Month: May 2026

Successful Defence of Board Members in Corporate Liability Dispute

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🏆 Successful Defence of Board Members in Corporate Liability Dispute

Another significant victory for our Firm. We secured a full dismissal of claims seeking to hold our clients — members of a company’s management board — personally liable for the company’s outstanding obligations, fully protecting their private assets.

We represented members of the management board of a commercial company in complex litigation initiated by creditors seeking to satisfy their claims directly from our clients’ personal assets. The legal basis for the claims was rooted in Polish corporate law governing the subsidiary personal liability of board members for a company’s obligations — in particular Article 299 of the Commercial Companies Code — as well as insolvency regulations concerning the timeliness of filing for bankruptcy.

The case was multifaceted and required simultaneous analysis across several dimensions: an assessment of the company’s financial condition in the period preceding insolvency, a verification of the appropriateness and timeliness of the board’s actions, and an examination of whether statutory exculpatory grounds existed to exclude personal liability.

As part of our litigation strategy, we conducted a thorough review of the company’s financial and corporate documentation spanning several years of its operations. We demonstrated that the board had continuously monitored the company’s financial standing, taken reasonable restructuring measures, and — critically — had filed for bankruptcy within the statutory deadline. The body of evidence assembled, including an expert opinion from a certified accountant, effectively dismantled the claimants’ argument that the board had acted negligently and to the detriment of creditors.

The court accepted our arguments in full and dismissed the claims entirely. Our clients avoided personal liability for the company’s obligations, preserving the integrity of their private assets. The judgment reaffirms that effective defence in such cases demands not only a thorough command of the law, but also the ability to navigate the intersection of corporate law, insolvency proceedings, and corporate finance.

⚖️ Facing a similar challenge?

Whether you are a foreign investor, a board member of a Polish entity, or a company navigating financial difficulty — understanding the scope of personal liability exposure under Polish law is essential. Our Firm provides comprehensive legal counsel at every stage: from early-stage risk assessment and structuring, through representation in court proceedings, to the robust protection of your personal and business interests.

We work regularly with international clients and are fully equipped to advise in English across all areas of Polish corporate, commercial, and insolvency law.

📩 Get in touch — we are here to help.

The PIP (NLI) Reform And B2B Reclassification Risk

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What the administrative decision means from 8 July 2026

A guide for employers and foreign investors hiring in Poland | ATL Law 2026

Introduction – a new chapter in employment-form supervision

The Act of 11 March 2026 amending the Act on the National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) and certain other acts – signed by the President on 2 April 2026 and published in the Journal of Laws on 7 April 2026 – introduces one of the most significant changes to the supervision of lawful employment in Poland in recent years. The core provisions enter into force on 8 July 2026, after a three-month vacatio legis. For businesses engaging contractors in Poland under B2B and other civil-law arrangements, this is the deadline by which organisations should prepare for substantially strengthened inspection powers.

Two layers must be distinguished. The reform does not prohibit B2B cooperation or other civil-law forms, and it does not change the statutory definition of an employment relationship. What it changes is enforcement – moving the point at which the nature of a working arrangement is decided away from lengthy court proceedings and towards the administrative inspection stage. For foreign investors, who frequently build operating models on flexible forms of cooperation, this means scrutinising not so much the wording of contracts as the way they are actually performed.

The core of the reform – an administrative decision, not only the courts

What remains unchanged – the substantive employment test

The reform does not touch Article 22 § 1 of the Labour Code, which has long provided the substantive test. Under that provision, work of a defined type performed for an employer, under the employer’s direction and at a place and time designated by the employer, for remuneration, constitutes an employment relationship regardless of how the parties have named their contract. Classification therefore turns on the actual content and manner of cooperation, not on the formal legal label. The test itself is not new – what is new is the procedure by which an authority may apply it.

The new power of the district labour inspector

Until now, establishing the existence of an employment relationship was in practice the domain of the labour courts, and proceedings often took years. The reform empowers the district labour inspector to establish the existence of an employment relationship by way of an administrative decision where the conditions of cooperation correspond to the features of employment, irrespective of the formal legal basis – and therefore also in relation to B2B contracts and contracts of mandate or for specific work. This creates an administrative “fast track” while preserving full judicial review of the decision.

A two-stage procedure – an order first, a decision only after

Unlike earlier drafts, the enacted model does not provide for automatic reclassification at the stage of inspection findings. The procedure is two-stage, which creates genuine room to correct a cooperation model.

