation pertained to only a fraction of the total distributions, and moreover, Mr. and Mrs. K. received the dividend not from V. B.V. (to which the Polish companies had made the payment) but from N. Limited by virtue of their shareholding therein. This is a significant distinction – the argument that “the tax was ultimately paid within the EU” does not avail the taxpayer where only a fraction of the dividend stream flowing through the structure is in fact subjected to taxation.
Beneficial Ownership of Dividends – The Court Corrects the Authorities While Upholding the Outcome
It is at this juncture that the most intellectually significant – and practically consequential – dimension of the judgment emerges. One must, however, precisely convey the decisional dynamics: it was not the tax authorities that predicated their decision on two independent legal bases; rather, it was the Court that performed a doctrinal correction, effectively “salvaging” the outcome of the decision while repudiating its central doctrinal pillar.
The Director of the Tax Administration Chamber constructed his reasoning primarily on the assertion that V. B.V. did not qualify as the beneficial owner of the dividend, and that consequently the condition stipulated in Article 22(4)(2) of the CIT Act was not met. Article 22c (the anti-abuse clause) appeared in the first-instance decision as a supplementary basis, but the Director himself stated that since the condition under Article 22(4)(2) was not satisfied, Article 22c was in principle moot – although he “considered it justified to note” the multi-tiered shareholder structure in the context of that provision.
The Voivodeship Administrative Court explicitly held that the authorities had erroneously interpreted Article 22(4) in conjunction with Article 4a(29) of the CIT Act by treating beneficial ownership as a condition of the dividend exemption. Relying on the most recent jurisprudence of the Supreme Administrative Court – in particular the judgment of 16 December 2025 (II FSK 523/23) and a series of decisions of 9 January 2025 (II FSK 562–566/22) – the Court observed that Article 22(4) of the CIT Act, unlike Article 21(3) (which governs the exemption for interest and royalties), does not include the requirement of beneficial ownership. The rational legislator deliberately differentiated the conditions of the two exemptions: in Article 21(3)(4) it added the beneficial owner requirement; in Article 22(4) it did not.
Notwithstanding its finding of a substantive law violation, the Court concluded that the error did not affect the outcome of the case, because the denial of the exemption found an independent and sufficient basis in Article 22c of the CIT Act – a provision invoked by the first-instance authority and effectively accepted by the appellate authority in its reasoning. The Court thus altered the doctrinal foundation of the decision while preserving its operative resolution.
The Anti-Abuse Clause – Article 22c as a Self-Standing Basis for Denying the Exemption
Article 22c of the CIT Act – the so-called anti-abuse clause (implementing Article 1(2) of the Parent-Subsidiary Directive) – disapplies the dividend exemption where, cumulatively: (1) the principal purpose, or one of the principal purposes, of the arrangement was to obtain the tax exemption, and the obtaining of that exemption does not result solely in the elimination of double taxation – a mechanism closely related to the broader anti-avoidance rules in Polish tax law; and (2) the arrangement lacks genuine character, i.e., it is not carried out for valid economic reasons.
The Court concurred with the authorities that both conditions were satisfied. The interposition of V. B.V. and N. Limited in the shareholder structure lacked economic justification – the companies conducted no holding activity whatsoever, and their sole function was to formally “channel” dividends with minimal taxation. Had both entities been absent, L. Sp. z o.o. would have distributed the dividend directly to Mr. and Mrs. K., which would have attracted a 19 percent withholding tax – instead, over 87 percent of the funds remained “parked” at the V. B.V. level, without reinvestment or further distribution. The timing of V. B.V.’s entry into the structure – shortly after the introduction of Article 22(4) of the CIT Act – constituted a further indicum of purposive design.
The Court underscored, following the CJEU’s Danish cases (C-116/16 and C-117/16), that a Member State must refuse the benefit of EU law provisions where those provisions are invoked not to achieve their objectives but to obtain an advantage from EU law while the conditions for obtaining that advantage are met only formally. At the same time, the Court dismissed the applicant’s request for a preliminary reference to the CJEU, finding that the circumstances of the case did not warrant initiating such proceedings.\
The Look-Through Approach – Why “Seeing Through” the Structure Did Not Assist the Taxpayer
The applicant argued that the authorities should have applied the look-through approach (LTA): even if V. B.V. was not the beneficial owner, the ultimate recipients of the dividend – Mr. and Mrs. K. – were EU residents who had paid tax in Poland. Since the dividend was ultimately taxed at the level of Polish residents, the exemption served to eliminate double taxation in accordance with the purpose of the Parent-Subsidiary Directive.
The Court addressed this argument directly and found that the proceedings had, in substance, applied LTA principles – the authorities had traced the flow of dividend amounts through the entire structure and identified the ultimate recipients. The conclusions of that analysis, however, did not support preferential taxation: N. Limited itself (the final corporate link in the chain) likewise conducted no genuine holding activity, and therefore could not be regarded as the beneficial owner of the dividends even under an LTA framework. For the practitioner, this is a critical takeaway: the look-through argument does not avail the taxpayer where Article 22c disapplies the exemption – the artificiality of the structure negates the protection afforded by the Directive.
