Recurring Non-Monetary Contributions by Shareholders as a Vehicle for Social Security Avoidance

2026-01-18

This article examines the increasingly prevalent practice of utilizing Article 176 of the Polish Commercial Companies Code (Kodeks spółek handlowych, hereinafter “KSH”) as a mechanism for circumventing mandatory social security contributions. While this provision was originally designed to facilitate periodic non-monetary contributions by shareholders within a corporate framework, recent years have witnessed its systematic exploitation as a vehicle for what amounts to disguised employment relationships. Through comprehensive analysis of emerging jurisprudence from Polish appellate courts and the Supreme Administrative Court, this article delineates the boundaries between legitimate corporate arrangements and impermissible avoidance schemes, offering practitioners a framework for assessing the legal risks associated with such structures.

Further reading: ZUS Optimization via Tokens in Poland: Innovation or Legal Risk?

I. Introduction

Article 176 of the Polish Commercial Companies Code, which governs recurring non-monetary contributions (powtarzające się świadczenia niepieniężne) by shareholders of limited liability companies (spółka z ograniczoną odpowiedzialnością), has historically occupied a marginal position in Polish corporate practice. The provision’s original ratio legis was relatively modest: to enable shareholders—particularly in family-owned enterprises or companies built upon the founders’ personal expertise—to render services to the company through a mechanism formally distinct from employment contracts or civil law agreements, while preserving the essentially corporate character of such obligations.

This landscape has undergone a dramatic transformation in recent years. Article 176 KSH has emerged as the subject of intense scrutiny, primarily due to its perceived utility as an instrument for optimizing social security burdens. Compensation disbursed to shareholders pursuant to this provision does not constitute a basis for mandatory social insurance coverage under Article 6 of the Act on the Social Insurance System (ustawa o systemie ubezpieczeń społecznych), as the statutory catalogue of insurance titles is exhaustive and does not encompass corporate contributions of this nature.

The identification of this apparent “gap” in the social security framework has precipitated a proliferation of legal structures whose genuine objective is not the utilization of the distinctive characteristics of the shareholder-company corporate relationship, but rather the avoidance of contribution obligations with respect to remuneration paid to individuals who are, in substance, performing dependent labor or rendering services. The response from social insurance authorities, and subsequently from the courts, has given rise to a reasonably coherent jurisprudential framework that demarcates the boundaries of permissible reliance upon Article 176 KSH.

It bears noting that the principal decisions of the Supreme Administrative Court shaping this jurisprudential line — the judgment of January 18, 2024 (II GSK 677/23) and the judgment of August 27, 2024 (II GSK 500/24) — were rendered in cases concerning individual interpretations with respect to the obligation of health insurance coverage (ubezpieczenie zdrowotne) under Article 66 of the Act of August 27, 2004 on Healthcare Services Financed from Public Funds (ustawa o świadczeniach opieki zdrowotnej finansowanych ze środków publicznych), rather than social insurance contributions (składki na ubezpieczenia społeczne) within the meaning of the Social Insurance System Act. Both judgments resolved cassation appeals against decisions of the President of the National Health Fund (Prezes Narodowego Funduszu Zdrowia), not the Social Insurance Institution (Zakład Ubezpieczeń Społecznych). This procedural circumstance does not, however, diminish the analytical value of the criteria developed therein for evaluating “social insurance optimization” structures in the broader sense. The tests of periodicity, corporate character, and functional distinctness from the day-to-day administration of company affairs are of universal application and will govern irrespective of whether the dispute at issue concerns health insurance premiums or social insurance contributions. This follows from the fact that in both regimes, the legal classification of the relationship between the shareholder and the company proceeds according to identical substantive-law criteria — the determinative question is whether the shareholder performs obligations under Article 176 KSH or, in substance, executes a contract for services (umowa o świadczenie usług) within the meaning of Article 750 of the Civil Code, which constitutes an insurable title under both the social insurance and the health insurance frameworks.

This article endeavors to systematize the criteria developed through case law and to analyze the thresholds beyond which structures predicated upon Article 176 KSH will be characterized as circumvention of law within the meaning of Article 58 § 1 of the Polish Civil Code (Kodeks cywilny).

