New Possibilities for Applying WHT Preferences

Extended Application of WHT Preferences

Alongside the well-known look-through approach, the new guidance outlines two further concepts:

1. Extended scope of beneficial owner (BO) analysis

A preference may now be applied at the level of the immediate recipient of the payment, even if it is unclear whether the payment will be forwarded to the actual beneficial owner.

This is possible if:

• the ultimate beneficial owner (UBO) has the right to claim the payment from the immediate recipient,

• the UBO can independently decide how the payment is used (via the immediate recipient),

• the UBO meets the beneficial owner criteria, and

• both entities have appropriate tax residency.

2. Presumption of BO status in intra-EU/EEA dividend payments

Under the guidance, when dividends are paid between companies based in EU or EEA countries, it is not required to verify BO status if the profit has been taxed at least once within the EU.

This applies to:

• intermediate payments in the chain, or

• final dividend payments to the last company in the structure.

However:

• the presumed BO must still demonstrate their status for refund procedures (i.e. under the pay-and-refund mechanism),

• applying the presumption does not prevent the use of anti-abuse clauses (GAAR), especially when the structure was designed artificially to benefit from the exemption.

What’s next?

These changes may require a review of your current payment chains, dividend structures, and BO documentation. Organizations should prepare for new compliance expectations and potential revisions to how WHT preferences are applied.

Have questions? Contact Adrian Celiński, Legal Counsel and Manager in the CIT team.