WHT under the microscope of the authorities

Recently, we have observed a significant tightening of the tax authorities’ approach to withholding tax (WHT) settlements. Market practice indicates an increase in the number of inspections, a more restrictive approach by the authorities, as well as cases of limited evidentiary proceedings and decisions issued without detailed consideration of taxpayers’ arguments. This tightening of the approach is also evident in the opinions issued regarding the application of preferential tax treatment.

At the same time, the responsibility of management board members for the correctness of tax settlements is growing, which is in line with the ongoing work on the amendment to the Tax Ordinance (UC138).

Previously, obtaining an opinion on the application of preferences, preceded by verification of documents and the status of the beneficial owner, was considered a significant safeguard and allowed for the safe application of withholding tax exemptions. However, current practice by tax authorities and administrative court rulings clearly undermine this approach. It is increasingly being pointed out that  an opinion does not replace the tax authority’s independent assessment of whether the exemption conditions have been met and does not preclude subsequent challenge to them in separate evidentiary proceedings.

This is confirmed, among others, by the judgment of the Supreme Administrative Court of 19 February 2026 (II FSK 773/25), in which the court emphasized that formal fulfilment of the conditions (including having an opinion on the application of preferences) is not sufficient if the analysis of all the circumstances indicates a lack of actual economic activity or only an indirect nature of the entity receiving the payment.

From a practical perspective, the significant reduction in the number of opinions issued regarding the application of preferences is also significant. Tax authorities are increasingly refusing to issue them after conducting a detailed analysis of group structures, financial flows, and the status of foreign payment recipients.

In practice, this means that even exercising due diligence and obtaining an opinion on the application of preferences does not eliminate the risk of challenging the right to apply WHT exemptions. This may lead to tax arrears for the payer and, consequently, personal liability for management board members.

Importantly, a similar line of argument may in the future also affect the stability of protection resulting from individual interpretations if the authority finds that the actual course of events differs from the presented factual circumstances.

In these circumstances, WHT-related processes should be viewed not only as an element of ongoing tax compliance but also as a key area of ​​personal liability risk management. Comprehensive verification of beneficial owner status, assessment of the true nature of transactions, and reliable documentation of undertaken actions and due diligence are particularly important.

What is worth doing now?

Companies making cross-border payments should analyze their current WHT procedures, verify the validity of documentation regarding the beneficial owner, and assess whether the scope of actions undertaken meets due diligence requirements. In many cases, it may also be appropriate to review historical settlements and assess the risks associated with previously applied preferences.

Observed trends show that withholding tax is becoming a key area of ​​tax risk management – ​​both at the company and management level. Therefore, it is worth considering withholding tax processes not only as a compliance obligation but also as a means of protecting against potential financial and personal liability.