II. The Normative Architecture of Article 176 KSH

A. Essential Elements of the Provision

Pursuant to Article 176 § 1 KSH, where a shareholder is to be obligated to render recurring non-monetary contributions, the articles of association must specify the nature and scope of such contributions. The provision thus imposes two cumulative requirements concerning the subject matter of the contribution: it must be (1) recurring in character and (2) non-monetary in nature.

The requirement of “recurrence” constitutes the pivotal structural element of the institution and simultaneously represents the principal axis of contention in the context of attempts at its instrumental exploitation. Commercial law doctrine has consistently interpreted this requirement as denoting periodicity—that is, contributions rendered at intervals—thereby distinguishing such contributions from both one-time performances and those of a continuous or permanent character.

As the Supreme Administrative Court (Naczelny Sąd Administracyjny) aptly observed in its judgment of August 27, 2024 (Case No. II GSK 500/24), continuous performance has been excluded from the substantive scope of Article 176 KSH. Continuous performances are those requiring the obligor’s constant conduct within the framework of the obligational relationship. Importantly, continuity does not invariably denote an uninterrupted state or the absence of discrete activities—it obtains equally where the obligor’s psychophysical acts, though separated in time, constitute a functional whole.

This characterization warrants doctrinal elaboration, for the Supreme Administrative Court did not confine itself to a casuistic rejection of a particular catalogue of services — it exposed a structural defect in any arrangement whereby shareholders who simultaneously serve as members of the management board purport to “transfer” their managerial obligations into the regime of Article 176 CCC.

The point of departure is a question that, amid the fervor of contribution optimization, is seldom posed in explicit terms: what, precisely, is the nature of a contribution under Article 176 CCC in relation to a shareholder’s other obligations toward the company? Article 176(1) employs the concept of an obligation on the part of a shareholder to perform services “for the benefit of the company” — that is to say, services that constitute a conferral of benefit upon the company. The notion of conferral presupposes, as a matter of elementary logic, that the company receives something it would not otherwise receive absent the obligation in question. This is a threshold condition: where a given course of conduct on the part of the shareholder already flows from a separate legal basis, its reiteration in the articles of association under the rubric of Article 176 does not give rise to any new obligation. It is a declaration of what already exists.

In the configuration where a shareholder simultaneously holds the office of management board member, that “separate legal basis” is Article 201(1) CCC: the management board conducts the affairs of the company and represents it. The scope of this duty is broad and — critically — indeterminate. The conduct of a company’s affairs encompasses the undertaking of all factual and legal acts connected with the company’s activity that are not reserved to the competence of other corporate organs. In a typical small operating company, this means that virtually every act of a managerial, organizational, or administrative character falls within the purview of Article 201.

The consequence is unforgiving. Where a shareholder who is also a board member “undertakes” pursuant to Article 176 to represent the company at meetings with counterparties, to verify orders, to supervise documentation, or to organize logistics, that shareholder undertakes to do something to which he or she is already bound by virtue of appointment to the board. The articles of association, insofar as they invoke Article 176, do not create any new obligational relationship in this regard. They create merely a new legal characterization — or, more precisely, a new label — for an existing duty. The company receives nothing beyond that to which it is already entitled.

It is here that the fundamental constructional error emerges — one that the Supreme Administrative Court correctly, if not expressis verbis, identified. Article 176 CCC is an attributive provision: it attaches the obligation to perform services to the share, not to the person of the shareholder (Section 1 in fine: “the articles of association shall specify the type and scope of such services”). The obligation arising under Article 201, by contrast, is an attribute of office in a corporate organ, not of participation in the share capital. These are two distinct legal regimes that cannot be superimposed upon one another without forfeiting the normative identity of each. If the substance of the contribution under Article 176 is identical to the substance of the duty under Article 201, then either Article 176 is devoid of content (for it creates no new obligation) or Article 201 is superfluous (for the duty already flows from the articles of association). Neither conclusion is admissible within the framework of rational systemic interpretation.

