Tax Explanations of the Minister of Finance from 3 July 2025: Withholding Tax (WHT) and Holding Companies – What Is Changing?

Previous Practice Regarding Withholding Tax Preferences for Holding Companies

Until now, it has been common practice of the Lublin Tax Office, in proceedings concerning the issuance of opinions on the application of withholding tax preferences or the consideration of refund requests under the pay & refund procedure, to assert that a holding company does not possess sufficient material and human resources to be considered as conducting genuine economic activity. Consequently, such entities were not recognized as the beneficial owners of the income they received.

Unfortunately, the result of this approach was that the authority often refused to issue an opinion allowing the application of withholding tax preferences on dividends paid to such holding companies, or denied a refund of withholding tax already withheld and remitted by the payer on dividends paid to a holding company.

Asset and Personnel Base in a Holding Company According to the Tax Explanations

According to the tax explanations published by the Ministry of Finance on 3 July 2025, the requirement to possess an asset and personnel base in the case of holding companies generally refers to having appropriately experienced staff who are genuinely involved in the company’s operations, possess sufficient expertise, and have access to adequate office equipment. An exception applies only where other circumstances indicate the absence of such a base.

This means that the tax authority cannot reasonably expect a holding company to own real estate, vehicles, or machinery, nor to employ a large number of staff.

The Condition of Receiving Income for One’s Own Benefit – Example Concerning a Holding Company

The tax explanations also address the situation of holding companies in the context of fulfilling the condition of receiving a given payment for one’s own benefit and the absence of any obligation to pass on all or part of that payment to another entity.

In Example No. 1 of the explanations, it is indicated that even if a holding company possesses an adequate asset and personnel base allowing it to conduct genuine business activity related to the payment in question, if publicly available documents show that in previous years the holding company did not exercise economic control over the dividends received (i.e., it did not generate profit from investing the dividends but merely transferred them onward in the same amount as received), then in order to recognize the holding company as the beneficial owner, further verification should be carried out — for example, by obtaining a declaration from the company confirming that it will act as the beneficial owner of the planned payment.

Moreover, if in previous years the company submitted such declarations but still failed to exercise economic control, such a declaration alone is no longer sufficient, and the scope of verification should be expanded. Unfortunately, the example does not specify what this additional verification should entail.

Important Reservation Regarding the Anti-Abuse Clause – Article 22c of the CIT Act

In the tax explanations published on 3 July 2025, a very important reservation was introduced — one that holding companies, in particular, should pay close attention to.

Specifically, even if a taxpayer acts in accordance with the example provided in the tax explanations, this does not automatically guarantee protection in the event of a tax audit. The tax authority retains the right to examine the conditions of the anti-abuse clause under Article 22c of the CIT Act. If the authority determines that the company’s actions were artificial — that artificial structures were created solely to benefit from the withholding tax exemption — it may deny the taxpayer the right to apply the exemption.

How Can Holding Companies Make Use of the Issued Tax Explanations?

A holding company can take advantage of the publication of the tax explanations in several ways.

First, if a taxpayer or withholding agent complies with the tax explanations during a given period, they are granted the protective effect provided for in Articles 14k–14m of the Tax Ordinance Act.

Furthermore, a holding company (or, more precisely, the withholding agent paying dividends to the holding company) has the right to apply to the Lublin Tax Office — the authority competent in matters concerning withholding tax collected on income earned in Poland by non-residents — for an opinion on the application of withholding tax preferences. Considering the content of the tax explanations, particularly those relating to the required asset and personnel base of the beneficial owner, there is now a genuine possibility of obtaining such an opinion.

Thirdly, if withholding tax has been collected on dividend payments to a holding company, it is possible to submit an application to the Lublin Tax Office under the pay & refund procedure (or, in certain cases, under the general overpayment procedure) to recover the withheld or paid tax.

In light of the above, the issued tax explanations should be assessed very positively. They will bring tangible benefits to taxpayers — particularly to holding companies, which until now have been in a very difficult position regarding the withholding tax on dividends paid to them from Poland.