A manufacturing company in the Silesia region received a tax authority decision in autumn 2024 holding its former management board member personally liable for the company's unpaid corporate income tax. The arrears had accumulated over three fiscal years. The board member had resigned eighteen months earlier. He believed his resignation protected him. It did not.

Under Polish tax law, a board member of a limited liability company may be held personally liable for the company's tax arrears if enforcement against the company proves ineffective. The Ordynacja podatkowa (Tax Ordinance) establishes this mechanism as a default rule for third-party liability. Liability is avoided only if the board member can demonstrate one of three statutory defences: timely insolvency filing, no fault in failing to file, or the existence of assets against which enforcement is possible.

This case study traces the full arc of the matter – from the initial tax authority decision through administrative appeal and the eventual successful defence. It draws out four transferable lessons for board members, shareholders, and their advisers operating in Polish restructuring and insolvency contexts.

What was the background to the liability decision?

The company was a mid-sized manufacturer of industrial components. It had operated for over a decade and employed roughly 80 people. From 2020 onward, cash flow deteriorated sharply. The board deferred tax payments, expecting a recovery in orders. The recovery did not materialise. By late 2022, arrears exceeded PLN 1.4m across corporate income tax and social security contributions.

The board member in question – we refer to him as Mr K – had served as president of the management board for six years. He resigned in spring 2023. His successor filed for insolvency in autumn 2023, but the court rejected the petition because the company's assets were insufficient to cover even the costs of proceedings. Enforcement by the National Tax Administration (Krajowa Administracja Skarbowa, KAS) against the company's remaining assets yielded nothing. KAS then turned to Mr K personally.

The decision issued in autumn 2024 held Mr K jointly and severally liable for PLN 1.4m. It named him as a "third party" under the Tax Ordinance. The decision cited his tenure as board president during the period in which the arrears arose. His resignation before the insolvency filing was treated as irrelevant to liability. That framing was the first error the tax authority made – and the first opening our team identified.

  • Arrears arose between 2020 and 2022 – within Mr K's tenure
  • Mr K resigned in spring 2023, before the insolvency petition
  • Insolvency petition rejected for insufficient assets (autumn 2023)
  • KAS enforcement against company assets yielded zero recovery
  • Personal liability decision issued autumn 2024: PLN 1.4m

What defence strategy did we pursue?

The Tax Ordinance provides three routes to exonerate a board member. First, the board member filed – or caused to be filed – a timely insolvency petition. Second, the failure to file was not the board member's fault. Third, the board member identifies specific company assets against which enforcement is feasible. Each route requires documentary support and a clear factual narrative.

Mr K's situation did not fit the first route cleanly. The insolvency petition had been filed by his successor, not by him. However, the timing of insolvency under Polish insolvency law is assessed objectively. A company becomes insolvent when it cannot meet its obligations as they fall due, or when its liabilities exceed its assets over a sustained period. We commissioned a retrospective financial analysis covering 2020 through 2023. The analysis established that the company had been balance-sheet insolvent since at least mid-2021 – well within Mr K's tenure.

That finding cut both ways. It meant the filing obligation had arisen during his tenure. But it also meant the 30-day filing window under insolvency law had expired long before he resigned. His successor filed too late as well. The tax authority had based its decision on the assumption that Mr K bore sole responsibility for the filing failure. Our argument was more precise: the obligation arose collectively, the failure was shared, and Mr K's personal fault could not be established to the standard required under administrative law.

We also pursued a parallel argument. The tax authority's decision had not properly assessed whether any company assets remained. A small receivable – approximately PLN 85,000 – had been overlooked in the enforcement file. We flagged it formally. Under the Tax Ordinance, even a partial asset identification shifts the enforcement burden back to the authority.

How did the appeal process unfold?

We filed an appeal to the Director of the Tax Chamber (Dyrektor Izby Administracji Skarbowej) within the 14-day statutory window. The appeal raised three grounds: factual error in establishing the insolvency trigger date, procedural error in the KAS enforcement file, and failure to consider the identified receivable. The Director of the Tax Chamber has 2 months to issue a second-instance decision, though in practice the timeline often extends to 3 months.

We secured a reversal of the personal liability decision for a manufacturing client in Silesia (autumn 2024 – spring 2025). The Director of the Tax Chamber found that KAS had not exhausted enforcement possibilities against the company before issuing the personal liability decision. The overlooked receivable was decisive. The authority was required to pursue it first. The personal liability decision was annulled and the matter remitted for re-examination.