The point may be stated with still greater force. Article 176 presupposes that the shareholder renders something to the company qua shareholder — not qua officeholder. The remuneration provided for under Article 176(2) is the quid pro quo for this additional engagement of the shareholder-as-equity-holder. Where the shareholder simultaneously serves as a management board member and “performs” under Article 176 precisely what he or she carries out by virtue of the board mandate, the remuneration under Article 176(2) becomes, in substance, concealed compensation for service on the management board — albeit disbursed under a regime that does not generate a health insurance contribution. This is not a shareholder’s contribution for the benefit of the company. It is board member remuneration in disguise.

The Supreme Administrative Court was therefore correct to hold that the shareholders “neither ‘give’ nor ‘do’ anything for the benefit of the enterprise, but merely perform acts amounting to the day-to-day operation of the company, ensuring its proper functioning.” This sentence, ostensibly descriptive, carries precise normative content: where there is no conferral of benefit exceeding an existing duty, there is no contribution within the meaning of Article 176 — regardless of what the articles of association may provide.

What emerges from the judgment, accordingly, is a test of functional distinctness: in any configuration where a shareholder simultaneously holds office on the management board, a contribution under Article 176 CCC must pertain to activities that a board member is not obligated to perform by virtue of that office alone. Formal separation in the articles of association does not suffice — the substance must concern something other than the conduct of the company’s affairs and its representation. Something that the shareholder brings to the company by reason of particular competencies, qualifications, or resources, and that exceeds what the company may expect of its board.

[Methodological note. The analysis above, examining the normative relationship between Article 176 KSH and Article 201(1) KSH, constitutes the author’s doctrinal commentary and extends beyond the express ratio decidendi of judgment II GSK 500/24. In its reasoning, the Supreme Administrative Court confined itself to endorsing the position of the President of the National Health Fund that the activities enumerated in the application “amount to nothing other than the performance of typical factual acts associated with the conduct of the company’s internal affairs” and that their scope “overlaps with the scope of activities performed in the course of the shareholders’ functions within the company.” The Court did not, however, undertake an independent analysis of the normative relationship between obligations arising under Article 176 and the management board’s competencies under Article 201. The elaboration presented below — including the proposed test of functional distinctness — represents an attempt at doctrinal explication of what the judgment implies but does not articulate, and a proposal for the operationalization of a criterion that the Supreme Administrative Court approved only at the level of outcome (the rejection of specific activities), rather than at the level of a formalized legal test.]

B. The Corporate Character of the Obligation

It admits of no doubt that the civil law relationship established between shareholder and company pursuant to Article 176 § 1 KSH possesses a corporate foundation and represents, by design, an exceptional arrangement. This exceptional character is signaled by the very drafting of the provision, which employs the conditional formulation “where a shareholder is to be obligated”—a construction that implies both the facultative nature and the particularity of such an arrangement of the company relationship.

The obligation to render recurring non-monetary contributions constitutes an additional duty of the shareholder—beyond the obligation to make capital contributions—that must be expressly provided for in the articles of association. It thus represents a supplementary manifestation of the shareholder’s cooperation within the framework of the obligation, arising from the company agreement, to pursue the common objective.

The corporate character of this obligation bears fundamental significance for assessing the permissibility of utilizing Article 176 KSH. As the Supreme Administrative Court emphasized in its judgment of January 18, 2024 (Case No. II GSK 677/23), shareholder obligations defined in agreements concluded pursuant to Article 176 KSH must be corporate obligations and may under no circumstances be treated as interchangeable with duties qualitatively corresponding to employment—that is, the performance of permanent functions within the company.

C. Shareholder Compensation

Article 176 § 2 KSH provides that compensation to the shareholder for contributions rendered to the company shall be paid by the company even where the financial statements do not disclose a profit. Such compensation may not exceed prices or rates prevailing in the market.

This provision, on one hand, guarantees the shareholder’s entitlement to compensation irrespective of the company’s financial condition (thereby distinguishing this institution from dividend distributions), while on the other hand introducing a safeguard mechanism against the extraction of funds from the company under the guise of compensation for contributions—the limitation to “prices or rates prevailing in the market” is designed to prevent the establishment of compensation disconnected from the market value of the contribution.

