When is a Management Board Member of a limited liability company liable for tax debts of the company ?

Similarly to debts owed to private entities, a Management Board Member may also be personally liable for tax arrears – provided that certain prerequisites are met – with all his/her assets.

The provisions of the Tax Ordinance Act (art. 116) defining the scope of liability of Members of Management Boards of companies for debts of companies related to taxes and social security payments have a similar construction to art. 299 of the Commercial Companies Code, as they make liability dependent on at least partial ineffectiveness of enforcement against the company’s assets and failure to file a timely motion for bankruptcy (opening of restructuring proceedings, approval of an arrangement in proceedings for approval of an arrangement). In addition, the receivable must have arisen (become due) while the board member was performing his function. Similarly to Article 299 of the Code of Commercial Companies, a Member of the Management Board may also be released from liability if he or she proves the absence of fault in failing to file such a motion. However, unlike liability for private-law liabilities, a Board Member will not be liable for the company’s tax debts even if he or she indicates assets from which enforcement will enable the arrears to be satisfied to a significant extent.

But what about those Board Members who have specific scope of duties that is completely unrelated to finance? Such persons often do not have any knowledge of the company’s liquidity. Therefore, should they be personally liable, with all their assets, for tax obligations if enforcement against the company proves ineffective?

The issue in question was recently considered by the Voivodship Administrative Court in Bydgoszcz (judgment of the Voivodship Administrative Court in Bydgoszcz of 16 May 2023, file ref. I SA/Bd 171/23). A Member of the Management Board questioned his liability for the company’s public-law liabilities, referring to the division of duties within the company – as he was only involved in contacting clients, selling flats and in marketing and advertising.

Unfortunately, the court did not share this argumentation. In the judge’s opinion, the regulations do not differentiate the liability of Management Board Members. Pursuant to art. 116 § 2 of the Tax Ordinance Act, the liability of Management Board Members covers tax arrears in respect of obligations whose due date expired while they performed their duties as Management Board Members. The judge pointed out that a Management Board Member is under a specific legal obligation to conduct the company’s affairs professionally, which he or she agrees to when taking on that function, and if obstacles arise which make it impossible to diligently fulfil the duties, Management Board Member should immediately resign from his or her function.

Therefore, it should be assumed that the scope of liability of a Member of the Management Board of a limited liability company for the company’s tax arrears is neither affected by the issue of division of tasks between the Members of the Management Board, nor by the fact that one Member of the Management Board is not engaged in the company’s affairs. Such circumstances are not prerequisites for the exclusion of this liability.

You have doubts about the liability of Members of the Company’s bodies? Contact us !

tel. (+48) 536 34 34 32

sekretariat@blumski.pl

Our law firm is experienced in providing services to companies, including participation in complex transactions, and this experience stems, among other things, from holding managerial positions in companies in the Bank Zachodni WBK S.A. group. (currently Santander Bank Polska S.A.) and being a Chairman of Supervisory Board in the company listed on the stock exchange.