A Warsaw-based technology company receives a letter from the Polish tax authority announcing a fiscal criminal investigation. The letter names two board members personally. The company's finance director has already been interviewed. No one on the board knows what to say – or what not to say.
The Kodeks karny skarbowy (Fiscal Penal Code, KKS) imposes criminal and quasi-criminal liability on individuals who manage companies and are responsible for tax obligations. Board members face personal exposure whenever a company underpays VAT, CIT, or customs duties – regardless of whether they acted in bad faith. Under Polish fiscal criminal law, the threshold for a minor fiscal offence currently starts at PLN 866.40 (one-fifth of the minimum wage), while the most serious fiscal crimes carry custodial sentences of up to five years. A well-structured defence strategy, begun early, is the single most effective tool available.
This guide sets out the key procedural stages, the most effective defence instruments available under the KKS, and the three most common mistakes board members make when facing a fiscal criminal investigation in Poland. It covers timelines, cost considerations, and specific scenarios drawn from manufacturing, IT, and cross-border investment contexts.
How does fiscal criminal liability arise for board members?
Fiscal criminal liability under the KKS attaches to the person who was actually responsible for a company's tax affairs at the time of the alleged irregularity. That person is frequently a board member, but it can also be a proxy holder, a chief financial officer, or an accountant. Polish fiscal criminal law does not require intent for every offence – negligence is sufficient for many categories.
The National Revenue Administration (Krajowa Administracja Skarbowa, KAS) is the primary authority conducting fiscal criminal proceedings in Poland. It operates alongside the Public Prosecutor's Office and the tax inspection units of the National Court Register (Krajowy Rejestr Sądowy, KRS) environment. Proceedings begin either with a preparatory investigation or a preliminary inquiry. The board member named in the proceedings becomes a suspect (podejrzany) once charges are formally presented – a step that triggers full procedural rights but also significant personal risk.
Three circumstances most commonly trigger board liability under the KKS:
- Unreported or under-reported VAT output tax over multiple settlement periods
- Failure to collect and remit withholding tax on payments to foreign contractors
- Incorrect customs classifications generating underpaid import duties
The statute of limitations under the KKS is shorter than many practitioners expect. For minor fiscal offences, it runs for just one year from the date of the offence, extendable to two years once proceedings commence. For fiscal crimes, the period is five years, extendable to ten. Missing these windows – in either direction – can determine whether a defence strategy succeeds or fails. White-collar defence counsel should map limitation periods on day one.
We secured a dismissal of fiscal criminal charges against a board member of a manufacturing client in the Mazowieckie region (spring 2025). The key argument was that the relevant tax decisions had not become final before the limitation period expired.
What procedural steps define the KKS defence timeline?
The KKS defence process has four distinct phases, each carrying its own deadlines and decision points. Understanding the sequence allows board members to allocate resources correctly and avoid the most costly procedural errors. The entire process from first KAS contact to final judgment can span two to four years in contested cases.
Phase one is the preparatory stage. KAS or the financial crimes unit of the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) – in cases involving financial instruments – issues a notice of commencement. At this point, the board member is typically still a witness, not a suspect. This distinction matters enormously. A witness has no right to refuse to answer questions. A suspect does. Retaining counsel before the formal presentation of charges preserves the option to manage the transition between these two statuses.
Phase two is the investigation itself. KAS investigators gather evidence, request bank records, interview employees, and may conduct searches of business premises. The board member's counsel should request access to the case file as early as procedurally possible – Polish fiscal criminal procedure permits this once the investigation reaches a certain stage. File review often reveals evidentiary weaknesses that can be exploited in the defence.
Phase three involves the decision to charge or close. KAS may refer the case to the prosecutor or close it with a conditional discontinuance. A conditional discontinuance – available where the fiscal damage does not exceed the threshold for a serious fiscal crime – requires the suspect to pay the outstanding tax liability within a fixed period, typically 30 to 60 days. This is frequently the most cost-effective resolution available.
