New Guidelines from the Polish Ministry of Finance: Verification of the Beneficial Owner in WHT Settlements
The Polish Ministry of Finance has issued updated tax guidelines outlining the obligations of payers of withholding tax (WHT) with regard to verifying beneficial ownership. The clarification impacts how documentation should be assessed and what level of due diligence is expected—both in related and unrelated party transactions.
The latest tax clarifications issued by the Ministry of Finance provide detailed instructions on verifying beneficial ownership in the context of applying withholding tax exemptions or reduced rates.
Key takeaways include:
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In transactions with related parties, obtaining a certificate of residence and a beneficial owner declaration is not sufficient. The payer is expected to assess additional documentation, such as financial statements, contracts, and group structure details, to verify eligibility for WHT preferences.
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In cases involving unrelated parties, reliance on a certificate of residence and a beneficial ownership statement is generally acceptable. However, the tax authorities retain the right to challenge this status based on other available evidence, which may result in denial of the tax preference.
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For so-called “technical payers” (e.g. investment firms), the list of documents requiring verification depends on the taxpayer’s status and the nature of the applied tax preference. These payers are responsible for comparing declarations with official registry data and financial reports.
A positive development is the Ministry’s clarification regarding the expected level of due diligence for unrelated parties. At the same time, it emphasizes the need for a formal verification of documentation, which can prove challenging in practice—particularly if contractors provide incomplete or incorrect residence certificates.
In transactions with related entities, the burden remains on the payer to determine the appropriate scope of verification. Unfortunately, this element of discretion may lead to uncertainty and potential disputes.
Given the updated guidelines, we strongly recommend reviewing your current WHT compliance procedures. Should you require support, our expert team is ready to assist.