Administrative courts challenge Ministry of Finance guidance on WHT
After many years of preparatory work, on 3 July 2025 the Polish Minister of Finance issued long-awaited tax guidance on the beneficial owner clause in withholding tax (WHT). The guidance introduces a number of taxpayer-friendly concepts that may simplify WHT settlements and reduce interpretative uncertainty, including the so-called look-through approach.
One of the concepts presented is the notion of “cascading shareholding”. Under this approach, the requirement of direct shareholding may be deemed satisfied where each entity in the ownership chain meets this condition in relation to the next entity, rather than directly in relation to the original payer of the income.
However, the practical effectiveness of the guidance depends on its application by tax authorities and administrative courts. In this context, concerns have been raised following the judgment of the Voivodship Administrative Court (WSA) in Lublin of 22 October 2025 (case no. I SA/Lu 350/25). The Court held that:
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tax guidance is not legally binding,
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it does not apply to factual situations preceding its issuance,
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the concept of cascading shareholding cannot be accepted.
The position taken by the WSA gives rise to the risk that the long-awaited Ministry of Finance guidance, intended to reduce uncertainty for taxpayers, may not meet expectations if it is not consistently applied by tax authorities and administrative courts.
We will continue to monitor further tax rulings and court judgments to assess how the guidance will be reflected in the practice of other courts and authorities. We also remain available to support clients in assessing the impact of the guidance and current case law on WHT matters, including the availability of exemptions or reduced withholding tax rates.