Financial Responsibility of Directors for Unpaid Taxes: Article 116 of the Tax Ordinance
This article is a chapter of the ebook „Shielding Directors: A Practical Guide for Foreign Directors of Polish Companies” — see the full table of contents or download the complete ebook (PDF).
If Article 299 of the Commercial Companies Code is severe, board members’ liability for tax arrears under Article 116 of the Tax Ordinance is severe and tireless. Several features distinguish the tax track, and all of them are unfavourable to the director. For a foreign board member, this is usually the largest single exposure in the system — larger, often, than the commercial-debt liability that first drew their attention — because it sweeps in unpaid corporate taxes and social security contributions alike, and because the creditor pursuing it has no discretion to show mercy.
Broader corporate coverage than Article 299
Article 116 reaches the management boards of limited liability companies, joint-stock companies and, since 1 July 2021, simple joint-stock companies — in each case including companies „in organisation” (where, absent a management board, the company’s attorney-in-fact, or even the shareholders, answer instead). The S.A. director who took quiet comfort from the absence of an Article 299 analogue for the joint-stock form finds no comfort here: on the tax track, the corporate form offers no escape hatch. And by Articles 31 and 32 of the Social Insurance System Act, the same regime governs unpaid ZUS social security contributions — in a payroll-heavy business, frequently the fastest-growing arrears of all, accumulating month by month while the board persuades itself the situation is temporary.
An obligated claimant: the tax authority must pursue you
The first structural cruelty of the tax track is that the creditor has no choice. Where an ordinary commercial creditor might weigh the cost of litigation, the strength of a continuing relationship, or the simple time value of money before suing a board member, the tax authority weighs none of these. The Supreme Administrative Court has held that Article 116 obliges the authority to conduct liability proceedings against all persons who may bear responsibility — in practice, all board members; the liability decision is issued against every one of them, and only at the enforcement stage does the authority choose whose assets to reach first (resolution of the Supreme Administrative Court of 9 March 2009, I FPS 4/08). There is, in other words, no negotiation partner with discretion to exercise. The authority does not decide whether to pursue the board. It proceeds.
Temporal scope keyed to payment deadlines, not to assessment
Since 2009, board members answer for arrears in respect of obligations whose payment deadline fell during their period in office (Article 116 § 2). The distinction is not academic. A tax obligation may arise in year one and fall due in year two; it is the year-two board that carries it. More unsettling still, decisions assessing tax for past periods are declaratory — the obligation arose by operation of law during the period to which it relates, and the decision merely ascertains what was already owed. The consequence is that a decision delivered to the company long after a director’s resignation can still found that director’s liability, provided the relevant payment deadlines fell within their tenure (judgment of the Supreme Administrative Court of 25 January 2024, III FSK 3433/21).
The corollary is genuinely disquieting, and our case-law chapter returns to it: a resigned director may bear the consequences of an assessment they had no power to contest, because the decision whether to appeal it belonged to a board they no longer sat on. This is liability for the outcome of a procedural contest one was not permitted to enter — which is precisely why the exit protocol discussed in the protection chapter insists on preserving documentation and securing contractual information rights on departure.
Whole-estate, benefit-blind liability
The liability covers the director’s entire personal assets, jointly and severally with the company and the co-directors, with no cap by reference to remuneration received. Serving without any remuneration changes nothing whatsoever, because the legislature deliberately attached the liability to the function — to the office of management board member — and not to any economic benefit derived from holding it. The purpose, openly stated in the leading commentary literature, is to compel performance of the bankruptcy-filing duty. This is also why a board that filed its bankruptcy petition on time is excused even though the tax creditor ultimately went unpaid: the law is not buying the creditor’s satisfaction, it is buying the director’s timely action.
Ineffective enforcement: formally established, but flexibly proven
Like the civil track, the tax track is subsidiary: the authority must first direct enforcement at the company’s entire estate and exhaust the available methods, and only then may a liability decision against the board issue. But the proof of failure is generously construed in the creditor’s favour. Following the seven-judge resolution of 8 December 2008 (II FPS 6/08), ineffectiveness of enforcement may be established by any legally admissible evidence — a formal decision discontinuing the enforcement proceeding is sufficient, but it is not necessary. Any actions of the enforcement authority that leave no doubt the claim cannot be satisfied from any part of the company’s assets will do (and see, in the same spirit, the judgment of the Supreme Administrative Court of 5 April 2022, III FSK 4880/21). The authorities are, moreover, entitled to assess for themselves when the grounds for the company’s bankruptcy arose; they need no expert opinion to reach that conclusion (judgment of the Provincial Administrative Court in Białystok of 5 October 2020, I SA/Bk 410/20).
The exoneration defences, tax edition
A director escapes liability for tax arrears by demonstrating one of three things: (1)(a) that a bankruptcy petition was filed, or restructuring proceedings were opened, in proper time; or (1)(b) that the failure to file occurred without the director’s fault; or (2) by identifying company assets from which enforcement will satisfy the arrears in significant part.
