Look-Through Approach (LTA) in WHT – A Favourable Interpretation for Taxpayers in the Latest Polish Guidelines

What is the Look-Through Approach (LTA)?

The look-through approach allows the application of WHT relief even when the ultimate beneficial owner (BO) receives the payment indirectly — through intermediary entities.

In practice, this means that if interest or royalty payments pass through holding structures before reaching the BO, WHT preferences may still apply — as long as the nature of the payment (e.g. interest) remains unchanged throughout the chain.

LTA under EU Directives

Although EU directives (such as the Parent-Subsidiary and Interest & Royalties Directives) require direct shareholding for tax exemptions, the Polish guidelines allow for a cascade holding structure – where each entity in the chain holds the required stake in the distributing company.

For dividend payments:

• The beneficial owner must be an EU/EEA tax resident, or

• The dividend must be taxed at least once in an EU/EEA country.

For interest and royalty payments:

• Effective taxation must be confirmed at each level in the ownership chain, up to the BO.

LTA and Double Tax Treaties (DTTs)

When applying DTTs, beneficial ownership must always be verified — regardless of whether the treaty explicitly requires it.

In the case of dividend relief, the applicability of LTA depends on the treaty’s language and whether it permits indirect shareholding (as opposed to requiring a direct stake).

Conclusion

The look-through approach, now formally acknowledged by Polish tax authorities, provides greater flexibility for multinational structures. However, the use of LTA requires careful analysis of payment flows, tax residency, and treaty terms to ensure compliance and mitigate risk.