A management board member of a spółka z ograniczoną odpowiedzialnością (sp. z o.o.), the Polish limited liability company, a prosta spółka akcyjna (PSA), the Polish simple joint-stock company, or a spółka akcyjna (S.A.), the Polish joint-stock company, usually asks whether the form of a capital company protects his or her private assets from the company’s tax debts. It does, until enforcement against the company’s assets proves ineffective. After that, the authority may issue a decision on his or her liability for arrears whose payment deadline expired while he or she held office – also where he or she has long ceased to sit on the management board. However, the 2025 judgments of the Court of Justice of the European Union (CJEU) and the general tax ruling of the Minister of Finance and Economy (Minister Finansów i Gospodarki) of 29 August 2025 have changed the rules of defence: a management board member may challenge the findings of the decision issued to the company, and he or she demonstrates the absence of fault with evidence of diligence. We explain when liability arises, how to defend yourself and what to prepare before the company stops paying.
Subsidiary but personal liability
A management board member is liable for the company’s arrears only after enforcement against its assets has proved ineffective and a decision has been issued against him or her – but then he or she is liable jointly and severally and with all his or her assets.
Article 116 § 1 of the Tax Ordinance (Ordynacja podatkowa) covers management board members of a sp. z o.o., a PSA and an S.A., including companies in organisation. They are liable “jointly and severally with all their assets” (translation by the author), “if enforcement against the company’s assets has proved wholly or partly ineffective”, and the management board member does not demonstrate any of the exonerating conditions. The provision is a specific instance of the rule in Article 107 § 1, under which, in the cases and to the extent provided for in Chapter 15 of the Tax Ordinance, third parties are liable for a taxpayer’s arrears with all their assets, jointly and severally with the taxpayer.
Liability does not arise without the involvement of the authority. The authority rules on it by way of a decision (Article 108 § 1) and, among other things, does not initiate the proceedings before the payment deadline for the liability established has expired or before a decision determining the amount of the tax liability has been served (Article 108 § 2). In an individual tax ruling of 27 August 2026, no. 0114-KDIP4-3.4012.404.2026.3.APR, the Director of the National Revenue Information Service (Dyrektor Krajowej Informacji Skarbowej, the Director of the KIS) assessed the right of a company formed by the conversion of a sole trader to deduct value added tax (VAT). In describing the company’s liability for the sole trader’s arrears (Article 112b), the Director quoted Article 108 § 1: “The tax authority rules on the tax liability of a third party by way of a decision”. The ruling does not concern Article 116, but the provision quoted covers every third party, including a management board member; we discuss liability on a conversion in the article Converting a sole trader into a sp. z o.o. — what actually happens to the tax position.
The authority may argue that the company’s lack of assets is obvious, so further enforcement measures would be unnecessary. This argument is not decisive, because Article 116 § 1 links liability to the outcome of enforcement against the company’s assets, not to a general assessment of its condition. Once you receive a notice of initiation of proceedings, check the case file to see which enforcement measures were taken against the company and with what result.
The office, not the contract – the source of liability
Liability under Article 116 arises from holding the office of management board member, so it is excluded neither by a management contract nor by a contractual allocation of liability.
The provision names as liable “the members of its management board” and links the scope of liability to the period of “their performance of the duties of a management board member” (Article 116 § 1 and § 2). It makes no reference to a contract, a resolution on remuneration or an internal division of powers. In our view, every management board member therefore remains within the scope of the provision, including a member who was not formally in charge of the company’s finances.
The distinction between contractual and statutory liability can be seen in the practice of the Director of the KIS. In an individual tax ruling of 3 September 2026, no. 0114-KDIP1-1.4012.491.2026.1.ESZ, the authority assessed, for VAT purposes, an amended management agreement intended to transfer to the company the liability of a management board member towards third parties. The application stated that, despite this amendment, she would still bear, among other things, liability for the company’s tax arrears under Article 116 of the Tax Ordinance. The authority held the position to be correct and noted: “What remains irrelevant in this context is the liability of the manager arising from mandatory provisions of law […]”, citing the Commercial Companies Code (Kodeks spółek handlowych) as an example. The ruling makes no determination under Article 116, but in our view it confirms the division: the contract shapes the relationship with the company, while liability towards the tax creditor arises from statute.