Phase four is trial, if the case proceeds. The district court (sąd rejonowy) handles most KKS cases at first instance. Sentencing options include fines (calculated in daily rates), restriction of liberty, and imprisonment. For board members with no prior record, a suspended custodial sentence combined with a fine is the most common outcome in contested cases where guilt is established.
Which defence instruments are most effective in KKS proceedings?
Three defence instruments stand out in Polish fiscal criminal practice. Each applies to a different factual scenario. Choosing the wrong instrument wastes time and signals poor preparation to the court. The right instrument, deployed at the right procedural moment, can reduce or eliminate personal liability.
The first instrument is voluntary disclosure (czynny żal, active regret). Under the KKS, a board member who voluntarily discloses a fiscal offence to KAS before the authority becomes aware of it – and simultaneously pays the outstanding tax liability – is exempt from criminal prosecution. The disclosure must be made in writing, must identify the offence precisely, and must be submitted before any investigation begins. Timing is everything. A disclosure filed one day after KAS opens a case is procedurally ineffective. Counsel should audit exposure on a rolling basis so that voluntary disclosure remains available as long as possible.
The second instrument is the exculpatory argument based on delegation of duties. Polish corporate legislation permits boards to delegate specific functions – including tax compliance – to designated managers or external advisors. Where a board member can demonstrate a documented, formal delegation and show that the delegated person had the competence and resources to perform the function, personal liability may be rebutted. The delegation must be in writing and pre-date the alleged offence. Verbal arrangements or informal understandings do not satisfy the legal standard.
The third instrument is the application for conditional discontinuance of proceedings. This is available where the social harmfulness of the act is not significant and the fiscal damage does not exceed the statutory threshold – currently set at approximately PLN 17,300 (twice the minimum wage). The court grants discontinuance on conditions: typically payment of the outstanding liability plus a probationary period of up to two years. No conviction is recorded. This outcome preserves the board member's professional reputation and avoids the collateral consequences of a criminal record.
Our team obtained a conditional discontinuance for a CFO of an IT services company in the Małopolska region (autumn 2024). The outstanding VAT liability was settled within 45 days of the application, and proceedings were closed without a conviction being entered.
What are the most common mistakes board members make in KKS cases?
Three mistakes appear repeatedly in KKS cases involving board members. Each one forecloses a defence option that would otherwise have been available. Recognising them early is the most practical risk-management step a board can take.
The first mistake is speaking to KAS investigators without counsel present. Board members often believe that co-operating voluntarily will demonstrate good faith and accelerate closure. In practice, unguided statements to KAS investigators become part of the evidentiary record. They can be used to establish knowledge of the irregularity – an element that converts a negligence-based offence into an intentional one. Intentional fiscal crimes carry significantly heavier sentences. The right to remain silent is available from the moment suspect status is conferred. Use it.
The second mistake is failing to separate corporate and personal exposure. When a company faces a tax assessment, the instinct is to manage the corporate liability first. But the KKS investigation runs on a parallel track. Board members who focus exclusively on the company's administrative appeal before the tax authority (Dyrektor Izby Administracji Skarbowej) sometimes allow KKS limitation periods to expire or miss the window for voluntary disclosure. Both tracks must be managed simultaneously, ideally by counsel who understands both tax procedure and fiscal criminal law.
The third mistake is underestimating the cost of delay. Fiscal criminal proceedings that are not resolved at the investigation stage become significantly more expensive at trial. Legal fees increase. The risk of a public court record rises. Reputational damage accelerates. Board members who engage qualified defence counsel within the first 30 days of receiving any KAS communication consistently achieve better outcomes than those who wait. For matters involving potential insolvency overlap, the interaction between board liability under the KKS and restructuring obligations deserves careful attention – see our analysis of cross-border insolvency involving Poland and Ukraine for context on how these tracks intersect.
What to prepare when instructing KKS defence counsel:
- Board resolutions delegating tax compliance responsibilities, if any exist
- All KAS correspondence, including informal letters and summons
- Corporate tax returns and JPK_VAT files for the relevant periods
- Employment contracts or mandates of any external tax advisors engaged
- A chronology of when the board first became aware of the alleged irregularity
How do the three business scenarios play out in practice?
