Liability of Directors of Foreign Companies for Tax Obligations in Poland

Liability of Directors of Foreign Companies for Tax Obligations in Poland

2026.09.19 Author: Robert Nogacki

Polish tax law permits the arrears of a legal person to be transferred, by administrative decision, onto the personal assets of the members of its managing body. Whether that mechanism reaches the directors of companies formed under foreign law has divided the Supreme Administrative Court (Naczelny Sąd Administracyjny): an earlier line of authority, running from 2017 to July 2023, answered in the affirmative; a more recent line, consistent since October 2023, answers in the negative, subject to a qualification concerning companies with a seat or branch in Poland. This Article examines the statutory basis of the dispute in Articles 116 and 116a of the Tax Ordinance, the reasoning of both lines, the application of the exculpatory grounds to a foreign entity, the procedural prerequisites reshaped by the judgments of the Court of Justice in Adjak and Genzyński, and the distinct position of social security contributions. It concludes that the liability of directors of foreign companies is, at present, primarily a question of legal basis rather than of fact, and that the answer differs according to whether the company operates from abroad, maintains a Polish branch, or is in fact managed from Poland.

 

Introduction

A Czech s.r.o. had neither a permanent establishment nor a branch in Poland. It operated from the Czech Republic and was registered in Poland for value added tax purposes only. For February 2015 it received a VAT refund of PLN 8,716; in October 2016 it received a decision declaring the refund undue and assessing a further PLN 553,931 under Article 108 of the VAT Act. The company did not pay, and the head of the tax office issued a decision imposing joint and several liability on its sole executive director. That case (III FSK 1597/21) and five others, in which the company was a British Ltd, an entity seated in Estonia, a Cypriot Ltd and two further Czech companies, have shaped the present state of the law. The liability of directors of foreign companies for Polish tax obligations is neither settled nor excluded: it turns on which of two lines of authority the adjudicating panel adopts, on whether the company has a branch in Poland, and on whether the creditor is the tax office or the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS).

This firm has previously examined the position of a foreign national who joins the board of a Polish company, in its analysis of board member liability under the laws of Poland, and the circumstances in which a foreign company managed from Poland becomes a Polish taxpayer. The present Article reverses the perspective: it concerns the director of a company governed by foreign law whose Polish arrears the authority seeks to recover from the director personally.

 

The Statutory Framework: Articles 116 and 116a of the Tax Ordinance

A. A Closed Catalogue of Third Parties

The Tax Ordinance (Ordynacja podatkowa) contains a closed catalogue of third parties who answer for another’s tax debt (Article 107 § 1). The personal liability of directors for tax obligations of a Polish limited liability company, joint-stock company or simple joint-stock company (prosta spółka akcyjna) arises under Article 116: it attaches where enforcement against the company’s assets has proved ineffective in whole or in part, extends to arrears whose payment deadline fell during the director’s tenure, and yields to the exculpatory grounds of a timely insolvency petition, the opening of restructuring proceedings, the absence of fault, and the identification of company assets. Article 116a, in force since 1 January 2003, extends that construction to “other legal persons”: the members of their managing bodies are jointly and severally liable for their arrears, and Article 116 applies mutatis mutandis. The explanatory memorandum to the 2002 amendment mentioned foundations, associations and cooperatives. It said nothing of companies governed by foreign law, and that silence is the axis of the entire dispute.

 

The Tax Ordinance does not define a legal person. The Civil Code (Kodeks cywilny), in Article 33, recognises as legal persons the State Treasury and those organisational units to which specific Polish statutes confer legal personality. The Private International Law Act (Prawo prywatne międzynarodowe), in Article 17, subjects a legal person to the law of the state of its seat or, where that law so provides, of its formation, and refers to that law the question of its legal nature. Which of these definitions is read into Article 116a determines whether the director of a Ltd in London, an OÜ in Tallinn or a Ltd in Nicosia is a third party within the meaning of the Ordinance. Third-party liability is an exception to the principle that each debtor answers for its own obligations, and exceptions are not construed expansively; that argument recurs, in one form or another, in every judgment discussed below. The interaction of Polish public law with the conflict-of-laws rules is examined more broadly in this firm’s essay on private international law.

