The withholding tax exemption for dividends (the so-called dividend exemption) has raised significant practical concerns for years. One of the most controversial issues is whether the dividend recipient must be a beneficial owner.
Although tax authorities have long answered this question in the affirmative, the latest case law of administrative courts significantly clarifies this issue – and not necessarily to the tax authorities’ satisfaction.
Dividend exemption – list of statutory conditions
Pursuant to Article 22, Section 4 of the CIT Act, the exemption from withholding tax for dividends applies if certain conditions are met, in particular:
- the payer is a company that is a Polish tax resident,
- the dividend recipient is subject to taxation on all of his/her income in the EU/EEA,
- holds directly at least 10% of the shares continuously for at least two years,
- does not benefit from exemption from all of his income.
Importantly, this provision does not explicitly stipulate the requirement to have the status of beneficial owner.
The approach of the tax authorities: an expansive interpretation
Despite the lack of a clear statutory basis, tax authorities have for years taken the position that the status of the beneficial owner should also be examined when paying dividends.
The tax authorities’ argument was based mainly on the need to prevent abuses and on the analogy with interest and royalties, where the beneficial owner is explicitly required.
Court rulings: no beneficial owner requirement
The case law of administrative courts – in particular the Supreme Administrative Court in its judgments of August 13, 2025 (II FSK 1510/22) and February 3, 2026 (II FSK 674/25) – is increasingly departing from the position of the authorities. In the latter judgment, the court clearly indicated that the condition for applying the exemption under Article 22, Section 4 of the CIT Act is not having the status of the beneficial owner of the dividend
A similar position was previously presented by provincial administrative courts, emphasizing that the list of statutory conditions for tax exemption is closed and it is not permissible to expand it by means of a teleological interpretation.
The beneficial owner is not everything
However, the lack of a beneficial owner requirement does not mean complete freedom.
Courts clearly emphasize the importance of the so-called small anti-abusive clause (Article 22c of the CIT Act). In practice, this means that even if the formal conditions for exemption are met, the exemption may be challenged if the structure is artificial.
The case law indicates criteria such as:
- lack of real economic activity,
- lack of staff and facilities,
- lack of decision-making independence,
- acting as an "intermediary" in the flow of dividends.
If they are met, tax exemption cannot be applied.
Consequently, it is recommended to perform a “two-track” analysis:
- Formal stage – whether the conditions of Article 22, paragraph 4 of the CIT Act have been met
- Anti-abusive stage – is there an artificial structure (Article 22c CIT)
Practical conclusions
From the perspective of taxpayers and WHT payers, several key conclusions can be drawn:
1. Beneficial owner is not a formal condition for exemption
The current case law clearly indicates that dividend exemption cannot be made dependent on the status of the beneficial owner – there is no statutory basis for this.
2. The risk of dispute with the authorities still exists
Tax authorities still often require due diligence on beneficial owners, which means that practice is not yet fully uniform.
3. Economic substance is key
In practice, today the following are more important than the formal status of the beneficial owner:
- actual activity,
- economic justification of the structure,
- actual control over income.
– which must be proven by documents.
Beneficial owner status is not a requirement for benefiting from the dividend exemption under applicable regulations and current case law. However, this does not mean that this issue is completely irrelevant. In practice, it has been "transferred" to the level of anti-abuse and due diligence assessment. As a result, the burden of analysis shifts from formal compliance to assessing the actual nature of the structure – which is often even more demanding
This article is for informational purposes only and does not constitute legal advice.
The law is current as of March 23, 2026.
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