Why beneficial ownership by country matters for withholding tax recovery
Beneficial ownership by country has become a decisive issue in cross-border withholding tax (WHT) recovery. A claimant may have a valid tax residence certificate, a treaty rate on paper, and a clear economic expectation of relief. That still may not be enough. Tax authorities increasingly ask whether the claimant was the true party entitled to use and enjoy the income, whether the claimant bore the economic risk, and whether the structure had a commercial purpose beyond treaty access.
This shift reflects a wider policy trend. The Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action 6 minimum standard targets treaty shopping and requires jurisdictions to strengthen tax treaties against inappropriate treaty benefits. The European Union (EU) is moving in the same direction through the Faster and Safer Relief of Excess Withholding Taxes (FASTER) Directive, which aims to make WHT relief faster while giving tax authorities stronger reporting visibility over cross-border investment income.
For institutional investors, the practical point is clear. Beneficial ownership by country is not an abstract tax concept. It is a documentation and evidence control that can decide whether excess WHT is recovered or permanently lost.
The common principles behind country-specific beneficial ownership tests
Most jurisdictions assess beneficial ownership through a similar core lens, but they apply it differently. The claimant usually needs to show that it was resident in the relevant treaty jurisdiction, that it owned or was entitled to the securities or income, and that it was not merely passing the income to another party under a legal, contractual, or practical obligation.
Authorities also test substance. They look at decision-making, economic exposure, financing arrangements, back-to-back flows, securities lending, dividend arbitrage, and the role of intermediaries in the custody chain. The EU Parent-Subsidiary Directive (PSD) illustrates this balance. It seeks to remove WHT friction on qualifying intra-group profit distributions, but its anti-abuse rule targets arrangements that are not genuine and do not reflect economic reality.
That is why a comparative approach matters. Beneficial ownership by country is not a one-size-fits-all checklist. France, Germany, Denmark, the Netherlands, Italy, Spain, Sweden, and Switzerland each apply different pressure points in practice.
Germany: substance, entitlement, and Section 50d(3)
Germany is one of the most demanding markets for beneficial ownership analysis. German WHT relief often turns on Section 50d(3) of the German Income Tax Act (Einkommensteuergesetz, EStG), which acts as an anti-treaty-shopping rule. The Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) published updated guidance in 2025 on entitlement to relief under Section 50d(3), including practical points on dividend WHT relief and the treatment of certain business activity and look-through arguments.
In practice, Germany wants more than proof that the applicant exists and holds shares. The file must usually support the applicant’s personal entitlement, factual entitlement, and non-tax rationale. Holding companies, fund platforms, treasury entities, and multi-tier structures therefore face sharper scrutiny. A claimant that cannot explain its function, control over income, and commercial purpose risks falling into a treaty-shopping analysis.
For investors comparing beneficial ownership by country, Germany stands out because the claim file often needs to prove the structure as much as the dividend.
France: apparent recipient versus beneficial owner
France has placed increasing emphasis on the distinction between the apparent recipient and the beneficial owner. French administrative guidance published in 2026 addresses dividend and assimilated income rules under Article 119 bis A of the French Tax Code, including how French-source dividends can be subject to specific withholding mechanisms and information requirements.
French case law also shows the importance of identifying the correct beneficial owner. In a 2024 French Supreme Court decision, the court considered whether WHT benefits could be denied where the recipient was not the beneficial owner of the income. Commentary on that decision confirms that the French tax administration may challenge treaty or EU relief by testing whether the claimant truly controlled and benefited from the income.
The operational lesson is that French WHT recovery depends on alignment. The claimant, treaty resident, securities holder, income recipient, and beneficial owner should either be the same party or be reconciled through robust evidence. Where a nominee, custodian, fund platform, or intermediate company appears in the chain, the file needs to explain its role before the tax authority asks.
Denmark: transaction tracing and custody-chain proof
Denmark applies a highly evidence-driven approach. The Danish Tax Agency requires a custody account statement showing the shareholder’s shareholding on the dividend resolution date. It may also require the statement to show movements in the shareholding from 6 months before the dividend distribution date to 6 months after that date. If shares were bought or sold during the relevant window, trade documentation may need to be attached. The claim must also state whether the shares were borrowed from or lent to other parties on the dividend resolution date.
This is a powerful example of country-specific beneficial ownership testing in practice. Denmark does not only test the claimant’s residence. It tests the securities position, the timing of ownership, and whether dividend-related trading or lending activity could undermine the claim.
For complex custody chains, Denmark’s standard raises the evidentiary bar. Beneficial ownership by country analysis must therefore include transaction history, not just static ownership records.
The Netherlands: anti-abuse and functional connection
The Netherlands is often seen as a sophisticated treaty jurisdiction, but it is not a light-touch market for abuse analysis. In July 2025, the Dutch Supreme Court issued decisions on the dividend WHT exemption and anti-abuse rules in cross-border holding structures. Commentary on those decisions highlights that a holding company’s broader activity may not be enough if the relevant shareholding is not functionally attributable to that activity.