Do not, therefore, treat contractual clauses or shareholders’ assurances as protection against Article 116. Protection is provided only by the statutory conditions and by the evidence that will allow you to demonstrate them.
Scope: arrears, interest and enforcement costs
You are liable for arrears whose payment deadline expired while you held office, together with default interest and the costs of enforcement proceedings.
Article 116 § 2 covers “tax arrears in respect of liabilities whose payment deadline expired during their performance of the duties of a management board member, and the arrears referred to in Article 52 and Article 52a arising during the performance of the duties of a management board member”. Tax not paid by the payment deadline constitutes arrears, as does a tax advance or tax instalment not paid on time; the rule also applies to receivables not paid over on time by a remitter (Article 51 § 1–3). Article 107 § 2 extends third-party liability to, among other things, default interest on tax arrears and the costs of enforcement proceedings.
What counts is the payment deadline, not the date of an audit or of a decision. The provision provides for no other point of reference, so a dispute over tax for the period of your term of office may end with a decision issued long after you have left the management board.
Scope of a management board member’s liability – what the decision may cover
| Item | What it covers | Time condition | Legal basis |
|---|---|---|---|
| The company’s tax arrears | tax, tax advance or tax instalment not paid by the payment deadline | the payment deadline expired while the member held office | Article 51 § 1–2 and Article 116 § 2 of the Tax Ordinance |
| Receivables owed by the company as a remitter | taxes not collected, and taxes collected but not paid over | as above | Article 51 § 3 and Article 107 § 2(1) of the Tax Ordinance |
| Arrears under Article 52 and Article 52a | the arrears referred to in those provisions | arose while the member held office | Article 116 § 2 of the Tax Ordinance |
| Default interest | interest on tax arrears | on the arrears covered by the decision | Article 107 § 2(2) of the Tax Ordinance |
| Enforcement costs | costs of enforcement proceedings | as above | Article 107 § 2(4) of the Tax Ordinance |
| Former management board member | the same rules as for a serving member | the period in which he or she held office | Article 116 § 4 of the Tax Ordinance |
Hypothetical example. A management board member held office until 15 February 2026. The company did not pay VAT for December 2025 or for January 2026. Under monthly settlement, the tax is paid by the 25th day of the month following the month in which the tax became chargeable (Article 103(1) of the VAT Act (ustawa o VAT)). The payment deadline for December therefore expired in January 2026, while the member held office, and the deadline for January expired on 25 February 2026, after he or she had left. The December arrears fall within the scope of his or her liability; the January arrears – provided the other conditions are met – are borne by the persons sitting on the management board on 25 February 2026.
Exonerating conditions: bankruptcy, restructuring, absence of fault, the company’s assets
The burden of proof lies with the management board member: he or she will avoid liability if he or she demonstrates one of the conditions in Article 116 § 1(1) or indicates the company’s assets in the manner specified in point 2.
The first condition is demonstrating that “a bankruptcy petition was filed at the appropriate time or restructuring proceedings were opened at that time”, or that an arrangement was approved in arrangement approval proceedings (Article 116 § 1(1)(a)). The second – that “the failure to file a bankruptcy petition occurred through no fault on his or her part” (point (b)). The third – indicating the company’s assets “enforcement against which will make it possible to satisfy the company’s tax arrears to a substantial extent” (point 2). Article 116 § 1a conclusively establishes the absence of fault where the obligation to file the petition arose and existed exclusively during enforcement conducted by way of compulsory administration or by way of sale of the enterprise under the provisions of the Code of Civil Procedure (Kodeks postępowania cywilnego).
In our view, the “appropriate time” is determined by the time limit under bankruptcy law. Article 21(1) of the Act – Bankruptcy Law (Prawo upadłościowe) requires the debtor to file a bankruptcy petition (wniosek o ogłoszenie upadłości) with the court no later than thirty days from the date on which the grounds for declaring bankruptcy arose. This obligation rests on anyone who has the right to manage the company’s affairs and to represent it, alone or jointly with other persons (Article 21(2)). The Minister of Finance and Economy treats the “appropriate time” as an objective condition, determined on the basis of the factual circumstances of each case.