Fiscal criminal exposure varies significantly by sector and ownership structure. Three scenarios illustrate the most frequent patterns encountered in Polish practice. Each calls for a different primary defence instrument.
In the manufacturing scenario, a Polish limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.) with a two-person board faces a KAS audit revealing underpaid VAT on intra-community supplies over 18 months. The total shortfall exceeds PLN 400,000. Both board members are named. The correct approach is to commission an independent tax opinion confirming whether the VAT treatment was defensible under EU case law, then consider voluntary disclosure if the opinion is unfavourable. If the company is simultaneously under financial pressure, the interaction with restructuring law under the Prawo restrukturyzacyjne (Restructuring Law) must be assessed. For cross-border dimensions, the analysis in our guide on cross-border insolvency involving Poland and the Czech Republic provides a useful framework.
In the IT scenario, a foreign-owned Polish subsidiary fails to withhold and remit tax on software licence fees paid to a related party in a non-treaty jurisdiction. The board member who signed the payment orders is the primary suspect. Here, the delegation argument is weak because the board member personally authorised each payment. The most effective strategy is to demonstrate reliance on a formal tax opinion obtained before the payments were made. Polish fiscal criminal law treats documented reliance on professional advice as a significant mitigating factor, and in some cases as a full exculpatory defence.
In the foreign investor scenario, a German shareholder appoints a local manager as sole board member of a Polish joint-venture vehicle. KAS opens a KKS investigation into customs duty misclassifications. The local manager argues that all decisions were made by the German parent. This argument fails under the KKS because liability attaches to the person who formally managed the company – not to the economic decision-maker. The local board member faces full exposure. Understanding how cost recovery in parallel civil or administrative proceedings works is also relevant here; our guide on cost recovery rules in Polish civil proceedings sets out the applicable framework.
Frequently asked questions
Q: How long does a KKS investigation typically last before charges are filed or the case is closed?
A: Most KKS investigations at the preparatory stage run between six months and two years. KAS has the authority to extend the investigation period, and complex cases involving multiple tax periods or multiple suspects routinely exceed 18 months. Board members should not interpret the absence of communication from KAS as a sign that proceedings have been closed. Counsel should monitor the case file actively throughout. Conditional discontinuance, where available, typically resolves matters within three to six months of the application being filed.
Q: Can a board member be held liable under the KKS even if they had no knowledge of the tax irregularity?
A: This is a common misconception. The KKS covers both intentional offences and negligent ones. A board member who failed to implement adequate internal controls, or who delegated tax compliance without proper oversight, may be found liable even without direct knowledge of the irregularity. The standard applied by Polish courts is whether a reasonably diligent manager in that position would have identified and corrected the problem. Documenting internal compliance procedures and regular board-level tax reviews is therefore a preventive measure, not merely a formality.
Q: What are the likely costs of KKS defence proceedings for a board member?
A: Legal fees for KKS defence depend heavily on case complexity and the stage at which counsel is retained. Matters resolved through voluntary disclosure or conditional discontinuance before trial typically involve fees in the range of PLN 15,000 to PLN 50,000. Contested cases that proceed to trial in the district court are significantly more expensive, often exceeding PLN 100,000 in legal costs alone. In addition, the board member may face a fine calculated in daily rates – the daily rate is set by the court based on income and personal circumstances, and the fine can range from 10 to 720 daily rates for fiscal crimes.
Fiscal criminal proceedings do not exist in isolation. A company facing a KAS investigation is often simultaneously managing a tax audit, an administrative appeal, or a restructuring process. Each track has its own deadlines. Missing one can have irreversible consequences on the others. The specific circumstances of your company require early, coordinated legal advice – waiting until charges are formally presented precludes several of the most effective defence instruments.
To receive an expert assessment of your exposure under the KKS and a structured defence strategy, contact info@kordeckipartners.com.
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 fiscal criminal defence, restructuring, and white-collar matters. 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.