III. Mechanisms of Abuse of the Article 176 KSH Institution

A. Taxonomy of Optimization Structures

Commercial practice has developed several fundamental models for utilizing Article 176 KSH for purposes of contribution optimization. These may be systematized according to the criterion of the “aggressiveness” of the structure:

The employment relationship substitution model involves the transformation of an existing employment relationship into a corporate relationship. The employee becomes a shareholder of a company (frequently a single-member company), and former employment duties are “repackaged” as recurring non-monetary contributions. The actual character of the work remains unchanged—the same individual, at the same location, performs the same activities, albeit formally as a shareholder fulfilling contributions under Article 176 KSH.

The artificial concurrence of titles model contemplates the conclusion by the same individual of two or more agreements with affiliated entities, whereby one agreement (for a lower amount) constitutes the basis for social security contributions, while the principal portion of compensation is disbursed as a contribution under Article 176 KSH. This structure echoes mechanisms previously employed in attempts at optimization through the multiplication of mandate contracts (umowy zlecenia).

The mass “corporatization” of employment model represents the most organized form of abuse. It involves the systematic establishment of companies for individuals who are in fact performing dependent labor (frequently foreign nationals), the introduction into articles of association of provisions concerning contributions under Article 176 KSH that correspond in content to employment duties, and the subsequent disbursement of compensation formally characterized as corporate contributions. This model is characterized by a high degree of standardization (identical templates for articles of association, common accounting services, shared registered office addresses) and central coordination by the entity orchestrating the entire undertaking.

B. Common Features of Abusive Structures

Analysis of the jurisprudence permits identification of features common to structures deemed to constitute abuse of the Article 176 KSH institution:

First, the contributions specified in the articles of association are in reality continuous or permanent in character, rather than periodic. The shareholder remains in constant availability, performing activities in a manner corresponding to employment rather than the fulfillment of distinct, temporally identifiable contributions.

Second, the scope of contributions corresponds to typical employment or contractor duties, rather than to the shareholder’s particular competencies deployed for the company’s benefit within the framework of a corporate relationship.

Third, the beneficiary of the contributions is not in substance the company itself, but rather its clients or counterparties. The shareholder performs activities for the benefit of third parties, with the company serving merely as an intermediary in the flow of compensation.

Fourth, the shareholder exercises no genuine influence over the company’s operations, does not participate in corporate decision-making, and frequently lacks even awareness of the legal character of the structure in which they participate.

Fifth, the company conducts no actual business activity beyond “servicing” contributions under Article 176 KSH—it has no other clients, employees, or productive assets.

IV. The Position of the Jurisprudence

A. The Criterion of Periodicity of Contributions

The criterion of periodicity of contributions bears fundamental significance for assessing the permissibility of utilizing Article 176 KSH. The jurisprudence consistently indicates that “recurrence” of activities means that they may be clearly located in time as activities separated by the shareholder’s release from all psychophysical activity.

In its judgment of September 28, 2023 (Case No. II GSK 1810/22), the Supreme Administrative Court held that the architecture of Article 176 KSH requires periodicity of shareholder activity. The provision, through its requirement of “scope” in the agreement, demands predictability as to the units of time that the shareholder’s activity will require. The quantity of performances rendered within a single relationship may likewise affect the loss by the contribution of its character as a recurring contribution and the acquisition of the character of continuity.

The Warsaw-Praga District Court (Sąd Okręgowy Warszawa-Praga), in its judgment of July 1, 2025 (Case No. VII U 946/24), analyzing a structure contemplating the performance by shareholders of 100-110 taxi passenger transport trips monthly, held that such contributions possess a continuous and permanent character—one that does not fall within the purview of Article 176 § 1 KSH. The scope, nature, and volume of work, in conjunction with the company’s business activity, indicated that the shareholders’ duties were tasks of a service character, characteristic of contracts for the provision of services.

