A manufacturing company in Mazowieckie found itself facing a tax-authority decision holding its former board member personally liable for the company's unpaid VAT and CIT arrears. The amount exceeded PLN 1.8 million. The authority had issued the decision after the company failed to satisfy its obligations during standard enforcement proceedings.

Under the Ordynacja podatkowa (Tax Ordinance), a board member of a limited-liability company may be held personally liable for the company's tax arrears when enforcement against the company proves ineffective. Liability is joint and several with other board members who served during the period when the arrears arose. A board member escapes liability only by demonstrating one of three statutory defences: timely insolvency filing, absence of fault in failing to file, or identification of company assets sufficient to satisfy the debt.

This case study traces the background, the defence strategy we deployed, the procedural steps taken, and the lessons that any board member – or their legal counsel – should draw from the outcome.

What was the background to the liability decision?

The company had operated for nine years as a mid-sized manufacturer supplying the automotive sector. Over an 18-month period, a combination of delayed customer payments and rising input costs caused chronic cash-flow shortfalls. VAT and CIT obligations went unpaid across multiple reporting periods. The National Court Register (KRS) showed the same individual serving as the sole board member throughout the critical window.

The tax authority – operating under the oversight of the National Revenue Administration (KAS) – conducted standard enforcement steps. Bailiff levies against the company's bank accounts and receivables yielded only partial recovery. Once the authority declared enforcement ineffective, it opened subsidiary-liability proceedings against the former board member personally. The decision issued by the relevant tax office in Warsaw named him as jointly and severally liable for the full outstanding balance, including interest and enforcement costs.

The former board member had not filed for insolvency during his tenure. He had consulted an accountant at the time, who advised that the company's situation might improve. No formal solvency assessment was commissioned. That omission became the central vulnerability in his position.

How did we build the defence strategy?

Insolvency law provides the clearest escape route: demonstrating that an insolvency petition was filed within the statutory 30-day window from the moment the company became insolvent. Our first task was to reconstruct precisely when insolvency – in the legal sense – first arose. This required a forensic review of the company's balance sheets, payment records, and creditor correspondence across a 24-month period.

We identified three overlapping arguments. First, the company's balance-sheet test did not show technical over-indebtedness until a date later than the authority assumed. Second, the board member had taken documented steps to restructure the debt – including a written proposal to the tax authority itself under the Ordynacja podatkowa instalment-payment procedure. Third, the KAS enforcement file contained a procedural irregularity: the authority had not exhausted all enforcement measures against the company before pivoting to subsidiary-liability proceedings. Under Polish administrative law, that sequencing is mandatory.

We also examined the personal-liability exposure under the lens of white-collar defence principles. The board member faced no criminal allegation at this stage, but a finding of personal liability in tax proceedings can feed parallel investigations. Early containment mattered. We coordinated with the client's insolvency counsel to ensure that any restructuring Poland narrative remained consistent across both the tax and potential criminal tracks.

We secured a reversal of a subsidiary-liability surcharge exceeding PLN 900,000 for a logistics-sector client in Mazowieckie (autumn 2024). That precedent shaped our sequencing here.

What did the procedural process involve?

The appeal was filed with the Director of the Tax Chamber (Dyrektor Izby Administracji Skarbowej) within the 14-day statutory deadline. The appeal ran to four substantive grounds, each addressed separately in the written submissions.

The procedural-irregularity argument proved decisive at first instance. The appellate authority found that the original tax office had not formally documented the exhaustion of enforcement measures before issuing the subsidiary-liability decision. That finding alone required the matter to be remitted for re-examination. It bought time – and created leverage for a negotiated settlement on the remaining arrears.

During the re-examination phase, we submitted a detailed chronological reconstruction showing that the company's cash-flow insolvency crystallised no earlier than a specific quarter. The board member had, within 28 days of that date, formally engaged a restructuring adviser and notified the KRS of changed circumstances. That notification – though not a formal insolvency filing – supported the "absence of fault" defence under the Tax Ordinance. The authority accepted the argument in part, reducing the personal liability figure by approximately 40 percent.

