Beneficial Ownership and Dividend Distributions
In December 2025, the Regional Administrative Court in Olsztyn rendered a judgment that may significantly reshape how Polish corporate taxpayers structure and execute dividend distributions within capital groups. The decision addresses a fundamental question: whether a company distributing dividends must verify that the recipient constitutes the beneficial owner of those proceeds as a precondition for claiming tax exemption. The court’s answer was unequivocal: no such requirement exists. This holding carries particular significance for enterprises operating within holding structures, where dividends routinely flow between affiliated entities.
The Practical Implications for Corporate Taxpayers
The Olsztyn Regional Administrative Court’s judgment of December 17, 2025 (Case No. I SA/Ol 478/25) aligns with a jurisprudential trajectory that has gained considerable momentum within the Supreme Administrative Court over the preceding two years. For business enterprises operating within capital groups, this development may portend several consequential outcomes.
First, the ruling suggests clearer exemption criteria. Where the statutory requirements enumerated in Article 22(4)–(4d) of the Corporate Income Tax Act are satisfied, the exemption should presumptively apply without necessitating proof that the dividend recipient constitutes its beneficial owner.
Second, the decision potentially circumscribes the scope for disputes with tax authorities. In light of this jurisprudential trend, withholding agents may apply the exemption by verifying primarily the formal statutory conditions.
Third, practitioners should maintain cautious optimism. Although judgments favorable to taxpayers now predominate, the case law remains non-uniform. Tax authorities may continue to assert contrary positions, invoking, inter alia, the general anti-avoidance rule codified in Article 22c of the Corporate Income Tax Act, as well as interpretive guidance issued by the Ministry of Finance.
The Factual Matrix
Company R. operates in agricultural production and forms part of a three-tier capital group structure. At the apex sits Company C., whose principal business activity encompasses wholesale and retail distribution of chemical products. The intermediate entity is holding company P., which conducts no operational activities, employs no personnel, is characterized as a head office function, and derives income primarily from interest on deposits.
Company R. intended to distribute dividends to P., which would subsequently remit the received funds to C.—likewise characterized as dividends. In connection with this distribution, R. sought to avail itself of the withholding tax exemption prescribed in Article 22(4) of the Corporate Income Tax Act.
That provision exempts from income tax revenues derived from participation in the profits of legal persons, including dividends, where the following conditions are cumulatively satisfied: the distributing entity is a company having its registered office or management board in the Republic of Poland; the entity receiving dividend income is a company subject to income taxation on its worldwide income in Poland or another EU or EEA Member State, regardless of where such income is generated; the receiving company directly holds not less than 10% of the shares in the distributing company’s capital; and the receiving company does not benefit from an exemption from income taxation on its worldwide income, regardless of source.
The exemption excludes income obtained by a general partner from participation in the profits of a limited partnership or limited joint-stock partnership having its registered office or management board in Poland.
Satisfaction of these conditions permits avoidance of the withholding tax otherwise applicable to intercompany dividend distributions.
Beneficial Ownership and Dividend Distribution
Company R. (distributing dividends to P.) applied to the Director of the National Tax Information for an individual tax ruling on whether the exemption’s application required P. to constitute the beneficial owner of the dividend. The concept of “beneficial owner” denotes an entity that receives proceeds for its own benefit, determines their allocation, bears the economic risk associated with their potential loss, and does not function merely as an intermediary obligated to transfer funds onward.
In the tax authority’s assessment, the exemption under Article 22(4) of the Corporate Income Tax Act applies exclusively to “taxpayers”—that is, entities obtaining permanent economic enrichment. The Director of the National Tax Information concluded that a dividend distribution in which an intermediary entity—such as holding company P., which conducts no operational activities—would likely transfer the received funds further, should not qualify for the withholding tax exemption, as P. does not constitute the beneficial owner of the dividend.
Due Diligence in Dividend Distribution
The Director of the National Tax Information emphasized that a withholding agent distributing dividends bears an obligation to conduct comprehensive verification of the exemption conditions while exercising due diligence. In the authority’s view, “due diligence” under Article 26(1) of the Corporate Income Tax Act encompasses not merely verification of formal requirements but also examination of beneficial ownership status. The authority invoked the exemption’s underlying purpose: it serves to prevent double taxation within capital groups, but only where income accrues to the actual beneficiary rather than being merely passed through.