  • Stage one – the order: the inspector first issues an order to remedy the irregularities identified, for example by changing the form of cooperation or eliminating the features of an employment relationship from the way the work is actually performed.
  • Stage two – the decision: only failure to comply with the order, or improper compliance, opens the way for the district labour inspector to issue a decision establishing the existence of an employment relationship. Independently of this route, the inspector retains the option of referring the matter to court.

The two-stage structure matters in practice: the first formal signal from the inspectorate is not yet a ruling but a call to act. Using that window for a genuine correction of the model allows a reclassification decision to be avoided.

The temporal effect of the decision – ex nunc and enforceability

One of the most important features of the enacted Act is the temporal scope of the decision’s effects. A district labour inspector’s decision establishing an employment relationship produces legal, tax and social-insurance effects from the date it is issued (ex nunc), not retroactively. The administrative decision alone therefore does not convert the cooperation backwards over its entire duration.

The decision becomes enforceable upon expiry of the appeal deadline or upon a final court judgment. The Act allows immediate enforceability to be ordered in defined cases, in particular where the decision concerns a person subject to special protection. Crucially, obtaining retroactive effects – covering the whole period during which the parties were bound by the contract – requires the district labour inspector to bring a separate court action to establish the existence of an employment relationship. The court route thus remains the only mechanism leading to retroactive effects within the employment relationship itself.

Protective standards where the terms cannot be determined

Where the circumstances do not allow the inspector to determine individual elements of the employment relationship, the Act provides for so-called protective standards. In that case an indefinite-term, full-time contract is presumed, with the place of work at the employer’s registered seat. The date of conclusion of the employment contract is taken to be the date of the decision, or in defined cases the date the inspection began. This construction shifts the practical risk of documentary ambiguity onto the engaging entity.

Appeal to the labour court and security granted ex officio

A district labour inspector’s decision does not close off the party’s ability to defend its position. An appeal lies to the labour court and must be filed within one month of the date the decision is issued. Until the case is finally concluded, enforcement of the decision is in principle suspended, save for cases covered by immediate enforceability.

At the same time, the reform strengthens the position of the person affected by reclassification. Where an appeal is filed, the court will as a rule grant security ex officio, limiting the engaging entity’s ability to amend or terminate the contract during the proceedings. The court may refuse security only where it is obvious, in the circumstances of the case, that the contract at issue is not an employment contract. In practice this means that even a successful challenge requires litigation during which the employer’s flexibility in managing the relationship is materially constrained.

Independent ZUS and tax-authority risk – a five-year horizon

Limiting the effect of the PIP decision itself to the future does not eliminate backward-looking financial risk. The Social Insurance Institution (ZUS) and the National Revenue Administration (KAS) act under their own competences and, independently of the inspector’s ruling, may pursue overdue contributions and taxes for up to five years back. A reclassification by PIP – like the inspection findings themselves – may serve these authorities as a trigger to open their own proceedings.

Under Article 38a of the Act on the Social Insurance System, contributions previously paid by a sole trader or contractor are credited against the amounts due. However, the difference between contributions calculated on the minimum base (typical for sole traders) and those due on full remuneration remains the engaging entity’s liability, increased by interest. For long-running, highly priced B2B cooperation, the accumulated arrears per individual can reach substantial figures, which often makes the ZUS and KAS exposure more significant financially than the inspector’s decision itself.

Twelve months for voluntary correction – the amnesty mechanism

The Act provides for a twelve-month period from the entry into force of the provisions, during which entities that voluntarily convert civil-law contracts into employment contracts are released from liability for prior irregularities in that respect. This mechanism is a genuine incentive to put cooperation models in order before the first inspection. It should be stressed, however, that the protective period concerns liability towards the labour inspectorate and does not eliminate the independent claims of ZUS and the tax authorities for overdue contributions and taxes. Voluntary correction reduces the risk of sanctions but does not automatically relieve the entity of financial arrears.

The individual interpretation as a safeguarding tool

Modelled on tax rulings, the reform introduces a new instrument – the ability to apply to the Chief Labour Inspector for an individual interpretation assessing a form of cooperation. The application fee is nominal. The interpretation is intended to confirm whether a given cooperation model gives grounds for a reclassification decision, and compliance with it protects against sanctions from the labour inspectorate.

The instrument should be used with awareness of its limits. The interpretation is not binding on the engaging entity and relates solely to the facts described in the application. For businesses built on numerous B2B contracts, an unfavourable interpretation may in turn increase exposure to inspection and force a costly change of model. A decision to apply should therefore be preceded by an internal audit and risk analysis.