The third defence is unique to the tax track, and it is narrower than it first sounds. The assets identified must be concrete, actually existing, demonstrably the company’s property rather than a third party’s, and of enforceable value that is „significant” measured against the arrears (judgments of the Supreme Administrative Court of 11 December 2019, II FSK 2089/19, and of 13 May 2020, II FSK 3003/19). The commentary literature concedes that the statutory phrase „significant part” resists precise quantification: a few percent is certainly too little, more than half certainly suffices, and the space between is judicial terrain to be contested case by case. What is clear is that pointing vaguely in the direction of some receivables, or at machinery of contested ownership, achieves nothing at all.
The burden of proof — with one structural mitigation
Formally, the burden of proving the exoneration defences rests on the director. The literature rightly insists, however, that this does not licence the authority to sit back. The authority remains bound by the principle of objective truth (Articles 122 and 187 § 1 of the Tax Ordinance), which obliges it to gather and exhaustively consider the evidence on its own initiative. That duty matters most in exactly the situation the foreign director is likeliest to face: long departed from the company, or locked out of its records by a bankruptcy trustee, with no practical access to the books needed to prove that a petition was timely or that the failure was faultless. A director defending an Article 116 case should invoke this duty early and in writing — because an authority that ignores a director’s evidentiary motions is building, with its own hands, the grounds for the decision’s annulment on appeal.
One quiet anomaly worth knowing
Polish bankruptcy law does not permit a bankruptcy petition where the company has only a single creditor. The case law has drawn the honest conclusion that follows: a board member who could not lawfully have filed cannot be faulted for failing to file, and bears no Article 116 liability on that account (judgment of the Provincial Administrative Court in Wrocław of 17 March 2020, I SA/Wr 768/19). It is a small island of logic that the well-advised director should know exists — and should not overestimate, because a second creditor (the tax office itself, very often) tends to materialise quickly, and with it the filing duty the single-creditor rule had briefly suspended.
The deeper lesson of Article 116 is the lesson of the whole guide, sharpened: the tax authority is the one creditor that must come after the board, with the longest institutional memory and the best enforcement tools in the system. A company quietly financing itself by not remitting VAT or social security contributions is writing its board’s personal liability in monthly instalments. The defences are real but procedural, and the time to secure them is before the arrears exist — a theme developed in full in the 12-point protection programme.
Read the Full Guide
This chapter is part of the ebook „Shielding Directors: Navigating Personal Liability in Times of Financial Turmoil and Insolvency — A Practical Guide for Foreign Directors of Polish Companies.”
This article is general information, not legal advice. © Kancelaria Prawna Skarbiec
Robert Nogacki – radca prawny (WA-9026), założyciel Kancelarii Prawnej Skarbiec.
Są prawnicy, którzy zajmują się prawem. I są tacy, którzy zajmują się problemami, na które prawo nie ma gotowej odpowiedzi. Od ponad dwudziestu lat Kancelaria Skarbiec pracuje na przecięciu prawa podatkowego, struktur korporacyjnych i ludzkiej niechęci do oddawania państwu więcej, niż się państwu należy. Doradzamy przedsiębiorcom z kilkunastu krajów – od tych z listy Forbesa po tych, którym fiskus właśnie zajął konto i którzy nie wiedzą, co robić jutro rano.
Jeden z najczęściej cytowanych ekspertów prawa podatkowego w polskich mediach – pisze dla Rzeczpospolitej, Dziennika Gazety Prawnej i Parkietu nie dlatego, że to dobrze wygląda w CV, lecz dlatego, że pewnych rzeczy nie da się wyjaśnić w piśmie procesowym i ktoś musi je powiedzieć głośno. Autor AI Decoding Satoshi Nakamoto. Sztuczna inteligencja na tropie twórcy Bitcoina. Współautor nagrodzonej książki Bezpieczeństwo współczesnej firmy.
Kancelaria Skarbiec zajmuje czołowe pozycje w rankingach kancelarii podatkowych Dziennika Gazety Prawnej. Czterokrotny laureat Medalu Europejskiego, laureat tytułu International Tax Planning Law Firm of the Year in Poland.
Specjalizuje się w sporach z organami skarbowymi, międzynarodowym planowaniu podatkowym, regulacjach kryptoaktywów i ochronie majątku. Od 2006 roku prowadzi sprawę WGI – jedną z najdłuższych spraw karnych w historii polskiego rynku finansowego, bo są rzeczy, których nie wolno zostawić w połowie, nawet jeśli trwają dwie dekady. Wierzy, że prawo jest zbyt poważne, żeby traktować je wyłącznie poważnie – i że najlepsza porada prawna to ta, dzięki której klient nigdy nie musi stanąć przed sądem.