The residual amount was settled under an instalment arrangement. Total exposure dropped from PLN 1.8 million to below PLN 700,000, spread over 36 months. For a complete picture of how cross-border insolvency layers can complicate similar liability chains, see our analysis of cross-border insolvency involving Poland and Hungary.

What lessons should board members take from this case?

The outcome confirms four transferable principles for any board member of a Polish limited-liability company operating under financial stress.

  • Insolvency timing is a legal question, not an accounting one. Engage insolvency counsel – not only an accountant – the moment payment deferrals become systemic.
  • Documented steps count. Written restructuring proposals, board resolutions, and KRS notifications all build the "absence of fault" record that the Tax Ordinance defence requires.
  • Procedural sequence matters. The tax authority must exhaust enforcement against the company before pursuing a board member. Challenging that sequence is often the fastest route to relief.
  • Personal liability and criminal exposure are linked. A tax-arrears decision can inform a subsequent white-collar investigation. Coordinate both tracks from the outset.

One further point deserves emphasis. The instalment-payment mechanism under the Tax Ordinance is available even after a liability decision is issued. Many board members – and their advisers – assume the decision closes all options. It does not. Negotiated settlement remains open, and the authority has discretion to grant it where the debtor demonstrates genuine co-operation and a realistic repayment plan.

Employer-side cost pressures that contributed to the company's original cash-flow stress are examined separately in our note on minimum wage 2026 impact on employer costs in Poland. For the broader question of how liability distributes across corporate groups, our article on subsidiary liability in Polish corporate groups provides a useful framework.

What to prepare if you face a subsidiary-liability decision:

  • Full financial statements for the 24 months preceding the arrears period
  • Board meeting minutes and any restructuring correspondence from the same window
  • KRS filing history, including any changes to board composition
  • Documentation of any prior instalment or deferral requests submitted to the tax authority

A board member facing a liability decision under the Tax Ordinance has a 14-day window to appeal. That window is hard. Missing it forfeits the most direct procedural path and leaves only limited-recourse options before the administrative courts (WSA/NSA). The irreversible nature of that deadline makes early legal review non-negotiable.

We also acted for a technology-sector client in Silesia (winter 2025) where a pre-pack restructuring – coordinated with the KAS enforcement office – reduced a board member's personal exposure by over 60 percent before any formal liability decision was issued. Early intervention consistently produces better outcomes than reactive defence.

The complexity of these proceedings – spanning tax law, insolvency law, administrative procedure, and potentially criminal law – means that no single practitioner profile covers all the relevant ground. Our team integrates restructuring, white-collar defence, and tax-litigation capabilities to address each track simultaneously.

Specific facts in your matter will determine which defence grounds are available and in what order to deploy them.

To discuss how the Tax Ordinance liability framework applies to your situation, email 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 board members who served during the period when the arrears arose and when enforcement against the company proved ineffective. A member who joined after the relevant tax obligations were incurred may argue they had no influence over the company's payment conduct during that window. The authority must establish the temporal overlap between board tenure and the accrual of each specific liability. Challenging that overlap is a standard first line of defence.

Q: How long does the appeal process typically take?

A: An appeal to the Director of the Tax Chamber generally takes between three and six months at first appellate instance. If the matter proceeds to the Provincial Administrative Court (WSA), the timeline extends by a further 12 to 18 months on average. Planning for a two-year horizon from initial decision to final court ruling is prudent. Interim measures – including suspension of enforcement – can be sought during that period to protect personal assets.

Q: Is it a misconception that insolvency filing automatically eliminates personal liability?

A: Yes. Filing for insolvency within the 30-day window is a defence, not a guarantee of immunity. The authority may still argue that the filing was made too late – that insolvency arose earlier than the board member acknowledges. The date of insolvency is often contested. A successful defence requires not only proof that a filing was made but that it was made within the correct window as measured from the legally determined onset of insolvency.

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 defence, and personal liability proceedings. 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.