Foreign collective management organizations and WHT

One of the issues addressed in the explanatory notes of the Ministry of Finance of July 3, 2025, is the status of collective management organizations for copyright or related rights (hereinafter: CMO). The activities of CMOs consist in the protection of the copyrights and related rights entrusted to them, within the framework of which these organizations collect, manage, and distribute copyright and related remuneration on behalf of creators and performers.

CMOs have independent powers to negotiate and determine the terms of agreements with users of works or related rights, including the amount of remuneration for their exploitation, with the right to collect and distribute it according to the rules established by the CMO. Therefore, they do not act on behalf of and for the benefit of individual creators, but for the entire community, representing their interests as a group along with pursuing their own tasks and objectives.

Collective management organizations cooperate with each other worldwide on the basis of mutual representation agreements in order to grant licenses and collect royalties from users of works and related rights abroad.

As part of their activities, CMOs also transfer royalties to other CMOs, which then redistribute these royalties to specific artists. In connection with the above, the question arose as to how payments from Poland to foreign CMOs should be treated in terms of withholding tax.

So far practice of tax authorities

Until now, the tax authorities have taken the position that if CMOs subsequently transfer the receivables they have received to the relevant artists, there is no permanent, and definitive increase in their assets. Therefore, in the opinion of the tax authorities, they cannot be considered the actual owners of the receivables they receive, and therefore, the withholding tax exemption cannot be applied.

Administrative courts, on the other hand, took a different approach to this issue, allowing in their judgments for the possibility of recognizing foreign CMOs as the actual owners of the receivables.

What has changed in connection with the explanatory notes issued?

According to the explanatory notes in order for an entity receiving receivables to be considered the beneficial owner, the following conditions must be met:

• • it must receive the receivables for its own benefit and bear the economic risk of losing them;
  • it must not be obliged to transfer all or part of the payment to another entity;
  • it must conduct actual economic activity.

According to the explanatory notes, collective management organizations are organizations characterized by a special status, which consists of:

• • independent competence to negotiate and determine the terms of agreements with users of works or related rights, including, in particular, the amount of remuneration;
  • representing the interests of the entire community (rather than individual creators);
  • establishing rules for cooperation and collection of fees from users of works;
  • conducting activities in areas where it is not possible in practice for creators to directly claim remuneration from users, both in the country where the works were created and abroad.

In view of the above, according to the Minister of Finance, it is justified to treat them as the actual owners of the receivables, both in the case of payments to foreign CMOs and in the case of receiving receivables from foreign organizations.

Circumstances examined to verify the condition of actual ownership

When a Polish CMO makes payments to a foreign CMO, it acts as a withholding tax remitter. This obligation arises from income tax laws and means that before transferring the remuneration, the Polish CMO should verify the possibility of applying preferential rates or exemptions under double taxation treaties.

The explanatory notes also refer to the circumstances that a Polish CMO should examine when making payments abroad.

A domestic CMO, acting as a payer of license fees, is required to obtain:

• • the original tax residence certificate or a copy thereof (in cases where this is permitted by the CIT Act and the PIT Act) of the contractor, and
  • a statement by the contractor that it is an entity recognized as a collective management organization for copyrights or related rights abroad in the country of its registered office.

According to the explanations, with regard to payments to foreign CMOs, verification of the conditions for applying tax preferences based on the above list of documents is sufficient to comply with the due diligence obligation. This means that a Polish CMOs is not required to examine the detailed structure of a foreign organization or the method of (re)distribution of remuneration to creators – a statement and a certificate of residence are sufficient.

Summary

In the explanatory notes of July 3, 2025, the Minister of Finance confirmed that collective management organizations may be recognized as the actual owners of receivables for withholding tax purposes. This means that tax preferences can be applied to payments between CMOs, and due diligence in verifying the counterparty includes a certificate of residence and a statement on the status of the CMO.

This is a long-awaited clarification—the status of these organizations has been clearly regulated and the issue has been treated with due detail, facilitating the application of tax preferences and eliminating the risk of double taxation.