The Director further observed that in transactions between related parties, heightened verification standards apply, given the withholding agent’s facilitated access to information concerning other group entities. Consequently, even absent explicit enumeration of the beneficial ownership requirement in Article 22(4), such requirement derives—in the authority’s view—from the general due diligence obligation.
The authority nevertheless deemed the company’s position correct regarding the third question: it confirmed that where C. constitutes the beneficial owner of the dividends, R. may apply the exemption pursuant to the so-called look-through approach (discussed in greater detail below).
The Administrative Court Appeal
The taxpayer challenged the Director’s interpretation before the Regional Administrative Court. The Olsztyn court accorded primordial significance to textual interpretation of the statutory provisions. Where Article 22(4), which sets forth the exemption prerequisites, contains no beneficial ownership requirement, such a condition cannot be judicially created through interpretive construction. The rational legislator introduced such a requirement in Article 21(3) of the same statute (concerning interest and royalties) but deliberately omitted it from Article 22(4) (concerning dividends). This differentiation is purposeful and deliberate and cannot be disregarded.
The court cited the Supreme Administrative Court’s position articulated in the judgment of October 9, 2024 (Case No. II FSK 78/22), according to which, given the indisputable absence of any requirement that the dividend recipient possess beneficial owner status, it would be incomprehensible and purposeless to expect the withholding agent to undertake any verification efforts regarding whether such status pertains to the recipient, or that such verification should bear upon the assessment of whether the agent has exercised due diligence.
The court emphasized that a withholding agent’s due diligence consists in verifying the conditions enumerated in Article 22(4)–(6) of the Corporate Income Tax Act, not in examining beneficial ownership status—a requirement the statute does not contemplate in this context. In other words, the withholding agent must ascertain whether the dividend recipient is a tax resident (on the basis of a certificate of residence), whether it holds the requisite shareholding for the appropriate period, and whether it does not benefit from income tax exemption—but need not investigate whether the recipient constitutes the actual beneficiary of the funds.
The Divergence Between Jurisprudence and Administrative Position
The Olsztyn court’s judgment reveals a significant divergence between the predominant administrative court jurisprudence and the position of the Minister of Finance expressed in interpretive guidance issued on July 3, 2025, concerning application of the beneficial ownership clause.
In that guidance, the Minister of Finance expressly states that the Parent-Subsidiary Directive aims at neutrality of profit distribution within the EU, “which applies where the parent company receiving the profit distribution is its beneficial owner.” This position rests on the CJEU judgment of February 26, 2019, in joined cases C-116/16 and C-117/16, wherein the Court indicated that the Directive’s exemption cannot apply where the dividend owner is a company established outside the Union. This means that according to the Minister of Finance, the beneficial ownership condition should be examined even for the dividend exemption under Article 22(4) of the Corporate Income Tax Act—notwithstanding that the provision does not explicitly formulate such a requirement. A similar approach applies to preferences arising from double taxation treaties.
Administrative courts have consistently rejected this position. The Olsztyn court expressly addressed the aforementioned guidance, stating that it “does not constitute a source of law [and] cannot modify, supplement, or in any other manner alter the provisions of enacted tax law.” The Supreme Administrative Court has emphasized in numerous judgments (including II FSK 78/22, II FSK 583/21, II FSK 1277/22, and II FSK 240/21) that where the rational legislator introduced a beneficial ownership requirement in Article 21(3) (interest, royalties) but omitted it from Article 22(4) (dividends), this differentiation is purposeful and cannot be negated through expansive interpretation.
The Content of the Ministry of Finance Guidance
The interpretive guidance of July 3, 2025, constitutes a comprehensive document which—independent of the controversial thesis regarding the obligation to examine beneficial ownership status for dividends—contains several elective mechanisms for withholding agents. Familiarity with these mechanisms proves valuable, as they may facilitate exemption application even within complex holding structures.
The Look-Through Approach
The guidance describes in detail the look-through approach concept, which permits a withholding agent to apply an exemption or reduced tax rate even where the beneficial owner of a payment is not its direct recipient, but receives it through intermediaries. For dividends under the Parent-Subsidiary Directive, each entity in the payment chain should satisfy the conditions of Article 22(4)–(4d) of the Corporate Income Tax Act, including the cascading requirement of direct holding of at least 10% of shares.
Notably, the Director of the National Tax Information confirmed the applicability of this approach in Company R.’s case in the challenged interpretation—deeming the applicant’s position correct regarding the look-through question where Company C. was the beneficial owner.