In its judgment of 30 April 2025, Genzyński, C-278/24, ECLI:EU:C:2025:299, the Court of Justice held that Article 273 of Directive 2006/112/EC does not preclude such a mechanism of joint and several liability for VAT arrears, provided that, in order to demonstrate the absence of fault, the management board member is able effectively to rely on having exercised all the diligence required in conducting the affairs of the company concerned. The Court added that, for that purpose, he or she cannot merely argue that, at the time when permanent insolvency was established, the State Treasury was that company’s sole creditor. The Minister of Finance and Economy expressed this standard as follows: “A management board member has the right to demonstrate that he or she is not at fault for failing to file the company’s bankruptcy petition on time if objective obstacles stood in his or her way which he or she could not remedy while exercising the due diligence to be expected of a management board member”.
The authority may argue that a difficult market situation, counterparties’ promises of payment or the absence of other creditors do not constitute an objective obstacle. After the Genzyński judgment, the “sole creditor” argument is indeed not sufficient on its own. So prepare evidence of diligence: liquidity analyses, correspondence with financing parties, a recovery plan with dates and a description of its outcome. When indicating the company’s assets, give specific items, their location and their value – the provision requires the arrears to be satisfied “to a substantial extent”, not to any extent whatsoever.
The Adjak judgment: the right to call into question the findings of the decision issued to the company
A management board member is not a party to the company’s assessment proceedings, but in the proceedings concerning his or her own liability he or she may effectively call into question the findings of fact and the legal classifications in the decision issued to the company – and this applies to every tax.
In its judgment of 27 February 2025, Adjak, C-277/24, ECLI:EU:C:2025:130, the Court of Justice held that Article 273 of Directive 2006/112/EC, read in conjunction with Article 325(1) of the Treaty on the Functioning of the European Union, the rights of the defence and the principle of proportionality, does not preclude rules under which a person who may be held jointly and severally liable cannot be a party to the assessment proceedings against the company. The condition, however, is that, in the proceedings against that person, he or she is able “effectively to call into question the findings of fact and the legal classifications made by the tax authority in the context of the first set of proceedings, and to have access to the file of the tax authority” – while respecting the rights of the company or of other third parties.
General tax ruling no. DTS2.8012.5.2025 of 29 August 2025 carries these requirements over into the practice of the authorities. Its key sentence reads: “An assessment decision addressed to the company may, in proceedings concerning the liability of a management board member, constitute only evidence of the circumstances established in it, and the possibility of adducing counter-evidence in that respect must not be excluded”. The Minister extended this interpretation beyond VAT: it is “appropriate in every case, irrespective of the tax in which the company’s tax arrears arose”. The right of access to the case file of the assessment proceedings “is not absolute in nature” and covers the extent necessary to call into question the findings on which the existence and amount of the liability depend. The Minister allows access to be refused on grounds of the public interest and also of the rights of the company and of third parties, in particular trade secrets.
The authority may rely on the finality of the final decision issued to the company. The Minister’s own position is that the management board member’s right of defence does not infringe that principle, and that successfully challenging the findings does not automatically lead to the decision issued to the company being called into question. This does not, however, change the status of that decision in your case: it is evidence against which you may present counter-evidence under the general rules (Article 188 of the Tax Ordinance).
The defence takes place “primarily in the evidentiary stage of the proceedings concerning his or her liability”. So, already at first instance, state which findings of the assessment decision you are challenging and with what evidence, and file an application for access to the company’s case file to that extent, stating which finding each document is needed to call into question.
Management board documentation – evidence gathered before a crisis
A defence under Article 116 is built while you hold office; years later, without access to the company’s documents, the exonerating conditions usually can no longer be demonstrated.
The provision shifts to the management board member the burden of demonstrating the conditions – it refers to a member who “has not demonstrated” the exonerating circumstances and “does not indicate” the company’s assets (Article 116 § 1). Access to the company’s case file in liability proceedings is limited to the extent necessary, and a former management board member usually no longer has sight of the company’s current documentation. Evidence therefore has to be gathered before it is needed.
We recommend a minimum standard of management board documentation:
- a monthly schedule of the payment deadlines and payments of the company’s taxes, including receivables owed as a remitter, signed by the person responsible and dated;
- a management board resolution assessing whether grounds for declaring bankruptcy have arisen, adopted without delay after the first persistent delays in payments, together with an opinion of a restructuring advisor or a lawyer;
- proof of filing a bankruptcy petition, an application to open restructuring proceedings or an application for approval of an arrangement, showing the date;
- where it is decided not to file a petition – a description of the reasons and of the remedial measures, with a timetable, which will later make it possible to demonstrate diligence;
- a list of the company’s assets suitable for enforcement, updated on every material change.
