A Mazowieckie-based holding company approached our Warsaw office in late autumn 2025. Its German parent had been waiting nearly six months for a dividend payment from the Polish subsidiary – a spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.). The delay was not caused by a lack of profit. It was caused by a procedural error made at the shareholder meeting that invalidated the resolution entirely.

Polish company law governs dividend distribution through the Kodeks spółek handlowych (Commercial Companies Code, KSH). For a sp. z o.o., the shareholders' meeting must pass a profit-distribution resolution based on approved annual financial statements. The dividend can only be paid from profit shown in those statements, supplemented by retained earnings from prior years, provided the company meets a net-assets solvency test.

This case study walks through the background, the legal strategy we applied, and the lessons that any foreign investor or Polish entrepreneur can take away. Three themes recur: procedural sequence, the solvency threshold, and withholding-tax documentation. Each one is a potential point of failure.

What went wrong in the background?

The sp. z o.o. had generated a net profit of roughly PLN 1.8 million in the prior financial year. The management board (zarząd) prepared a draft profit-distribution proposal and circulated it before the annual general meeting. So far, so standard. The problem emerged when the meeting was convened without the required written notice period – under Polish corporate legislation, shareholders must receive notice at least two weeks before the meeting date.

The National Court Register (KRS) filing for the financial statements had also been delayed. Polish law requires annual financial statements to be approved and filed with the KRS within a fixed period after the financial year ends. The meeting took place before the statements were formally approved by the shareholders. That sequence violation meant the profit-distribution resolution lacked a valid legal basis. Any dividend paid on that resolution would have exposed the management board to personal liability for repayment.

The German parent had engaged a local accountant rather than a law firm. The accountant processed the payment instruction. The company's bank flagged the transfer and requested a certified copy of the resolution. At that point, the error surfaced. The transfer was blocked – and the cross-border relationship became strained.

  • Notice period for shareholders' meeting: minimum two weeks
  • Financial statements must be approved before the dividend resolution
  • KRS filing of statements: mandatory before distribution
  • Solvency test: distributable amount cannot reduce net assets below share capital
  • Withholding tax: standard rate 19%, reduced under EU Parent-Subsidiary Directive or applicable tax treaty

What strategy did we apply?

We identified three parallel workstreams on the first day of instruction. First, convene a corrective shareholders' meeting with proper notice. Second, obtain KRS confirmation of the filed financial statements. Third, prepare the withholding-tax (WHT) documentation package for the German parent before the corrected resolution was passed – not after. Preparing WHT documentation retrospectively adds weeks and risks a 19% deduction on the full dividend amount.

We secured a reversal of the blocked transfer situation and a valid dividend resolution for the Mazowieckie client within 34 days of instruction (autumn 2025). The corrected meeting was convened with a 14-day written notice, the agenda included formal approval of the annual financial statements as a prior item, and the profit-distribution resolution followed immediately. That sequencing is non-negotiable under Polish corporate legislation.

The WHT package included a certificate of residence for the German parent, a statement confirming beneficial ownership, and documentation that the parent had held at least 10% of the shares for an uninterrupted period of two years. That threshold matters. The EU Parent-Subsidiary Directive, implemented into Polish tax law, exempts qualifying dividends from WHT entirely – but the exemption is not automatic. The Polish subsidiary must hold supporting documentation at the moment of payment, or the 19% rate applies and a refund claim must be filed separately.

For a due diligence Poland exercise or an M&A Poland transaction, dividend history and WHT compliance records are standard review items. Gaps in those records affect valuation and deal structure. We flagged this point to the German parent for future reference. You can read more about common review gaps in our article on red flags in Polish M&A for Luxembourg buyers.

What are the transferable lessons for shareholders who want to set up company Poland or distribute profit from an existing sp. z o.o.?

The sequence of steps is the most important lesson. Many foreign investors who set up company Poland through an online KRS registration tool underestimate the procedural discipline required at the point of profit distribution. Registration is fast. Distribution is formal. Those are two very different processes, and conflating them is the most common source of error we see at our law firm Warsaw practice.

The solvency test deserves equal attention. Polish corporate legislation prohibits a dividend payment that would reduce the company's net assets below the sum of share capital and any statutory reserve. For a sp. z o.o. with a minimum share capital of PLN 5,000, this is rarely a binding constraint. But companies that have accumulated losses in prior years – or that carry significant deferred liabilities – must run the calculation before the resolution is passed, not after.

Our team also obtained interim confirmation for a foreign investor's subsidiary in Lower Silesia (spring 2026), resolving a WHT refund claim of over PLN 400,000 that had been pending for 14 months. The delay originated from a missing beneficial-ownership declaration filed after payment rather than before. That single document, prepared in advance, would have prevented the entire dispute. For groups considering their Polish entry structure, our comparison of branch versus subsidiary in Poland for Cyprus groups sets out how entity choice affects dividend access from the outset.

Foreign nationals working in Poland and receiving dividend income as shareholders should also be aware that their residency status affects personal income tax obligations. Our guidance on the EU Blue Card in Poland for 2026 covers residency thresholds that interact with tax treaty entitlements.

To receive an expert assessment of your company's dividend distribution readiness, contact info@kordeckipartners.com.

Frequently asked questions

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

A: Polish corporate legislation permits interim dividends for a sp. z o.o. only if the company's articles of association expressly allow it and the management board prepares interim financial statements showing sufficient profit. The interim dividend cannot exceed half of the profit earned in the previous full financial year, plus any undistributed retained earnings. This is a minority tool and carries additional board-liability exposure if the interim statements are later found to overstate profit.

Q: How long does the full dividend distribution process typically take?

A: From the date the annual financial statements are approved at the shareholders' meeting, a straightforward distribution can be completed in two to four weeks. That assumes the notice period was observed, WHT documentation is prepared in advance, and no KRS filing backlog exists. Cross-border payments to non-EU parents, where a tax treaty exemption applies, typically take longer – four to eight weeks – because additional certification from the foreign tax authority is required.

Q: Is it a misconception that the 19% withholding tax always applies to dividends paid to foreign shareholders?

A: Yes. Many clients assume the 19% rate is automatic. In practice, it is the default rate that applies only when no exemption or treaty reduction is available or when the documentation requirements are not met. EU parent companies holding at least 10% of shares for two uninterrupted years qualify for a full exemption under the Parent-Subsidiary Directive. Treaty partners outside the EU may benefit from reduced rates of 5% or 10%. The key is documentation prepared before payment – not after.

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 transactions and dividend structuring. 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.