Higher sanctions and inter-institutional cooperation

Alongside the reclassification decision, the reform raises the penalties for concluding civil-law contracts in conditions characteristic of an employment relationship. The upper limit of the fine rises from the previous PLN 30,000 to a materially higher level, and the inspector may impose a penalty by way of a fine notice. Equally important in practice is the strengthening of inter-institutional cooperation.

The reform provides for systematic data exchange between the Social Insurance Institution, the National Labour Inspectorate and the National Revenue Administration, including the use of IT systems for risk analysis and the targeting of entities for inspection. It also establishes an inter-institutional team comprising the Chief Labour Inspector, the President of ZUS and the Head of KAS, tasked with coordinating action and identifying areas of heightened risk. In practice this means that contribution and tax data may become a source for selecting targets of labour inspections.

The foreign investor’s perspective

For a foreign investor who employs or plans to employ in Poland, the reform has several practical consequences. Models built on B2B contracts – common in IT, construction and the creative-services sector – remain particularly exposed to inspection. In capital groups where a Polish company cooperates with individual contractors performing work organised by the company, correct contract wording alone ceases to be sufficient – what decides is the actual operating practice and its consistency with the declared legal basis.

Consequently, legal due diligence on market entry, or on the acquisition of a B2B-based company, should cover not only the content of the contracts but also the actual manner of cooperation: the contractors’ degree of independence, the economic risk they bear, the scope of organisational subordination, and the consistency of documentation with practice. Because the assessment is distributed across several authorities – PIP, ZUS and KAS – the risk must be analysed cumulatively rather than through the lens of the labour inspectorate alone.

How to prepare your company before 8 July 2026

The reform does not require abandoning the B2B model where it reflects genuine contractor independence. The sensible response is not an automatic shift to employment contracts, but a thorough audit of cooperation models carried out before the new provisions begin to apply. The table below indicates the signals on which inspecting authorities focus when assessing the nature of a working arrangement.

 

Signals of employee subordination (reclassification risk) Features of genuine B2B independence (lower risk)
Fixed working hours and attendance set by the principal Contractor independently sets working time and organisation
Work solely at the principal’s premises and on its equipment Genuine freedom as to the place and tools of performance
Ongoing instructions and direct supervision by a manager Settlement by result, without day-to-day direction
Fixed monthly pay irrespective of result and free of risk Economic risk and responsibility for the result borne by the contractor
A single recipient of services and a ban on serving others Ability to provide services to multiple clients
“Actual” cooperation inconsistent with the contract wording Documentation consistent with the real operating practice

 

In practice, preparing the organisation should involve reviewing existing contracts and mandates for features of subordination, verifying that contract wording is consistent with how cooperation is actually performed, putting documentation in order and – where the line is thin – considering a voluntary correction of the model within the twelve-month protective window. For borderline models, applying for an individual interpretation is worth considering.

Conclusion

The reform of the National Labour Inspectorate does not create a new basis of liability; it radically changes how long-standing rules are enforced. From 8 July 2026, the burden of deciding the nature of a working arrangement shifts from lengthy court proceedings to a faster administrative inspection stage, while judicial review is preserved and the decision operates only prospectively. The greatest financial risk, however, remains with the independent proceedings of ZUS and KAS, which may reach five years back.

For employers and foreign investors, the key is to use the period before the provisions take effect for a thorough audit of cooperation models and for putting documentation and operating practice in order. The civil-law cooperation that remains safe is the one that is not only correctly designed but also ready to be defended from the first day of an inspection.

ABOUT ATL LAW

ATL Law is a law firm specialising in comprehensive support for foreign investors on the Polish market. We provide multilingual advice (Polish, English, German) in employment law, tax law, corporate law and compliance. We advise on the design and audit of B2B and civil-law cooperation models against reclassification risk, and we represent clients in inspection proceedings before the National Labour Inspectorate and in proceedings before ZUS and the National Revenue Administration. We help employers prepare their organisations for the reform that takes effect on 8 July 2026.

Off-Cycle Financial Statements in Poland: What Foreign Investors Should Know After the 2026 KSR Clarification

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If you own – or are considering buying – a Polish company, there is a quirk of Polish accounting law that may catch you off guard: certain corporate events force your company to prepare a full financial statement in the middle of the fiscal year, separate from its regular annual accounts. This applies to transactions you may take for granted in your home jurisdiction, such as paying an interim dividend or restructuring your holding.