Keep copies of these documents in a manner consistent with your duty of confidentiality towards the company. The authority may claim that management board documents are one-sided. That is why their date and source matter – a report from the accounting system and minutes drawn up on the day of the decision carry different weight from explanations written after the proceedings have been initiated.
Fiscal penal liability – a separate track
A decision under Article 116 does not close the matter: proceedings under the Fiscal Penal Code (Kodeks karny skarbowy, KKS) may run in parallel, in which the personal liability of the perpetrator of a prohibited act is assessed.
The two paths have different conditions and different means of defence. In proceedings under Article 116 you defend yourself with the exonerating conditions and by calling the assessment decision into question; in a fiscal penal case, one of the tools is voluntary disclosure (czynny żal) under Article 16 of the Fiscal Penal Code. The Ministry of Finance (Ministerstwo Finansów) describes it as notifying the authority of the commission of a prohibited act, stating its material circumstances, combined with payment of the depleted receivable if the act consisted in depleting it. The notification is ineffective if it was submitted “at a time when the prosecuting authority already had clearly documented knowledge of the commission of a fiscal offence or fiscal petty offence” or “after the prosecuting authority has commenced an official activity, in particular a search, a verification activity or an audit”. It is submitted in writing, including in electronic form, or orally for the record.
Time therefore works against the management board member. If you detect an irregularity in the company’s settlements, decide on a correction, payment and any notification before the authority takes action. The notification is submitted by the perpetrator of the act, so where the management board has several members, assess the need to submit it individually, with the involvement of defence counsel.
The most common mistake
The most common mistake is the belief that resigning from office ends liability for the company’s taxes.
Article 116 § 4 states expressly: “The provisions of § 1–3 also apply to a former management board member […]”. Read together with § 2, this means that a former management board member is liable for arrears whose payment deadline expired during his or her term of office. This also applies where enforcement against the company and the decision on his or her liability fall in a period when he or she has long had no connection with it. The only thing a resignation changes is that you are not answerable for liabilities whose payment deadline expires after you leave.
The consequence can be severe, because resignations are often submitted at the moment the company stops paying – that is, at the stage when a decision has to be taken on a bankruptcy petition or a restructuring application. Anyone who leaves without that decision and without documents later loses the ability to demonstrate the exonerating conditions.
Before you resign, establish the status of the arrears and payment deadlines, ensure that the management board adopts a resolution on a bankruptcy petition or on opening restructuring proceedings, and secure copies of the documents. If, years later, you receive a notice of initiation of proceedings, use the rights confirmed after the Adjak judgment: access to the case file and counter-evidence against the findings of the decision issued to the company.
Summary
- Check every month whether the company pays its taxes and the receivables owed as a remitter on time – you are liable for arrears whose payment deadline expired while you held office (Article 116 § 2 of the Tax Ordinance).
- Document in a management board resolution the assessment of the grounds for declaring bankruptcy or for opening restructuring proceedings, and the date on which the application was filed – this is evidence of the condition in Article 116 § 1(1).
- Secure copies of the documents before leaving the management board – resignation does not extinguish liability for the period of your term of office (Article 116 § 4).
- In the proceedings concerning your liability, challenge the findings of the decision issued to the company and demand access to the case file to the extent necessary – as against you, the assessment decision is only evidence.
- Consider voluntary disclosure under Article 16 of the Fiscal Penal Code without delay once an irregularity is detected – before the authority begins official activities.
Sources cited
All quotations from Polish-language sources — statutes, tax rulings and court judgments — are given here in the author's translation; the Polish wording is authoritative.