The President of the National Health Fund, in the decision that was subsequently subjected to cassation review in case II GSK 500/24, held that the minimum frequency of activities defined by reference to the formula “at least” (co najmniej) — such as “at least once per week,” “at least once per month,” or “at least once per quarter” — entails that such activities may be performed even daily and without temporal limitation, thus rendering them continuous in character. The Supreme Administrative Court endorsed this assessment, finding the agency’s position to be free from legal error. Although this proposition was not formulated by the adjudicating panel as an independent interpretive rule, its approval within the framework of cassation review lends it considerable argumentative weight in the practice of applying Article 176 KSH.

B. The Criterion of the Beneficiary of Contributions

A significant criterion for assessment is the determination of who constitutes the actual beneficiary of the shareholder’s contributions. The Warsaw District Court (Sąd Okręgowy w Warszawie), in its judgment of March 14, 2024 (Case No. XXI U 1708/23), indicated that while the performance of activities stricte for the company’s benefit might be permissible within the framework of Article 176 KSH (for example, the preparation of legal opinions in matters directly concerning the company), the performance of such activities for the company’s clients constitutes the fulfillment of a mandate that does not fall within the boundaries of contributions described in Article 176 KSH.

The court illustrated this distinction instructively: the preparation by a shareholder of an application for a legal interpretation for the company would fall within the boundaries of Article 176 KSH, but the preparation of such an application for a client of the company falls outside the boundaries of this provision, as it constitutes an activity exceeding the corporate relationship connecting shareholder and company.

C. Analogy to the Simulation of Concurrence of Insurance Titles

The jurisprudence perceives an analogy between abuse of Article 176 KSH and previously widespread structures involving the simulation of concurrence of insurance titles through the conclusion of multiple mandate contracts.

In the judgment of the Warsaw-Praga District Court of December 16, 2019 (Case No. VII U 762/18), it was indicated that the legislature’s intention was the application of the institution of concurrence of titles for social insurance coverage only where a genuine concurrence of titles exists in respect of a given individual, and not where the insured person artificially and unnaturally brings about such concurrence solely for the purpose of availing themselves of a particular statutory benefit.

Courts apply similar logic to structures predicated upon Article 176 KSH: the inquiry is not whether the formal requirements of the provision have been satisfied, but rather whether the legal structure corresponds to the actual state of affairs and to the purpose of the regulation, or whether it merely constitutes “packaging” of a legal relationship of another type in corporate form.

D. Circumvention of Law Distinguished from Simulation

The jurisprudence precisely distinguishes the situation of circumvention of law (Article 58 § 1 of the Civil Code) from simulation of a legal act (Article 83 § 1 of the Civil Code). As the Wrocław Court of Appeal (Sąd Apelacyjny we Wrocławiu) indicated in its judgment of December 27, 2017 (Case No. III AUa 1092/17), the simulation of concurrence of insurance titles does not denote the simulation of the disputed contracts, which—as established—were actually performed.

One may speak of a legal act aimed at circumventing a statute where such act permits the avoidance of prohibitions, mandates, or burdens arising from a statutory provision, and was performed solely with such intent. A legal act aimed at circumventing a statute consists in such shaping of its content that, from a formal (ostensible) standpoint, does not contravene the statute, but in reality aims at the realization of an objective the achievement of which is prohibited thereby.

Significantly, for assessing whether circumvention of law has occurred, it is not decisive whether all parties to the act were aware of this. The objective of acts aimed at circumventing law need not be known to all parties—it suffices that such objective is encompassed by the intent of at least one of them.

V. Legal Consequences of Challenging the Structure

A. Consequences in the Sphere of Social Insurance

Successful challenge of a structure predicated upon Article 176 KSH leads to a determination that the shareholder was in reality performing work pursuant to a contract for the provision of services (Article 750 of the Civil Code), and on that basis is subject to mandatory social insurance in accordance with Article 6(1)(4) of the Act on the Social Insurance System.

The basis for assessment of contributions is then the income obtained from compensation for the performance of contributions—pursuant to Articles 18(1) and (3) and 20(1) of the system act. The contribution payer is the entity for whose benefit the contributions were actually performed.

B. Payer Liability

The consequences of challenging the structure are borne principally by the contribution payer, who is obligated to remit outstanding contributions together with interest. In the case of “mass corporatization” models, a problem may arise in determining who constitutes the actual payer—whether the company of which the individual performing contributions is a shareholder, the entity orchestrating the entire undertaking, or the end client.