That distinction matters. A company may have management activity, fees, or personnel, but those facts do not automatically prove that the dividend-generating shareholding belongs to a genuine operating or investment function. The authority may ask whether the specific investment has a real connection to the claimant’s commercial activity.
In a beneficial ownership by country comparison, the Netherlands shows that substance must be relevant, not cosmetic. Investors should avoid assuming that generic operational substance will protect every claim.
Italy: intermediary substance and look-through risk
Italy has taken a more assertive position in dividend WHT beneficial ownership disputes. Recent commentary on Italian Supreme Court case law describes a focus on whether an intermediate entity has substantive business activity, control over the income, and independence from the wider group. In a 2025 decision involving a Danish sub-holding company, the court reportedly denied beneficial owner status where the intermediary lacked sufficient operational structure and independence, and considered a look-through outcome to the ultimate beneficial owner.
The Italian risk profile is therefore not limited to treaty eligibility on paper. The claimant must be the correct claimant. Where an intermediate company has limited personnel,limited decision-making, or a near-automatic flow of funds to another party, Italy may test whether that company was inserted to access a rate that the real investor could not claim directly.
This makes Italy particularly relevant for private equity, holding-company, and fund structures where dividend flows pass through intermediate entities before reaching ultimate investors.
Spain: procedural alignment and claimant consistency
Spain’s WHT reclaim system is procedural, but that does not make beneficial ownership irrelevant. The Spanish Tax Agency states that where a non-resident has borne withholding higher than the tax legally due, the non-resident may request the refund of the excess through Form 210. Form 210 is used for Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes, IRNR) where non-residents obtain Spanish-source income without a permanent establishment.
The key issue is consistency. The refund applicant should be the party that bore the WHT and can support the relevant treaty position. Dividend vouchers, custodian records, residence evidence, and payment details need to tell the same story. Where the beneficial owner differs from the account holder or nominee shown in the chain, the claim should not leave that discrepancy unexplained.
Spain illustrates a practical point in beneficial ownership by country analysis. Even where the law appears administratively straightforward, poor claimant alignment can create avoidable rejection risk.
Sweden: treaty relief tied to the beneficial owner’s residence
Sweden states the beneficial ownership point directly. Dividends paid to non-residents are normally subject to 30% WHT, but a lower rate may apply where a tax convention provides for one between Sweden and the beneficial owner’s country of residence. The Swedish Tax Agency also requires refund claims to include supporting documents such as certificates proving Swedish tax was withheld, a certificate of residence, and a power of attorney where an authorised representative acts.
That wording matters. Sweden does not frame the treaty rate around the administrative account or the custody platform. It ties treaty relief to the beneficial owner’s country of residence. A claimant therefore needs to prove the identity and residence of the party that truly benefits from the dividend.
For pooled funds, nominee arrangements, and multi-investor structures, Sweden can require careful investor-level mapping. The tax authority’s focus remains simple: which beneficial owner is entitled to which treaty rate, and what evidence proves it?
Switzerland: residence-specific forms and refund discipline
Switzerland applies a high statutory WHT rate on investment income, including dividends, through its anticipatory tax system. The Swiss Federal Tax Administration states that anticipatory tax amounts to 35% on investment income in Switzerland. For foreign residents, the refund route is form-driven, and the Administration provides country-specific refund forms for Swiss anticipatory tax on dividends and interest for applicants resident abroad.
Switzerland therefore rewards form discipline. The correct country form, claimant identity, income details, tax voucher, residence confirmation, and banking information must align. A high statutory rate also means errors can be expensive. A failed Swiss claim can leave a significant residual tax cost even where a treaty should reduce the final burden.
Within a beneficial ownership by country framework, Switzerland highlights a different risk. The question is not only whether the claimant qualifies, but whether the claimant used the correct residence-based refund route and supported the claim with complete documentation.
What beneficial ownership by country comparisons reveal
The comparative pattern is clear. Germany focuses on anti-treaty-shopping and entitlement. France distinguishes the apparent recipient from the true beneficial owner. Denmark scrutinises share movements, lending, and custody-chain evidence. The Netherlands tests whether the investment is functionally connected to genuine activity. Italy looks closely at intermediary substance and independence. Spain demands procedural consistency. Sweden ties treaty relief to the beneficial owner’s residence. Switzerland requires strict residence-based refund documentation.
These approaches overlap, but they are not identical. A claim file that works in one jurisdiction may be weak in another. Investors should therefore treat beneficial ownership by country as a filing strategy, not a generic tax label.
At Global Tax Recovery, our work sits in this execution layer. We prepare and reconcile documentation, review tax residency evidence, liaise with custodians and tax authorities, file claims, and track recovery through the reclaim process. That role is becoming more important as authorities use more data, more anti-abuse rules, and more transaction-level checks.