 

C. The Source of a Foreign Company’s Polish Arrears

Before the question under Article 116a arises at all, the foreign company must have Polish arrears. In the six judgments discussed below the source was VAT: companies registered in Poland for that tax but conducting their business abroad. A second source, more frequent among smaller entities, is Polish tax residence of a company in fact managed from Poland, or a permanent establishment in Poland; for VAT purposes the analogous question is whether the company has a fixed establishment here. Such arrears arise by operation of law, long before the first letter from the authority, and the director typically learns of them together with the summons.

 

Two Lines of Authority in the Supreme Administrative Court

For six years the Court answered uniformly in the affirmative. The judgments of 25 April 2017 (I FSK 1665/15), 9 July 2020 (II FSK 1029/20) and 18 May 2021 (III FSK 3392/21) held that the notion of a legal person in Article 116 refers only to Polish companies, whereas an “other legal person” under Article 116a embraces any entity that satisfies the conditions for recognition as a legal person, whether Polish or foreign. In 2023 three further judgments confirmed that view: of 25 January 2023 (III FSK 1597/21, a Czech s.r.o.), of 22 June 2023 (III FSK 2206/21, a British Ltd) and of 4 July 2023 (III FSK 3216/21, a company seated in Estonia; a parallel judgment, III FSK 2972/21, was delivered the same day). All are available in the Central Database of Administrative Court Decisions.

The reasoning of this line rests on three pillars. First, the status of a foreign entity is assessed not under the Civil Code but under the connecting factors of Article 17 of the Private International Law Act; a company that is a legal person in its home state is, it follows, a legal person for the purposes of the Polish Ordinance. Second, a company performing taxable transactions in Poland becomes a taxpayer within the meaning of Article 7 § 1 of the Ordinance and Article 15 of the VAT Act, and a taxpayer that is not a natural person can only be a legal person or an organisational unit without legal personality. Third, an argument from equality: the director of a foreign company would escape a liability that the board member of a Polish company would bear on identical facts, to the detriment of competition (so, expressly, III FSK 3216/21). In the Estonian case the Court added that the authority itself had verified the company’s legal personality upon its VAT registration, on the basis of its articles and a sworn translation of the register extract; it could hardly maintain thereafter that it did not know with whom it was dealing. For this line, the liability of directors of foreign companies is an ordinary instance of Article 116a, and the dispute concerns only the prerequisites.

 

B. The Restrictive Line: Numerus Clausus and Private International Law

The turn came on 10 October 2023. The judgment in III FSK 2767/21 agreed that the status of a foreign company is assessed under the Private International Law Act, but drew the opposite conclusion. Article 17(3)(8) of that Act subjects the liability of shareholders and members for the obligations of a legal person to the law of the state of its seat; the Polish Article 116a could therefore reach the director of a foreign company only as an overriding mandatory provision within the meaning of Article 8(1) of the Act, a classification which, as the Court cautioned, ought not to be adopted lightly.

Two weeks later, on 25 October 2023, the Court stated the position expressly (III FSK 174/22, III FSK 840/22, III FSK 841/22 and, in the case of a Cypriot company, III FSK 173/23), and then repeated it on 29 November 2023 (III FSK 3768/21, a British company) and on 19 January 2024 (III FSK 3731/21, a Czech company): Article 116a in conjunction with Article 116 does not extend to the members of the governing bodies of entities formed and operating under a legal system other than the Polish one, and a foreign company that has neither a seat nor a branch in Poland is not an “other legal person” within the meaning of that provision. The reasoning is coherent. Article 116a refers to a legal person within the meaning of Article 33 of the Civil Code, that is, to an entity on which Polish statutes have conferred personality. The 2002 explanatory memorandum spoke of Polish foundations and associations. Since the legislature in 2021 found it necessary to add the simple joint-stock company to Article 116 by express amendment, the catalogue must be closed, for otherwise that company would have fallen within Article 116a without any amendment. Extending the provision to an indeterminate class of foreign entities would open a catalogue which Article 107 § 1 closes. Liability for another’s debt rests on strict, at times formal, prerequisites, which may not be enlarged by interpretation.

