Liability of a board member for tax obligations

Liability of a board member for tax obligations
Jakub Chajdas

Jakub Chajdas

Partner / Attorney-at-law

The principles of fulfilling tax obligations result directly from the Act. It also specifies entities obliged to pay tax liabilities. The occurrence of tax arrears has an objective nature. It actualizes the responsibility of a specific entity for its settlement. Is a board member liable for the tax obligations of a capital company? We answer this question in the following article.

Table of Contents

The basis for the liability of a board member for tax obligations

The rules of liability for tax obligations of the management board members of capital companies are regulated by Art. 107-117 of the Tax Ordinance. These provisions deviate from the general principle of liability for tax obligations, according to which the taxpayer is liable with all his assets. The legislator specifies the category of events that initiate tax liability. He also defines the subjective scope, conditions and scope of liability.

The general principle regarding the liability of board members in capital companies provides that, in cases and to the extent specified by the Act, third parties are jointly and severally liable with the taxpayer for tax arrears.

The scope of liability of a board member for tax obligations

The Tax Ordinance, in Art. 107 § 1 and § 1a, expands the liability for tax arrears of capital companies to third parties. According to this, they are jointly and severally liable with the taxpayer for tax arrears with all their assets. Moreover, they are liable jointly and severally with the legal successor of the taxpayer for arrears taken over.

In practice, board members are jointly and severally liable with their entire estate for tax obligations of:

Furthermore, this responsibility may also extend to:

  • Representatives of these companies in organization. If a representative hasn’t been appointed, it extends to shareholders. This is the case if no management board has been appointed in the company.
  • Former board members, former representatives, or shareholders of the company in organization.
  • Directors and members of the board of directors in a simple joint-stock company in organization, in which such board was established.
  • Liquidators of the company. With the exception of those appointed by the court, responsible for tax arrears arising during liquidation.

The moment when the liability of a board member for tax obligations arises

The liability of board members for tax obligations arises only under certain conditions. Namely, when the enforcement from company’s assets is entirely or partially ineffective. A board member can be exempted from liability under certain conditions. These include situations when he or she:

  • proves that a bankruptcy petition was filed in due time, or that restructuring proceedings were opened at that time. Alternatively, board member demonstrates that an arrangement was approved in the arrangement proceedings. It is also possible if the failure to file a bankruptcy petition occurred without the fault of the board member or another third party.
  • indicates the company’s assets from which enforcement will enable a significant part of the tax arrears to be satisfied.

The nature of the liability of a board member for tax obligations

The liability of third parties for the company’s tax obligations has the following characteristics:

  • Subsidiary (auxiliary)
  • Joint and several (between the liable and the taxpayer, and among board members)
  • Personal (concerns the entire personal estate, including marital property)
  • Provides guarantee and security.

A board member is only liable when the tax obligation cannot be enforced from the primary obligor. He is responsible for someone else’s debt, guaranteeing the payment of a public-law obligation. But, this doesn’t release the primary obligor from his tax obligation. Therefore, the creditor should first pursue his claims from the primary obligor. Only after using all available legal means for that, he can seek to fulfil his claims from a board member. Only if it is impossible to collect the amount due from the principal obligor, the liability of the board member for the company’s tax obligations is updated.

What are the responsibilities of a limited liability company’s management board members? Find out more from this article.

Determining the liability of a board member for tax obligations

A board member’s liability for tax obligations of the company results from a decision of tax authority. This is a separate decision from the one determining the taxpayer’s tax assessment. During the proceedings leading to the decision, the tax authority doesn’t conduct a separate evidentiary procedure on the arrears. It focuses on matters related to:

  • The existence and identification of the entity responsible for tax obligations.
  • The scope of obligations covered by the liability.
  • Determination of the deadline for payment.

Solidarity in the liability of board members arises from the decision of tax authority.  In a decision concerning more than one board member, it is important for the authority to indicate that their responsibility is joint and several. At the same time, in the case law, there are no grounds for repealing decision if such wording is not included.

The tax authority conducts proceedings on the liability for tax arrears of an LLC (Sp. z o.o.) in relation to all individuals who may bear such responsibility. This means that after establishing solidarity among potential obligors, the authority can select a debtor (board member) to satisfy the arrears. A separate tax decision should be issued for each board member who may be liable for the company’s obligations.

Enforcement of the liability of a board member for tax obligations

The creditor can seek satisfaction of the claim from a chosen board member. However, this can happen only after the emergence of joint and several liability.  There is no need for one joint decision concerning all board members as debtors, to determine their joint and several liability. This results directly from the Act (Art. 369 of the Civil Code).

What is important, the settlement of a claim as a result of repayment of arrears by one of the board members doesn’t exempt the tax authority from adjudicating against the other board members. In such a situation, there is a possibility of later ruling on the liability of other board members


Enforcing tax arrears is a formalized process. It ensures payment of public obligations when the primary debtor is unable or evades responsibility. Legislator imposed liability on board members for tax obligations of capital companies. Yet, specific circumstances must be met to determine the basis and scope of such responsibility. This serves to maintain an economic balance.

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