For years, the legal and accounting community in Poland disagreed about what exactly these mid-year statements were – whether they needed to be audited, what comparative data they should contain, and how they related to the annual financial report. In February 2026, the Polish Accounting Standards Committee (Komitet Standardów Rachunkowości, “KSR”) issued a binding clarification that finally settles most of these questions.

This article explains what changed, why it matters for your Polish operation, and where you still need to be cautious.

When Your Polish Company Will Need One of These Statements

A mid-year (“special”) balance sheet date arises whenever the company closes its books on a date other than the end of its fiscal year. The most common triggers from a foreign investor’s perspective are:

  • Corporate conversions – for example, converting a limited liability company (spółka z o.o.) into a joint-stock company (spółka akcyjna), or restructuring a partnership into a corporate form. Polish company law requires a financial statement as part of the conversion plan.
  • Mergers and demergers – both domestic and cross-border. The financial statement underpins the merger plan and the related shareholder resolutions.
  • Interim dividend payments by a joint-stock company – paying an interim dividend in a Polish spółka akcyjna requires a financial statement supporting the distribution.
  • Entering the “Estonian CIT” regime – a popular alternative corporate tax system in Poland that taxes only distributed profits. Switching to it requires closing the books on the day before entry.
  • Other statutory events specific to particular industries or transactions.

If any of these are on your roadmap for your Polish subsidiary, expect to encounter a special balance sheet date.

The Core Insight: This Is Not Your Annual Report

The single most important takeaway from the KSR clarification is this: a financial statement prepared on a special balance sheet date is not an annual financial statement, and the fiscal year does not end on that date.

In practical terms, this means three things:

First, your company still has to prepare its regular annual financial statement at the end of its fiscal year, exactly as before. The mid-year statement does not replace it – the two coexist.

Second, the fiscal year keeps running. Even though the books are formally closed on the special date and reopened the day after, this is an accounting mechanic, not a calendar event. The fiscal year continues until its scheduled end.

Third, the regulatory treatment is much lighter than for the annual report – which is good news for your cost base and timeline.

The Practical Consequences: Lighter Compliance

Because the mid-year statement is not an annual one, several burdensome requirements do not apply by default:

  • No mandatory statutory audit. Unlike the annual financial statement (which must be audited for companies above certain thresholds), the mid-year statement does not need an auditor’s opinion, unless a specific provision says so.
  • No board approval by shareholders’ resolution. The shareholders do not need to formally approve it the way they approve the annual report.
  • No management report. The narrative document covering business activity, risks, and outlook is required only for annual statements.
  • No payments-to-governments report. The extractive-industries disclosure obligation is tied to the fiscal year, not to any mid-year close.

For a foreign investor managing several Polish entities, this matters. Each annual audit cycle costs time and external fees; the KSR clarification confirms that a transaction-driven mid-year close does not automatically multiply that burden.

Watch-Outs: When the Lighter Regime Does Not Apply

The “no audit needed” rule has meaningful exceptions. Before assuming you can skip the auditor, check whether any of the following applies:

  1. Interim dividend in a joint-stock company. Polish company law requires that the financial statement supporting the interim distribution be reviewed – this is precisely the kind of “special provision” that overrides the default.
  2. M&A operations. Merger plans, demerger plans, and conversion plans typically require a statutory auditor’s opinion under Polish company law. The financial statements supporting those plans are tightly coupled to that audit process.
  3. Public companies and regulated sectors. Listed issuers, banks, insurance undertakings, and other regulated financial institutions face additional reporting and review obligations under sector-specific rules and capital-markets regulations.
  4. Industry-specific statutes may impose their own audit or disclosure requirements that survive the general rule.

A clean way to think about it: the default is “light”, but transactional context can quickly re-introduce a full audit requirement.

What Has To Be in the Statement

The KSR clarification also resolves a subtle but consequential question – what comparative data the mid-year statement should contain. The answer matters because incomplete comparatives undermine the document’s usefulness to lenders, counterparties, and tax authorities. The structure is now:

  • Balance sheet – current data as of the special date, with prior-year data as of the end of the previous fiscal year.
  • Profit & loss statement – from the start of the current fiscal year to the special date, with the corresponding period of the previous fiscal year for comparison.
  • Cash flow statement – same logic as P&L.
  • Statement of changes in equity – current data from the start of the fiscal year to the special date, with the entire previous fiscal year as the comparative.