The change of view engaged the same judges: the presiding judge of the panel which, on 22 June 2023, set aside a judgment favourable to the director of a British Ltd was, six months later, the judge rapporteur in two judgments of the restrictive line. That is a change of opinion, not an accident of composition. Scholarship has moved in the same direction: an article published in 2025 in Analizy i Studia CASP, a journal of the SGH Warsaw School of Economics, regards the application of Article 116a to foreign companies as inadmissible de lege lata, and, according to a summary published by INFOR, the judgment of 26 March 2025 (III FSK 1386/24) upheld the restrictive line, adding that Articles 116 and 116a are not overriding mandatory provisions. Since October 2023 this firm is not aware of any judgment of the Supreme Administrative Court that has returned to the affirmative line.

 

C. The Consequences of the Divergence for the Director of a Ltd, an OÜ or an s.r.o.

No resolution of the Court binding all of its panels has been adopted, and a case may still come before a panel inclined to revert to the affirmative line. The tax authorities, for their part, have not taken cognisance of the restrictive line: they continue to issue decisions under Article 116a and to defend them on cassation. A simple order of defence follows. The objection that the provision affords no legal basis is raised first, before the authority itself and with a full argument drawn from the Private International Law Act and the legislative history, rather than for the first time before the court. In parallel, the defence on the prerequisites of Article 116 is prepared, since if the panel adopts the affirmative line that defence alone will remain. Subsidiarily, the principle that doubts as to the content of the law are resolved in favour of the taxpayer (Article 2a of the Ordinance) may be invoked: in the Cypriot case the Provincial Administrative Court in Warsaw held that even on the authority’s reading, that principle would require the conclusion that there were insufficient grounds to burden the director of a company which the statute does not expressly name. The liability of directors of foreign companies is thus, at present, a dispute about legal basis first and about facts second.

 

IV. The Branch Qualification and the Company Managed from Poland

The holdings of the restrictive line are not unconditional, and the liability of directors of foreign companies with a Polish branch differs from that of companies without one. The holdings speak of a foreign company having neither a seat nor a branch in Poland, and III FSK 3731/21 emphasises that the ruling concerns companies without a branch in Poland. In the reasoning the branch criterion played no independent part, as a commentary on III FSK 2767/21 published on the UMCS journals platform observes, yet the reservation is not accidental. A foreign company with a Polish branch may fall within Polish insolvency jurisdiction, in which event the grounds for bankruptcy, including the “proper time” for the petition, can be assessed under Polish law. In its guide for foreign directors this firm described the judgment of 19 January 2024 (III FSK 580/23), concerning the Polish branch of a Maltese company, in which liability was transferred to the foreign company’s management on Polish terms. The director of a company which maintains a branch of a foreign company in Poland should therefore not rely on the restrictive line.

A third situation, the most important for the readers of this Article, remains: a company without a branch which is in fact managed from Poland. The six judgments concerned companies operating from abroad whose only link with Poland was VAT registration. An authority which concludes that the company has its management in Poland may be expected to argue that it also has its seat here within the meaning of private international law, and its centre of main interests within the meaning of Regulation (EU) 2015/848 on insolvency proceedings, so that the reservation in the restrictive holdings is satisfied. Whether a court would accept that argument is unknown, since no such case has yet reached the Supreme Administrative Court. A cautious assessment is that the restrictive line is a real line of defence for the director of a company genuinely operating abroad, while for the director of a letterbox company run from a Warsaw flat it is an argument rather than a shield.

 

V. The Application of Article 116 Mutatis Mutandis to a Foreign Company

If the panel accepts that Article 116a reaches the foreign company, a second stage begins: the application of Article 116 mutatis mutandis. That phrase may mean application without modification, with modification, or not at all, according to whether a given condition can be reconciled with the situation of a foreign entity. The Court itself, in III FSK 2206/21, acknowledged that this part of the analysis had not yet been thought through and remitted it to the court of first instance. It is here that the extent of the liability of directors of foreign companies is decided in a concrete case. Four points warrant attention.

