The battle between Polish taxpayers, Polish tax authorities, and Polish administrative courts over the look-through approach (LTA) continues and shows no signs of ending.
In one of the latest rulings, the Provincial Administrative Court in Warsaw confirmed that the application of the look-through approach (LTA) is compliant with Polish tax regulations (judgment of January 3, 2025, case no. III SA/Wa 2385/24). This is yet another ruling by Polish tax courts confirming that LTA should apply to dividend, interest, and royalty payments, in line with previous case law (including the judgment of the Supreme Administrative Court of March 11, 2015, case no. II FSK 215/13).
On February 7, 2025, the Director of the National Tax Information issued another individual tax interpretation, denying the right to apply LTA to interest payments made to a Dutch entity with a U.S. ultimate beneficial owner (0111-KDIB1-1.4010.652.2024.1.SG). A similar position was taken in another interpretation published a few days later by the Director of the National Tax Information (case no. 0111-KDIB2-1.4010.647.2024.1.BJ), concerning interest payments to a taxpayer’s shareholder who had arranged financing from external entities for the purpose of conducting an acquisition in Poland.
The interpretations issued by the Director of the National Tax Information contradict not only the almost unanimous stance of Polish administrative courts but also the approach previously taken by the Director of the National Tax Information until 2023.
Who will ultimately win this battle between Polish tax authorities and Polish taxpayers and tax courts? Most likely the latter. However, the cost of this dispute is business uncertainty, as well as a waste of time and money for all parties involved.
A brief explanation of the look-through approach: it is applied in the context of dividend, royalty, and interest payments between taxpayers from different countries. LTA allows for the application of tax preferences (reduced tax rates or exemptions) concerning withholding tax based on the actual beneficial owner of the payment—regardless of whether they are the direct recipient.
If LTA cannot be applied, withholding tax must be fully collected from the payment to a recipient who does not meet the criteria of the actual beneficial owner. In practice, the denial of LTA means that holding structures are exposed to additional tax burdens resulting from the application of standard withholding tax rates.