If preparing full comparatives is genuinely impractical (for example, where source data is not available in the required granularity), the standard allows an alternative – but the company must explain the deviation in the notes. This is not a discretionary shortcut; expect auditors and tax authorities to test the justification if invoked.

After the Special Date: Your Next Annual Report Still Covers the Full Year

Because the fiscal year does not end on the special balance sheet date, the next annual financial statement covers the entire fiscal year – not just the period after the special date. The comparative period is the previous full fiscal year, as usual.

The KSR clarification recommends that the notes to that annual report identify the event that triggered the special balance sheet date (for example, the conversion or merger), and provide partial-year data where this helps users of the statement – particularly when the fiscal year spans two tax years or involves a settlement among shareholders.

A Critical Tax Caveat: Accounting Year ≠ Tax Year

Foreign investors frequently assume that closing the books mid-year also closes the tax year. It does not – not automatically, and not as a matter of accounting law.

The Polish corporate income tax statute defines the tax year separately. By default, it is the calendar year, but taxpayers can elect a different tax year aligned with their fiscal year. A mid-year accounting close does not end the tax year unless a specific tax rule says so. The clearest examples where the two align are:

  • Transfer pricing documentation – obligations track the tax year, which usually matches the fiscal year.
  • Estonian CIT entry and exit – the tax statute itself requires book closure on specific dates.

The KSR explicitly disclaims any interpretation of tax law in its clarification. This is not a technicality – it is a warning that the tax consequences of a mid-year close need a separate analysis, ideally before the corporate event is finalized.

The Unresolved Question: Changing the Fiscal Year During a Conversion

One area remains genuinely unsettled. Under Polish accounting law, when a company changes its fiscal year, the first year after the change must be longer than 12 months. But it is not clear whether this rule applies when the fiscal year is changed in connection with a corporate conversion – or whether “the first year after the change” means the year beginning after the change or the year ending after the change.

For investors planning to combine a conversion with a fiscal-year alignment (a common request when integrating a Polish target into a foreign group’s reporting calendar), this ambiguity can result in inconsistent reporting periods spanning up to two years. The KSR did not resolve this – which means it has to be planned for, transaction by transaction, until either the legislature or the courts settle it.

How ATL Law Supports Foreign Investors

At ATL Law, we routinely advise foreign investors and international groups on Polish corporate operations that trigger special balance sheet dates – conversions, mergers, demergers, dividend planning, and entry into the Estonian CIT regime. Our work in this area typically covers:

  • Transaction structuring that anticipates the accounting and tax mechanics, not just the corporate-law steps;
  • Drafting of conversion, merger, and demerger plans in compliance with the Polish Commercial Companies Code (KSH), including coordination with statutory auditors;
  • Tax opinions on the consequences of mid-year book closures, including the interplay with Estonian CIT and transfer pricing;
  • Cross-border coordination with parent-company auditors and finance teams to ensure that the Polish entity’s reporting integrates cleanly with group accounts;
  • Interim dividend planning for Polish joint-stock companies, including compliance with the supporting-statement requirements.

The 2026 KSR clarification removes much of the uncertainty that used to surround mid-year financial statements in Poland – which should make planning easier and timelines more predictable. The areas that remain ambiguous, particularly around fiscal-year changes during conversions, are exactly where experienced local counsel adds the most value.

Beneficial Owner Won’t Save Your Polish Holding Structure

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If you hold a Polish company through a foreign holding entity — Dutch, Cypriot, Luxembourg, Maltese — there is a recent Polish court ruling you should understand. Not because it changes the law dramatically, but because it tells you exactly where the Polish tax authorities will now attack. And the answer is not where most investors expect.

The short version

For years, the central fight over Poland’s dividend withholding tax exemption was about one phrase: “beneficial owner.” The Polish tax authorities argued that a foreign holding company could only enjoy the exemption if it was the real owner of the dividend — not just a conduit passing money up the chain.

A regional administrative court in Gdańsk has now confirmed, in line with a growing series of Supreme Administrative Court rulings, that this argument is wrong: beneficial-owner status is not a condition for Poland’s dividend exemption. Good news for taxpayers — except the same court still denied the exemption. It simply used a different tool to do it.

That tool is the anti-abuse clause. And for foreign investors, that shift is the whole story.

How Poland’s dividend exemption works (and where the trap is)

When a Polish company pays a dividend to a foreign shareholder, the default is a 19% withholding tax. Under the EU Parent-Subsidiary Directive — implemented in Polish law — that tax can drop to zero if certain conditions are met (minimum shareholding, holding period, EU/EEA parent, and so on).