  1. The identity of the managing body. For a British Ltd it is the director recorded at Companies House, for an Estonian OÜ the juhatuse liige, for a Czech s.r.o. the jednatel; in III FSK 1597/21 the authority established the mandate from an extract of the Czech commercial register. An American LLC raises a prior question, namely whether it is a legal person at all, on which depends whether Article 116a is engaged or nothing is. Resignation must be proved by a document the authority will accept: in III FSK 2206/21 an uncertified photocopy of a declaration accepting the resignation did not suffice, and the liability of a former director extends to the period of de facto management, not merely to the period of registration. Persons managing without a mandate are the subject of this firm’s analysis of shadow directors.
  2. The futility of enforcement. The authority must attempt enforcement, including abroad: within the Union under Directive 2010/24/EU on mutual assistance for the recovery of tax claims, and vis-à-vis the United Kingdom under the protocol on mutual assistance for the recovery of claims annexed to the 2020 Trade and Cooperation Agreement. The director is entitled to require the authority to demonstrate what it did in the state of the company’s seat before turning to the director’s own assets; the manner in which futility is established, and the service of the enforcement title as a precondition of valid seizure, are examined in this firm’s analysis of the derivative liability of corporate officers.
  3. The insolvency petition in proper time. Under which law? In the British case (III FSK 2206/21) the Court accepted that the company had no capacity to be declared bankrupt under Polish law and that British law governed the petition; the court of first instance in III FSK 3768/21 added that jurisdiction is determined by Regulation 2015/848 and the debtor’s centre of main interests. For a company managed from Poland the conclusion is arguably unexpected: if that centre is in Poland, the petition belongs before a Polish court, and a director who in good faith filed it in London or in Tallinn may be told that it was filed in the wrong place. The Regulation applies to any debtor whose centre of main interests lies within the Union, and thus also to a British company managed from Poland; Brexit changed only the automatic recognition of Polish proceedings in the United Kingdom. A person managing a foreign company from Poland ought to assess insolvency under both legal orders and, in case of doubt, file where the risk of rejection is lower, documenting the reasons for the choice. The Polish framework is described in this firm’s overview of insolvency law in Poland.
  4. Absence of fault and identification of assets. The judgment of the Court of Justice of 30 April 2025 in Genzyński (C‑278/24) held that the Polish mechanism is compatible with Union law only because the presumption of fault is rebuttable: the board member must have a genuine opportunity to show that the diligence required in conducting the company’s affairs was observed, and the mere emergence of a VAT liability does not of itself mean that the time for an insolvency petition has arrived. The Court at the same time rejected the proposition that the director of a company whose sole creditor is the State Treasury is for that reason free of liability; the filing of the petition suffices, and its fate is immaterial. For the director of a foreign company the evidence of diligence lies in the documents of the director’s own legal order: accounts filed with the register, professional advice, correspondence with the authorities of the state of the seat, resolutions on the financial position. The identification of company assets operates also where the assets are situated abroad, provided they are specific and attainable in enforcement. The defensive strategies and exculpatory grounds available to board members generally are discussed elsewhere on this site.

 

VI. Procedural Prerequisites and Temporal Limits

Proceedings concerning the liability of directors of foreign companies are subject to the same barriers as proceedings against the board of a Polish company, but each of them operates differently across a border. A decision imposing third-party liability requires the prior service on the company of a decision determining the amount of the obligation (Article 108 § 2(2)(a) of the Ordinance), save for arrears declared in returns for which an enforcement title has been issued (Article 108 § 3) and for obligations arising after the company’s liquidation (Article 116 § 2a). Service on a company struck from a foreign register is impossible until the company is restored to the register under the law of the state of its seat, for which, in England, a creditor may also apply. The liability decision may be issued within five years from the end of the year in which the arrears arose (Article 118 § 1), and the obligation it creates becomes time-barred three years after the end of the year in which the decision was served (Article 118 § 2). The computation of those periods is governed by the general rules on the statute of limitations for tax obligations and on their tolling and interruption, and the question whether a board member is liable for statute-barred obligations of the company is treated in a separate analysis. In III FSK 3731/21 the court of first instance noted a further point: the notice of suspension of the limitation period on account of fiscal penal proceedings had been served on the company’s former finance director rather than on the company, so that no suspension had occurred.

The judgment of the Court of Justice of 27 February 2025 in Adjak (C‑277/24) altered the balance in the second set of proceedings. The director need not be a party to the assessment proceedings against the company, but in the proceedings concerning the director’s own liability must have access to the file of those proceedings and a genuine opportunity to challenge the findings of fact and the legal classifications on which the arrears rest. The Minister of Finance confirmed as much in a general interpretation of 29 August 2025 (DTS2.8012.5.2025). For the director of a foreign company this is frequently the only occasion on which the existence of a Polish obligation can be contested at all: whether the company had a permanent establishment or tax residence in Poland, and whether its transactions were subject to Polish VAT. The judgment does not, however, reopen concluded cases of its own force: a director who did not contest the findings against the company in the liability proceedings will not obtain reopening merely because the Court of Justice has spoken (so the Supreme Administrative Court in its judgment of 10 December 2025, III FSK 832/25, discussed at the XI Toruń Review of Tax Case Law in March 2026). The avenues of challenge are described in this firm’s analyses of the tax decision and of appeals to the administrative courts.