The Presumption of Beneficial Ownership Satisfaction
The guidance introduces a presumption according to which “examination of the beneficial ownership condition is not necessary with respect to profit distributions subject to at least single taxation within EU borders.” This means that where a dividend paid by a Polish company ultimately reaches shareholders (e.g., natural persons) from whom withholding tax will be collected, the withholding agent may presume the beneficial ownership condition to be satisfied.
Extended Scope of Beneficial Ownership Analysis
In certain cases, where the direct payment recipient is not its beneficial owner but a superior entity (e.g., parent company) satisfies this condition and is established in the same jurisdiction (EU or treaty country), the withholding agent may take into account that superior entity’s characteristics when verifying the beneficial ownership condition.
Practical Significance of the Guidance
The interpretive guidance constitutes general explanations of tax law provisions issued pursuant to Article 14a(1)(2) of the Tax Ordinance. Adherence thereto affords the taxpayer (and withholding agent) the protection provided in Articles 14k–14m of the Tax Ordinance. This means that a withholding agent complying with the guidance—including requirements to examine beneficial ownership status—enjoys legal protection even where administrative courts consistently vacate interpretations premised on that position.
The Supreme Administrative Court Judgment of January 31, 2023: A Contrary Position
It bears noting that contrary authority exists within Supreme Administrative Court jurisprudence. In the judgment of January 31, 2023 (Case No. II FSK 1588/20), the Court held that a withholding agent is obligated to verify the dividend recipient’s status as beneficial owner, invoking the Parent-Subsidiary Directive’s objectives and the necessity of preventing abuse. The Court indicated that it would be unacceptable to maintain that a withholding agent applying the exemption could act without exercising due diligence encompassing examination of beneficiary status. The Court qualified this holding, however, by noting that such verification may occur with due regard for the withholding agent’s capabilities and does not signify an obligation to conduct proceedings equivalent to those undertaken by tax authorities. Although subsequent Supreme Administrative Court judgments have consistently departed from this approach, the divergence has not yet been resolved by a binding resolution.
The Significance for Business Practitioners
The Olsztyn court’s judgment represents yet another decision reinforcing the interpretive approach that circumscribes withholding agents’ verification obligations in dividend distributions. This approach has achieved clear predominance over the past two years—confirmed by Supreme Administrative Court judgments including those of August 13, 2025 (II FSK 1510/22), January 9, 2025 (II FSK 562/22 et seq.), October 9, 2024 (II FSK 78/22), February 1, 2024 (II FSK 583/21), February 8, 2023 (II FSK 1277/22), and April 27, 2021 (II FSK 240/21).
Business practitioners should nevertheless remain cognizant that the jurisprudence is not uniform—judgment II FSK 1588/20 represents a contrary position, and the divergence has not been resolved by binding resolution. Tax authorities may invoke the general anti-avoidance rule (Article 22c of the Corporate Income Tax Act), which permits denial of exemption where its obtainment constituted the transaction’s principal purpose and the conduct was artificial. The Ministry of Finance guidance—although not constituting a source of law—shapes administrative practice and affords legal protection to withholding agents who comply therewith. The Olsztyn case may yet reach the Supreme Administrative Court through cassation appeal, meaning the ultimate resolution remains unsettled.
Practical Conclusions for Business
The practitioner confronts a choice among strategies.
The first approach involves adherence to the administrative court jurisprudence—verifying exclusively the formal conditions under Article 22(4)–(4d), without examining beneficial ownership status. The risk lies in challenge by the tax authority at the audit stage, though with high probability of prevailing in court.
The second approach involves adherence to the Ministry of Finance guidance—examining beneficial ownership status within the due diligence framework, with potential utilization of the look-through mechanism, presumption, or extended subjective scope. The benefit is legal protection under Articles 14k–14m of the Tax Ordinance.
The third, hybrid approach involves documenting satisfaction of formal conditions while gathering information enabling application of the guidance mechanisms (e.g., look-through), thereby securing the withholding agent’s position regardless of the interpretation adopted by the authority.
The practical takeaway for business practitioners is as follows: the Olsztyn court’s judgment and the predominant Supreme Administrative Court jurisprudence constitute significant authority in potential disputes with tax authorities, but do not eliminate the risk of exemption challenge—particularly for holding structures with limited economic substance. Legal awareness, familiarity with available mechanisms, and readiness to effectively contest unfavorable determinations remain essential.
Robert Nogacki is a licensed legal counsel and the founder and managing partner of Kancelaria Prawna Skarbiec, a Warsaw-based law firm providing tax advisory, legal, and strategic services to businesses.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