The jurisprudence indicates that the payer is the entity for whose benefit the contributions were actually performed and who derived benefit therefrom. In the case of structures in which the shareholder’s company serves merely a “flow-through” function, payer status may be attributed to the entity actually utilizing the work.

C. The Question of Liability of Partners in Civil Law Partnerships

In the context of contribution liability, it is important to distinguish the situation where the payer is a limited liability company (which, as a legal person, bears liability independently) from the situation where the payer is a civil law partnership (spółka cywilna).

In its judgment of December 16, 2019 (Case No. VII U 762/18), the Warsaw-Praga District Court recalled that a civil law partnership lacks legal personality, and consequently the partners bear joint and several liability for the partnership’s obligations. A partner joining the partnership bears liability for its obligations arising from the moment of joining, while a partner withdrawing from the partnership, notwithstanding the loss of membership, will bear liability for obligations arising from events that occurred while they were a partner.

VI. The Boundaries of Permissible Optimization

A. Criteria for Legality of the Structure

On the basis of jurisprudential analysis, one may formulate a catalogue of criteria whose satisfaction conditions recognition of a structure predicated upon Article 176 KSH as lawful:

The periodicity criterion: Contributions must possess a genuinely recurring character, with clear intervals between individual contributions. It is impermissible to structure contributions in a manner corresponding to permanent employment or continuous availability.

The specificity criterion: The nature and scope of contributions must be precisely specified in the articles of association, in a manner permitting their identification and accounting. A general specification of contributions as, for example, “activities related to the company’s business activity” does not satisfy this requirement.

The corporate character criterion: Contributions must possess a corporate character—that is, they must serve the company directly within the framework of the shareholder-company relationship. The performance of activities for the company’s clients exceeds this scope.

The proportionality criterion: The scope of contributions may not indicate permanent employment in the company. The temporal dimension of contributions should be materially less than that corresponding to full-time employment.

The substance criterion: The company must conduct actual business activity, within which the shareholder’s contributions constitute a supplementary element rather than the sole form of its activity.

B. Examples of Permissible Contributions

In light of the jurisprudence, the following may be regarded as permissible contributions: periodic preparation of analyses or opinions concerning the company’s activity, participation in specified meetings or negotiations on behalf of the company, periodic training of company employees utilizing the shareholder’s particular competencies, and making available to the company specified assets during designated periods.

The common denominator of these contributions is their clear periodicity, their connection to the shareholder’s personal competencies or resources, and their service to the company’s activity as a whole rather than to its individual clients.

VII. Conclusion

The institution of recurring non-monetary contributions under Article 176 KSH was not conceived as an instrument for optimizing social security burdens. Its utilization for such purposes, while formally possible, encounters boundaries delineated by the normative architecture of the provision and by the principle of impermissibility of circumvention of law.

The jurisprudence has developed reasonably precise criteria for assessing whether a given structure falls within the boundaries of permissible utilization of Article 176 KSH or constitutes abuse of this institution. Decisive significance attaches to the actual character of the contributions (periodicity versus continuity), their beneficiary (the company versus its clients), and the context of the company’s operation (genuine business activity versus a “flow-through” structure).

Entities contemplating utilization of Article 176 KSH should be cognizant that formally correct drafting of provisions in the articles of association does not guarantee legal security. Social insurance authorities and courts examine the actual character of relationships, not confining themselves to documentary analysis. Structures in which Article 176 KSH serves merely as “packaging” for legal relationships of another type are consistently challenged, with the consequence being the obligation to remit contributions together with interest and potential fiscal criminal liability.

For commercial practice, the conclusion follows that Article 176 KSH may be safely utilized only in cases corresponding to its ratio legis—where a shareholder possessing particular competencies or resources undertakes to make them periodically available to the company within the framework of a corporate relationship. Attempts to “repackage” employment relationships or mandate contracts in the form of contributions under Article 176 KSH must be regarded as attended by elevated legal risk.

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Robert Nogacki

Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.