 

Social Security Contributions: the Same Divergence, Different Rules

Article 31 of the Social Insurance System Act (ustawa o systemie ubezpieczeń społecznych) refers to Articles 116 and 116a of the Ordinance, so that the liability of directors of foreign companies for the contributions of persons who worked for them in Poland begins with the same question about the “other legal person”. The remaining rules, however, differ, and to the director’s disadvantage. First, ZUS need not first issue a decision against the company: Article 31 does not refer to Article 108 § 2, and the Supreme Court (Sąd Najwyższy), in a resolution of seven judges of 15 October 2009 (I UZP 3/09), held that a board member is liable for contributions even where the decision is issued after the company has been struck from the register. Second, the obligation arising from a contribution decision becomes time-barred five years after the end of the year of its issue (Article 24(5d) of the Act), not three. Third, an appeal against a ZUS decision lies to the ordinary courts, not the administrative courts, and the line of the Supreme Administrative Court binds neither the ordinary courts nor the Supreme Court; this firm is not aware of any pronouncement of the Supreme Court on Article 116a in relation to foreign companies, so the outcome is here less predictable than in tax. The practical conclusion is that, for a foreign company which paid people in Poland, contributions are often the greater exposure, since neither the barrier of Article 108 § 2 nor the striking off of the company protects against them.

 

Beyond the Tax Ordinance: Fiscal Penal Liability and the Law of the Seat

The dispute over Article 116a does not end the matter, since the liability of directors of foreign companies is not confined to the Tax Ordinance. The person who conducts the economic affairs of the company is criminally answerable for its Polish obligations (Article 9 § 3 of the Fiscal Penal Code, Kodeks karny skarbowy), whatever the register in which the company is entered; the typical charge is tax evasion or the filing of an inaccurate return, and the instrument of “active repentance” (czynny żal) is worth knowing before it is needed. Conversely, Article 299 of the Commercial Companies Code (Kodeks spółek handlowych) has no application to a foreign company; the civil liability of its director for the company’s debts is governed by the law of the state of the seat (Article 17(3)(8) of the Private International Law Act), for instance by the British rules on wrongful trading. The Polish model against which the authorities measure the director’s position is described in this firm’s analysis of piercing the corporate shield.

 

Practical Considerations for the Director of a Foreign Company with a Polish Nexus

  1. Establish whether the company has any Polish arrears at all: VAT registration, a permanent establishment, management in Poland. Without them Article 116a has nothing to transfer.
  2. Determine whether the company has a branch in Poland. If it does, the restrictive line will not assist.
  3. Assess insolvency under the law of the seat and under Polish law, and file any petition where the centre of main interests lies; document the choice.
  4. Preserve evidence of diligence within the company’s own legal order: accounts, advice, correspondence with authorities.
  5. Answer the authority’s first letter with a full objection to the legal basis under Article 116a and, simultaneously, a request for access to the file of the company’s case.
  6. Contest the company’s obligation itself in the liability proceedings, since Adjak confers that right and an omission cannot later be cured by an application for reopening.
  7. Compute the time limits of Article 118 of the Ordinance and Article 24 of the Social Insurance System Act separately for taxes and for contributions.

 

Conclusion

The liability of directors of foreign companies for tax obligations in Poland presently depends on three determinations. Whether a foreign company is an “other legal person” under Article 116a: since October 2023 the Supreme Administrative Court has answered that it is not, though without a binding resolution and against the practice of the authorities. Whether the company has a branch or a centre of management in Poland: if so, the answer tends towards the affirmative. Whether the creditor is the tax office or ZUS: in the field of contributions the safeguards are fewer. Adjak and Genzyński have supplied directors with instruments of defence, but only to those who deploy them in the first proceedings. For the director of a foreign-law company who has received a summons, a notice of the initiation of proceedings or a decision from Poland, the first step is not a conversation but a review of the company’s documents and of the authority’s letter; conclusions on which the director’s personal assets depend are made in writing, and in these cases the outcome is frequently determined by what was said in the first submission.