The Parent-Subsidiary Directive versus Double Tax Treaties – Article 22a CIT Act and the Suspension of the Limitation Period
The applicant raised an additional procedural argument: since the taxation of the dividend derived from provisions implementing the Parent-Subsidiary Directive (and not from the double tax treaty with the Netherlands), the authority could not invoke Article 22a of the CIT Act (which requires account to be taken of double tax treaties) nor suspend the running of the limitation period under Article 70a of the General Tax Ordinance (which pertains to liabilities arising under international agreements).
The Court provided a persuasive response: where the dividend exemption under the Directive does not apply, the authority must examine whether the more favourable rate under the Poland–Netherlands Convention (5 or 15 percent rather than 19 percent) is applicable – and this required verification of beneficial ownership under Article 10(2) of that Convention. Those findings depended on information obtained from the tax administrations of the Netherlands, Cyprus, and Malta, which justified the suspension of the limitation period under Article 70a of the Ordinance for the entire period from the first request (4 October 2022) to receipt of the final response (21 January 2025 – Malta).
The Tax Authority’s Limitation-Period Arsenal – Cumulation of Article 70a and Article 70(1)(6)
Independently of the suspension under Article 70a, the Court identified an additional basis for the suspension of the limitation period: by order of 25 August 2023, the Head of the Customs and Fiscal Office initiated an investigation into a fiscal offence under Article 56(2) of the Fiscal Penal Code in connection with the submission of false information in the IFT-2R tax return for 2018 (exposure to a shortfall of PLN 380,000). The notice of suspension of the limitation period (Article 70c of the Ordinance) was served on the taxpayer on 14 September 2023. The fiscal criminal proceedings were discontinued only on 9 April 2025 on the ground that the offence had become time-barred, but the Court – taking into account the timing of the initiation (well before the expiry of the limitation period) and the range of procedural steps undertaken – found that the initiation was not of an instrumental character.
For taxpayers, this means that in cross-border cases the authorities command a cumulation of two limitation-suspending instruments: the exchange of information with foreign administrations (Article 70a) and the initiation of fiscal criminal proceedings (Article 70(1)(6)). Even were a court to reject one of these bases, the other could independently sustain the liability beyond the standard five-year period.
Practical Implications – What the Judgment Means for International Holding Structures
First, the judgment reinforces the emerging line of jurisprudence: beneficial ownership is not a condition of the dividend exemption under Article 22(4) of the CIT Act. The Voivodeship Administrative Court in Gdańsk expressly adopts the position of the Supreme Administrative Court in case II FSK 523/23 and the 2023–2025 series of decisions. This is significant for taxpayers who have been losing disputes on that ground – but the advantage is circumscribed, because the exemption may nonetheless be denied under Article 22c (the anti-abuse clause), which shifts the battleground to a different plane entirely.
Second, the judgment establishes the evidentiary standard for “artificiality” of a structure: passivity of the holding company, absence of dividend reinvestment, minimal operating costs limited to formal maintenance of the entity, distribution of only a fraction of dividends to the next-tier shareholder, and – particularly tellingly – the temporal coincidence between the acquisition of the holding vehicle and the entry into force of the exemption.
Third, the look-through approach offers no protection where Article 22c applies – even if the ultimate beneficiary resides in the EU and pays tax, the artificiality of the intermediate links in the structure disapplies the exemption.
Fourth, the judgment illustrates the potency of the tax authority’s limitation-period arsenal in cross-border cases: the cumulation of Article 70a (exchange of information) and Article 70(1)(6) of the Ordinance (fiscal criminal proceedings) means that the effective limitation period may extend far beyond the standard five years. Successive requests directed to the administrations of multiple states may de facto suspend the running of the limitation period for years.
Enterprises maintaining international holding structures should treat this judgment as an imperative to audit the economic substance of their foreign entities – not merely against the formal conditions of the exemption, but above all against the resilience of the structure to an artificiality challenge under Article 22c of the CIT Act. Where any doubt persists, it is advisable to consult counsel specialising in international tax planning and tax litigation.
Robert Nogacki – licensed legal counsel (radca prawny, WA-9026), Founder of Kancelaria Prawna Skarbiec.
There are lawyers who practice law. And there are those who deal with problems for which the law has no ready answer. For over twenty years, Kancelaria Skarbiec has worked at the intersection of tax law, corporate structures, and the deeply human reluctance to give the state more than the state is owed. We advise entrepreneurs from over a dozen countries – from those on the Forbes list to those whose bank account was just seized by the tax authority and who do not know what to do tomorrow morning.
One of the most frequently cited experts on tax law in Polish media – he writes for Rzeczpospolita, Dziennik Gazeta Prawna, and Parkiet not because it looks good on a résumé, but because certain things cannot be explained in a court filing and someone needs to say them out loud. Author of AI Decoding Satoshi Nakamoto: Artificial Intelligence on the Trail of Bitcoin’s Creator. Co-author of the award-winning book Bezpieczeństwo współczesnej firmy (Security of a Modern Company).
Kancelaria Skarbiec holds top positions in the tax law firm rankings of Dziennik Gazeta Prawna. Four-time winner of the European Medal, recipient of the title International Tax Planning Law Firm of the Year in Poland.
He specializes in tax disputes with fiscal authorities, international tax planning, crypto-asset regulation, and asset protection. Since 2006, he has led the WGI case – one of the longest-running criminal proceedings in the history of the Polish financial market – because there are things you do not leave half-done, even if they take two decades. He believes the law is too serious to be treated only seriously – and that the best legal advice is the kind that ensures the client never has to stand before a court.