The remitted proceedings gave us a second opportunity. We submitted the retrospective insolvency analysis as new evidence. KAS accepted that the company had been insolvent since mid-2021. The revised decision acknowledged that the 30-day filing window had lapsed before Mr K's resignation. It did not, however, fully exonerate him – it reduced the liability to PLN 340,000, covering only the arrears that arose in the final quarter of his tenure, when fault could still be argued.

That outcome was contested further. At the time of writing, a petition to the Regional Administrative Court (Wojewódzki Sąd Administracyjny, WSA) is pending. The cross-border dimension – Mr K had since relocated to Germany – added complexity. For context on how Polish insolvency proceedings interact with foreign jurisdictions, see our analysis of cross-border insolvency involving Poland and Ukraine.

What lessons does this case carry?

Four lessons stand out. They apply to any board member, incoming investor, or restructuring adviser dealing with Polish entities carrying tax arrears.

Resignation does not reset the clock. Liability under the Tax Ordinance attaches to the period of tenure, not to the moment of resignation. A board member who served during the period in which arrears arose remains exposed, regardless of whether they are still in office when enforcement begins. This point is frequently misunderstood – and the misunderstanding is costly.

The insolvency trigger date is everything. The 30-day filing window runs from the date insolvency objectively arose. Boards that delay recognition of insolvency do not extend the window. They simply move further into the period of personal exposure. A retrospective financial analysis, prepared by an independent expert, can establish or rebut the trigger date. Commissioning it early – before any authority decision – is far cheaper than reconstructing it under adversarial conditions. Directors' and officers' insurance can provide a partial backstop; for an overview of D&O coverage relevant to Polish directors, see what Polish directors need to know about D&O insurance.

Enforcement exhaustion is a procedural prerequisite. KAS cannot issue a personal liability decision against a board member unless enforcement against the company has been genuinely exhausted. Overlooked assets – receivables, deposits, IP rights, claims under contracts – can invalidate the decision entirely. Reviewing the enforcement file for omissions is a standard first step in any defence.

Pre-pack restructuring can prevent the problem from arising. Had the company initiated a pre-pack sale of its business assets under the Polish restructuring framework before insolvency became unavoidable, the arrears might have been partially discharged through the arrangement. The board member's liability would have been assessed differently. For businesses showing early signs of distress, restructuring Poland-style – through approved arrangement proceedings or simplified restructuring – is a far better outcome than waiting for KAS enforcement. The Digital Operational Resilience Act (DORA) compliance obligations, while distinct in subject matter, illustrate the same principle: early action prevents irreversible exposure. See our note on DORA compliance – who must comply and by when.

  • Identify the objective insolvency trigger date as early as possible
  • Review KAS enforcement files for overlooked company assets
  • Preserve board resolutions, financial reports, and correspondence from the distress period
  • Assess restructuring options before the 30-day filing window closes
  • Obtain D&O insurance coverage before distress becomes visible

Personal liability under the Tax Ordinance is not inevitable. It is, however, irreversible once the appeal window closes without challenge. A board member who receives a third-party liability decision has 14 days to act. That window forfeits all administrative remedies if missed.

The specific circumstances of your company require early analysis – delay in challenging a personal liability decision precludes administrative appeal and forces costly court proceedings. If your management board faces a KAS enforcement action or a third-party liability decision involving tax arrears, we will review the enforcement file, assess the insolvency trigger date, and prepare the administrative appeal: 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: No. Liability under the Tax Ordinance attaches only to the period during which the board member actually held office. However, if arrears accumulated across multiple periods and the board member served during any part of that time, the authority may seek to hold them liable for the portion arising within their tenure. The burden of establishing the precise period falls on both sides.

Q: How long does the administrative appeal process take, and what does it cost?

A: A first-instance appeal to the Director of the Tax Chamber formally takes up to 2 months, though 3 to 4 months is common in practice. If the matter proceeds to the Regional Administrative Court, add a further 12 to 18 months. Legal fees for the administrative stage typically range from PLN 8,000 to PLN 25,000 depending on complexity. Court proceedings carry additional court fees and representation costs.

Q: Does a timely insolvency filing by a successor board member protect the former member?

A: Not automatically. The filing must have been timely relative to the date insolvency objectively arose – not relative to the date the successor took office. If insolvency arose during the former board member's tenure and no filing was made within 30 days of that date, the defence of "timely filing" is unavailable to the former member, even if the successor later filed. This is one of the most common misconceptions in this area of Polish tax law.

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.