A foreign shareholder in a Warsaw-registered spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.) receives a dividend payment – only to discover that the board failed to verify the statutory balance-sheet test before authorising the distribution. The tax authority opens an inquiry. The company faces a clawback demand. This scenario is more common than most investors expect.

Polish dividend distribution rules require every sp. z o.o. to satisfy a mandatory balance-sheet test before any profit is paid out to shareholders. The Kodeks spółek handlowych (Commercial Companies Code, KSH) sets a hard cap: distributions may not reduce net assets below the sum of share capital and statutory reserve. Shareholders who receive a distribution made in breach of these rules are personally obliged to return the funds, and board members face personal liability for authorising an unlawful payment.

This alert covers three areas: the statutory conditions that must be met before any distribution is approved, the thresholds and deadlines that determine who is affected, and the immediate steps boards and shareholders should take to stay compliant.

What are the core conditions for a lawful dividend in Poland?

Under Polish corporate legislation, the right to a dividend arises only after the shareholders' meeting approves the annual financial statements and resolves to distribute profit. That resolution must be adopted within six months of the financial year-end – for most companies, by 30 June. Missing this window does not extinguish the right to distribute, but it complicates the process and may trigger scrutiny from the National Court Register (KRS).

The balance-sheet test is the first filter. Net assets shown in the approved financial statements must exceed the sum of share capital and the mandatory reserve (equal to at least 8% of annual net profit, accumulated until the reserve reaches one-third of share capital). Any amount above that floor is distributable – but only to the extent confirmed by the statements. Interim financial statements prepared for the same purpose must be signed off by a certified auditor if the company is subject to statutory audit.

Two further conditions apply. First, the company must not be insolvent at the date of distribution, nor must the payment render it insolvent. Insolvency law imposes a 30-day deadline on boards to file for insolvency once the company meets the statutory test for over-indebtedness. Paying a dividend that tips the company into that zone exposes the board to personal liability. Second, the KSH allows the articles of association to restrict distributions further – for example, by requiring a supermajority vote or capping the distributable amount.

We secured a reversal of a clawback demand exceeding PLN 800,000 for a manufacturing client in the Mazowieckie region (autumn 2025). The board had approved a distribution before the auditor signed the interim statements. Early intervention before the tax authority formalised its position was decisive.

Who is affected, and what are the key thresholds?

Every sp. z o.o. registered with the KRS is subject to these rules without exception. The thresholds that determine the practical risk profile vary by company size. Companies whose net assets fall below PLN 5,000 – the minimum share capital – cannot make any distribution at all. Companies approaching that floor after a loss-making year must recalculate the distributable amount before each resolution, not simply rely on prior-year figures.

Foreign investors operating through Polish subsidiaries face an additional layer. Withholding tax on dividends paid to non-resident shareholders is set at 19% unless a double-tax treaty or the EU Parent-Subsidiary Directive reduces or eliminates it. The Polish Financial Supervision Authority (KNF) monitors dividend flows from regulated entities. For unregulated companies, the Head of the National Revenue Administration (KAS) retains the right to challenge distributions that it considers abusive under the general anti-avoidance rule (GAAR). A transaction exceeding PLN 500,000 in tax benefit triggers enhanced GAAR scrutiny.

Timing matters for withholding tax compliance. The paying company must remit withheld tax to the tax office by the 20th day of the month following payment. Failure to remit on time attracts statutory interest currently running at 14.5% per annum, plus potential surcharges. For cross-border distributions, the certyfikat rezydencji (certificate of tax residence) of the receiving shareholder must be current – Polish tax law treats a certificate as valid for 12 months from its issue date.

We obtained a binding ruling protecting a dividend structure worth over EUR 2m for a German investor's subsidiary in Lower Silesia (spring 2025). The ruling confirmed that the Parent-Subsidiary Directive exemption applied, removing the 19% withholding tax exposure entirely.

What should boards and shareholders do now?

The following checklist covers the minimum steps before any distribution is authorised. Skipping any item creates a gap that regulators and counterparties can exploit during due diligence Poland reviews or M&A Poland transactions.

  • Obtain approved annual financial statements and confirm the distributable amount against the balance-sheet test.
  • Verify that share capital and the mandatory reserve are fully covered after the proposed distribution.
  • Confirm the company is solvent and will remain solvent post-distribution.
  • Collect a current certificate of tax residence for each non-resident shareholder before payment.
  • Calendar the 20-day withholding tax remittance deadline from the payment date.

Boards should also review their articles of association. Many companies incorporated before 2020 contain outdated distribution clauses that do not reflect subsequent KSH amendments. An articles review takes one to two weeks and costs a fraction of the exposure created by a defective distribution. For companies considering a set up company Poland exercise or a conversion from sp. z o.o. to spółka akcyjna (joint-stock company, S.A.), the distribution regime changes materially – S.A. rules impose additional restrictions on interim dividends and require a supervisory board resolution in most cases.

Employment considerations can also intersect with distribution timing. Companies that have recently restructured their workforce should confirm that any outstanding obligations under Polish labour law do not affect the solvency calculation before the distribution resolution is passed. A single overlooked redundancy liability can shift the net-asset figure below the statutory floor.

The specific circumstances of your company's distribution structure carry irreversible consequences if the balance-sheet test is not properly documented. A defective resolution cannot be retroactively cured once the tax authority opens a formal inquiry – the clawback obligation crystallises on the date of payment, not the date of discovery.

To receive an expert assessment of your dividend distribution structure, contact info@kordeckipartners.com.

Frequently asked questions

Q: Can a sp. z o.o. pay an interim dividend before the year-end?

A: Yes, but only if the articles of association expressly permit it and interim financial statements confirm that sufficient distributable profit exists. The interim statements must cover the period up to the last day of the month before the resolution. If the company is subject to statutory audit, the auditor must review those statements before the board authorises payment.

Q: How long does a shareholder have to return a distribution made in breach of the balance-sheet test?

A: Polish corporate legislation does not set a fixed repayment deadline, but the company's claim against the shareholder is subject to a general three-year limitation period running from the date of the unlawful payment. Board members who approved the distribution remain jointly and severally liable for the same amount. Acting quickly to reverse the distribution before a tax audit begins significantly reduces the overall exposure.

Q: Is the 19% withholding tax rate a common misconception among foreign investors?

A: Many investors assume that a double-tax treaty automatically applies without any procedural steps. Under Polish tax law, the paying company must collect and verify the shareholder's certificate of tax residence before applying a reduced treaty rate. Applying the reduced rate without a valid certificate exposes the paying company – not the shareholder – to the unpaid tax plus interest. The paying company acts as a withholding agent and bears the compliance risk.

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 corporate governance, dividend structuring, and M&A transactions. 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.