A manufacturing company in the Mazowieckie region received a tax assessment notice addressed not to the company – but to its former managing director personally. The company had accumulated significant VAT and corporate income tax arrears over three years. By the time the tax authority issued its decision, the company itself was insolvent and had no recoverable assets. The director, who had left the board two years earlier, was now facing personal liability for a debt exceeding PLN 800,000.
Under the Ordynacja podatkowa (Tax Ordinance), members of a limited liability company's management board are jointly and severally liable for the company's tax arrears when enforcement against the company proves ineffective. This liability is not automatic. The tax authority must demonstrate that enforcement against the company failed and that no statutory exemptions apply. A board member who filed a timely insolvency petition, or who had no knowledge of the company's financial deterioration at the relevant time, may avoid personal liability entirely.
This case study examines how our team challenged the liability decision, the arguments that succeeded, and the lessons that apply to any board member facing a similar claim. The matter proceeded through administrative proceedings before the Naczelnik Urzędu Skarbowego (Head of the Tax Office) and then before the Dyrektor Izby Administracji Skarbowej (Director of the Tax Administration Chamber). The timeline from the initial decision to final reversal spanned approximately 14 months.
What was the background to the liability claim?
The client – a former managing director of a mid-sized manufacturing company – had served on the board for approximately four years. He resigned 22 months before the tax authority initiated enforcement proceedings against the company. The company had been registered with the Krajowy Rejestr Sądowy (National Court Register, KRS) since 2011. Its VAT and CIT arrears accumulated primarily during the director's final 18 months in office. The tax authority argued that because the arrears arose during his tenure, he remained personally liable regardless of his subsequent resignation.
The authority issued a joint and several liability decision for PLN 847,000. That figure included principal arrears, late payment interest, and enforcement costs. The director had no involvement in the company's affairs after his resignation. He had not been a shareholder. He received no financial benefit from the period in which the arrears arose. Despite this, the formal conditions for issuing a liability decision – ineffective enforcement against the company – had been met. The authority's position was legally defensible on its face.
Two factors made this case defensible from the outset. First, the director had flagged liquidity concerns in writing to the supervisory board roughly 30 months before the liability decision. Second, a restructuring adviser had been engaged – though ultimately not formally appointed – during the period the arrears were building. Both facts pointed toward a potential exemption: the director could argue that an insolvency or restructuring filing had been warranted and that he had taken identifiable steps toward it.
What strategy did we adopt to challenge the decision?
Polish tax law provides three principal exemptions from board member liability. The board member must show either that an insolvency petition was filed in time, that restructuring proceedings were opened in time, or that the failure to file was not the board member's fault and that the company's assets are sufficient to satisfy the arrears. None of these exemptions applied in a clean, textbook form. Our strategy was to build a composite argument around the third exemption, supplemented by a procedural challenge to the authority's enforcement chronology.
We secured a reversal of a comparable tax liability decision exceeding PLN 500,000 for a logistics client in Lower Silesia (autumn 2024). That experience shaped our approach here. The core argument was that the tax authority had failed to demonstrate that enforcement was genuinely ineffective before issuing the personal liability decision. Under Polish administrative procedure, the authority must exhaust enforcement measures against the company itself. In this case, the authority had conducted a single enforcement action – a bank account levy – before declaring enforcement ineffective. We argued this fell short of the required standard.
The secondary argument addressed the director's internal conduct. His written liquidity warning and the engagement of a restructuring adviser were framed as evidence that he had acted in good faith. The Naczelnik Urzędu Skarbowego rejected both arguments at first instance. The appeal to the Director of the Tax Administration Chamber produced a different result. The Chamber found that the authority's enforcement record was procedurally deficient. It remitted the case for fresh enforcement proceedings against the company.
