CJEU Ruling in Neo Group - A Landmark Decision on Withholding Tax
On 15 October 2026, the Court of Justice of the European Union (CJEU) issued one of the most eagerly awaited tax law rulings in years. The Neo Group case concerns a fundamental issue - the rules for applying the withholding tax (WHT) exemption to dividends paid to foreign shareholders. Experts openly admit that the decision may significantly complicate the situation of thousands of Polish businesses.
Withholding tax is a levy that Polish companies must deduct when paying dividends to foreign shareholders. Although the EU Parent-Subsidiary Directive (PS Directive) provides for an exemption from this tax in intra-EU relations, the Polish tax authorities have for years approached this exemption with considerable caution. The tax authorities regularly challenge the right of Polish payers to apply the relief, demanding additional evidence confirming the status of the actual recipient of the dividend (the so-called beneficial owner).
The ruling in Neo Group confirms the broad powers of tax authorities to examine whether the recipient of a dividend is the beneficial owner of the funds paid. In practice, this means that meeting the formal conditions of the PS Directive alone may not be enough to benefit from the exemption.
Why will the CJEU ruling make it harder to use the WHT exemption?
Until now, Polish companies paying dividends to foreign shareholders could rely on a relatively clear mechanism - if the conditions of the PS Directive were met (including an appropriate shareholding and holding period), the exemption from withholding tax should apply automatically. The ruling in Neo Group changes this perspective in several key respects:
- Wider scope of verification - tax authorities can examine not only the formal conditions of the exemption, but also the economic rationale of the entire holding structure.
- Anti-abuse clause - the CJEU confirmed that Member States have the right to refuse the exemption if the corporate structure was created mainly to obtain a tax advantage.
- Burden of proof on the taxpayer - in practice, it will be the Polish company paying the dividend that has to show that the transaction has a commercial justification beyond the tax aspect.
- Analysis of the entire ownership chain - the tax authorities may examine where the funds paid ultimately end up and whether the intermediate recipient performs a genuine business function.
As experts point out, including Jacek Wojtach, tax adviser and managing associate at the law firm Tomczykowski Tomczykowska, this ruling is part of a Europe-wide trend of tightening the approach to tax optimisation structures. Polish companies that have so far applied the WHT exemption on the basis of formal conditions should review their structures as soon as possible.
Exit tax under scrutiny - the opinion of the EU Advocate General
In the same week as the ruling in Neo Group, the opinion of the EU Advocate General on the Polish exit tax was also published. This decision concerns a completely different issue, but one that is equally important for Polish entrepreneurs.
Exit tax is a tax imposed on companies and individuals who transfer assets or tax residence outside Poland. Its purpose is to tax unrealised capital gains before the taxpayer leaves the Polish jurisdiction. The Advocate General partly questioned whether the Polish exit tax rules comply with EU law.
It should be stressed that this is for now an opinion, not a binding judgment. However, statistics show that subsequent CJEU rulings most often follow the opinion of the Advocate General. If the Court takes this path, the Polish exit tax rules may need to be amended.
For entrepreneurs planning international expansion or business restructuring, this is a very significant signal. A potential relaxation of the Polish exit tax could make the cross-border transfer of assets within the EU single market easier, although the final shape of the regulations will depend on the CJEU ruling and the possible reaction of the Polish legislator.
What should Polish companies paying dividends abroad do?
Both decisions - the ruling in Neo Group and the opinion on exit tax - show that the legal and tax environment for international corporate structures is changing rapidly. Polish companies with foreign shareholders should take specific action:
Audit of existing structures
First of all, it is worth carrying out a thorough review of the current ownership structure in terms of the economic substance of foreign entities. If the parent company does not conduct genuine business activity in its country of residence, the risk of the WHT exemption being challenged increases significantly. It is crucial to document that the foreign company has real resources - employees, an office and independent management.
Preparing defence documentation
In light of the CJEU ruling, Polish companies should gather documentation confirming the economic justification for the dividend payment and the status of the beneficial owner. This includes, among other things, certificates of residence, beneficial owner status declarations, transfer pricing documentation and value chain analyses within the group. This kind of preparation may prove decisive in the event of a tax audit.
Considering alternative solutions
It is worth considering whether the current corporate structure is optimal under the new legal conditions. With a properly planned structure, it is generally possible to minimise the tax risk associated with dividend payments - for example, by using a family foundation, under which a dividend from a limited liability company (sp. z o.o.) can generally be tax-free. This solution, offered by Global Accounting, combines succession planning with tax optimisation, although each case requires individual analysis.
Consequences for international structures - exit tax and cross-border planning
The Advocate General's opinion on exit tax in turn opens a discussion about the future of cross-border tax planning in Poland. If the CJEU finds the Polish rules partly incompatible with EU law, entrepreneurs will gain a stronger argument in disputes with the tax authorities over the taxation of unrealised gains when transferring assets abroad.
This does not mean, however, that exit tax will be abolished entirely. EU law allows the taxation of unrealised gains on tax emigration, but requires the rules to be proportionate and to respect the principle of freedom of establishment. The Polish rules may need adjustments, for example regarding the deferral of tax payment or the method of valuing the transferred assets.
For companies planning international expansion - whether to the United Kingdom, Dubai or other markets - these decisions mean the need for even more careful planning of the legal and tax structure. Every decision to transfer assets should be preceded by a detailed analysis of the tax consequences in both jurisdictions.
Need an analysis of your structure? Take advantage of a free consultation
The CJEU ruling in Neo Group and the opinion on exit tax are a clear signal: it is time to review international tax structures. If your company pays dividends to foreign shareholders, uses the withholding tax exemption or plans a cross-border restructuring - do not delay a professional risk analysis.
The specialists at Global Accounting, with more than 10 years of experience serving companies with foreign shareholders, will help assess whether your current structure is safe in light of the latest CJEU case law. During a free consultation they will analyse your situation and propose solutions tailored to the new legal conditions.
Call: +48 505 684 412 or write to [email protected] - the first consultation (15 minutes) is free of charge.
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