- General tax ruling no. DTS2.8012.5.2025 of the Minister of Finance and Economy of 29 August 2025 on the application of Article 116 of the Act – Tax Ordinance in connection with the judgments of the Court of Justice of the European Union of 27 February 2025 in Case C-277/24 (Adjak) and of 30 April 2025 in Case C-278/24 (Genzyński) (Dz.Urz. Ministra Finansów i Gospodarki z 2025 r. poz. 10) – in proceedings concerning the liability of a management board member, an assessment decision issued to the company is solely evidence, against which counter-evidence may be adduced; the management board member is entitled to access to the case file to the extent necessary; the interpretation applies to all taxes. https://www.gov.pl/web/finanse/interpretacja-ogolna-nr-dts2801252025-ministra-finansow-i-gospodarki
- Judgment of the Court of Justice of 27 February 2025, Adjak, C-277/24, ECLI:EU:C:2025:130 – Article 273 of Directive 2006/112/EC does not preclude a situation in which a person who may be held jointly and severally liable is not a party to the assessment proceedings against the company, provided that, in the proceedings against that person, he or she can effectively call into question the findings of fact and the legal classifications of the first proceedings and have access to the case file of those proceedings, while respecting the rights of the company or of other third parties. https://curia.europa.eu/juris/liste.jsf?num=C-277/24&language=PL
- Judgment of the Court of Justice of 30 April 2025, Genzyński, C-278/24, ECLI:EU:C:2025:299 – joint and several liability of a management board member or former management board member for VAT arrears, subject to exonerating conditions, is permissible if he or she can demonstrate the absence of fault by having exercised all diligence; it is not sufficient to rely on the fact that the State Treasury was the sole creditor. https://curia.europa.eu/juris/liste.jsf?num=C-278/24&language=PL
- Individual tax ruling of the Director of the National Revenue Information Service of 3 September 2026, no. 0114-KDIP1-1.4012.491.2026.1.ESZ – activities of a management board member performed under a management agreement that transfers liability towards third parties to the company will not constitute business activity carried out independently for VAT purposes; the statutory liability of a management board member (in the description of the case, among other things, under Article 116 of the Tax Ordinance) is irrelevant to that assessment. https://eureka.mf.gov.pl/informacje/podglad/708738
- Individual tax ruling of the Director of the National Revenue Information Service of 27 August 2026, no. 0114-KDIP4-3.4012.404.2026.3.APR – the right to deduct VAT on invoices issued after the date of the conversion of a sole trader into a single-shareholder sp. z o.o. but bearing the details of the sole trader being converted (the applicant’s position held to be incorrect); in its reasoning, the authority quotes Article 112b and Article 108 § 1 of the Tax Ordinance on the liability of that company for the sole trader’s arrears. https://eureka.mf.gov.pl/informacje/podglad/706709
- Ministry of Finance, “Electronic voluntary disclosure” (Elektroniczny czynny żal), gov.pl website – the nature of voluntary disclosure under Article 16 of the Fiscal Penal Code, the obligation to pay the depleted receivable and the cases in which the notification is ineffective. https://www.gov.pl/web/gov/elektroniczny-czynny-zal
- Ministry of Finance announcement of 13 October 2021 “e-Voluntary disclosure in fiscal penal cases still possible and effective” (e-Czynny żal w sprawach karno-skarbowych wciąż możliwy i skuteczny) – the notification is submitted in writing, including in electronic form, or orally for the record. https://www.gov.pl/web/finanse/e-czynny-zal-w-sprawach-karno-skarbowych-wciaz-mozliwy-i-skuteczny
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As a tax advisor I take care of the substantive quality of our free materials. My aim is to educate the market through reliable analyses that allow entrepreneurs to apply the law safely in practice.
Get in touch →Legal basis: Act of 29 August 1997 – Tax Ordinance (consolidated text: Dz.U. z 2026 r. poz. 622, as amended): Article 51 § 1–3, Article 52, Article 52a, Article 107 § 1 and § 2, Article 108 § 1 and § 2, Article 112b, Article 116 § 1, § 1a, § 2 and § 4, Article 188; Act of 10 September 1999 – Fiscal Penal Code (consolidated text: Dz.U. z 2025 r. poz. 633, as amended): Article 16; Act of 11 March 2004 on the tax on goods and services (consolidated text: Dz.U. z 2025 r. poz. 775, as amended): Article 15(3)(3), Article 103(1); Act of 15 May 2015 – Restructuring Law: to the extent referred to in Article 116 § 1(1)(a) of the Tax Ordinance; Act – Bankruptcy Law: Article 21(1) and (2); Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1, as amended): Article 273; Treaty on the Functioning of the European Union: Article 325(1).