- Challenge the adequacy of enforcement steps taken against the company
- Document all internal warnings and restructuring-related communications
- Identify the precise period of the director's board membership relative to when arrears arose
- Assess whether a pre-pack or formal restructuring filing could have been initiated
- Engage restructuring counsel early – before the tax authority issues its decision
For any board member facing a liability notice, the 14-day period for lodging an appeal is the hardest deadline. Missing it forfeits all administrative remedies and precludes any further challenge within the tax proceedings. That consequence is irreversible.
To discuss how this strategy applies to your situation, contact info@kordeckipartners.com.
What lessons does this case offer for directors and restructuring advisers?
The most transferable lesson is procedural. Tax authorities frequently issue board liability decisions after a single, cursory enforcement attempt. Polish insolvency and restructuring law – including the Prawo restrukturyzacyjne (Restructuring Law) – provides multiple formal procedures that can interrupt or prevent personal liability from crystallising. A pre-pack arrangement, for instance, can be approved by the court before the company's assets are formally liquidated, preserving value and potentially satisfying tax arrears in full. For more on cross-border insolvency structures that interact with Polish proceedings, see our analysis of cross-border insolvency involving Poland and the UAE.
The second lesson concerns timing. Board members often wait too long before seeking advice. By the time the tax authority has declared enforcement ineffective, the window for proactive restructuring has usually closed. The liability decision can follow within weeks. Directors should treat any sustained period of unpaid tax obligations – particularly where VAT is accumulating – as a trigger for immediate legal review. Under Polish tax law, personal liability can attach even where the director resigned more than two years before the decision, provided the arrears arose during the tenure.
The third lesson involves employment-related liabilities that run parallel to tax claims. Where a company has accumulated both tax arrears and unpaid employee entitlements, a board member may face concurrent exposure. The interaction between tax liability decisions and employment claims – including severance obligations – is explored in our note on severance pay calculation under the Polish Labour Code. For a broader doctrinal overview of the liability framework itself, see our earlier analysis at board liability for tax arrears – Art. 116 Tax Ordinance.
The outcome here was partial but significant. The liability decision was remitted, not cancelled outright. Fresh enforcement proceedings against the company are ongoing. If those proceedings again prove ineffective, the authority may reissue the personal liability decision – this time with a more complete enforcement record. The director's exposure has not disappeared. It has been deferred, and the factual record has been strengthened in his favour.
Specific circumstances require specific advice. A decision remitted today can be reissued tomorrow with a stronger procedural foundation. Waiting for that second decision – rather than acting during the remittal window – risks a far more difficult challenge.
To receive an expert assessment of your board liability exposure, contact info@kordeckipartners.com.
Frequently asked questions
Q: Can a board member be held liable for arrears that arose before they joined the board?
A: Under the Tax Ordinance, personal liability attaches to arrears that arose during the period when the individual was a board member. Arrears that crystallised before the director joined the board cannot generally be attributed to that director. However, the tax authority may argue that a board member who failed to identify and address pre-existing arrears contributed to their growth. The precise dating of each liability period requires careful analysis of the company's tax accounts and the KRS registration history.
Q: How long does the tax authority have to issue a personal liability decision?
A: The Tax Ordinance does not impose a short limitation period specifically on board liability decisions. The general limitation period for tax arrears applies – typically five years from the end of the calendar year in which the tax payment fell due. In practice, authorities often issue liability decisions several years after the arrears arose, which is why directors who left the board years ago can still receive unexpected notices. Acting promptly on any notice is essential, as the appeal window is only 14 days.
Q: Does opening restructuring proceedings always protect a board member from personal tax liability?
A: Not automatically. The exemption requires that restructuring proceedings were opened "in time" – meaning at a point when the filing was still legally available and the company had not yet become irreversibly insolvent. A restructuring filing made after the company was already unable to satisfy its debts may not satisfy the exemption. Courts and tax authorities examine the timing closely. Early engagement with restructuring counsel – before the company's financial position deteriorates beyond recovery – provides the strongest protection. A pre-pack structure, where assets are transferred to a purchaser under court supervision, can sometimes preserve the exemption even in difficult cases.
KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to restructuring, insolvency, and white-collar defence. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.