Here is the distinction the court made clear, and it matters:

  • For interest and royalties, Polish law explicitly requires the recipient to be the beneficial owner.
  • For dividends, the law contains no such requirement.

The court’s reasoning is simple: if the legislator deliberately wrote the beneficial-owner test into one exemption and left it out of the other, tax authorities cannot read it back into the dividend rules. So if your structure was challenged purely on “your holding company isn’t the real owner,” you now have a strong defense.

But that defense only gets you to the real battlefield — which is substance.

The case, in plain terms

The facts are a textbook cross-border holding chain:

Polish operating companies → Dutch holding company → Cypriot company (managed from Malta) → two Polish-resident individuals.

In 2018, the Polish company paid out a dividend to the Dutch holding company and applied the 0% exemption. The tax authorities investigated — using information exchange with the Dutch, Cypriot, and Maltese tax administrations — and found something that, frankly, is common in these structures.

The Dutch holding company had no employees, no office, no real estate, and no genuine business. Its income was almost entirely dividends from Poland. Its only “investment” was parking the cash in a bank account. The Cypriot company one level up looked exactly the same.

Then came the number that decided the case. Over 2017–2018, the Dutch entity received more than PLN 32 million in dividends from Poland — and only about 13% of it ever reached the actual individuals at the top of the chain. More than 87% simply sat at the holding-company level, never reinvested, never distributed onward.

To the court, that wasn’t a holding structure. It was a parking lot for cash, built to convert a 19% tax into 0%.

The anti-abuse clause: the real test

This is the part every investor should internalize. The court found that the exemption could be denied under the small anti-abuse clause (Poland’s implementation of the directive’s anti-abuse rule). That clause switches off the exemption when both of these are true:

  1. A main purpose of the arrangement was to obtain the tax exemption — and the benefit went beyond simply avoiding double taxation; and
  2. The arrangement is artificial — not done for genuine economic reasons.

The court found both. The intermediate companies did no real business; their only function was to channel dividends with minimal tax. One detail made it worse: the Dutch company appeared in the structure shortly after the exemption was introduced — a timing pattern that tax authorities read as deliberate.

The court also leaned on the EU’s well-known “Danish cases” (C-116/16 and C-117/16): an EU member state must refuse a directive benefit when the conditions are met only on paper and the real aim is to game the system.

“But the money was eventually taxed in the EU” — why that didn’t work

The taxpayer made an argument that sounds compelling: the ultimate recipients were Polish residents who did pay tax in Poland, so the exemption simply prevented double taxation — exactly what the directive intends. This is the “look-through” approach: ignore the empty shells and look at who really ends up with the money.

The court’s response is the practical lesson of the entire ruling. It accepted that the authorities had effectively already looked through the structure — and found no one worth looking through to. The look-through approach only helps when there is a real beneficial owner somewhere in the chain. Here, the Cypriot company at the top was also a shell, and only a small fraction of the money was ever taxed in Poland.

Bottom line: “it was taxed somewhere in the EU” does not rescue a structure once the anti-abuse clause applies. Artificiality anywhere in the chain neutralizes the directive’s protection — no matter where the final recipient lives.

The hidden risk: the statute of limitations barely protects you

There is one more point that rarely makes the headlines but should worry any investor relying on “enough time has passed.”

This case concerns a 2018 dividend, yet it is still being litigated in 2026. How? Because Polish authorities have two independent ways to freeze the limitation clock in cross-border cases:

  • Information exchange with foreign tax administrations. Because the authorities had to query the Netherlands, Cyprus, and Malta, the clock was suspended for the entire period from the first request (October 2022) to the last reply from Malta (January 2025).
  • Opening a fiscal-criminal investigation (here, over an allegedly false withholding-tax return), which independently suspends the clock.

These work in parallel. Even if a court strikes one down, the other can keep the tax liability alive. The practical takeaway: in cross-border holding structures, the comfortable assumption that “the standard five-year period has run out” is often an illusion. Successive queries to several countries can suspend the clock for years.

What this means for you

If you hold Polish assets through a foreign company, here is how to read this ruling:

  • Stop relying on the beneficial-owner debate. It’s largely settled in the taxpayer’s favor for dividends — but that’s no longer where you win or lose.
  • The decisive question is substance. Polish authorities now build their case on whether your foreign holding company actually does anything: people, premises, decisions, reinvestment, genuine business purpose.
  • A pure conduit is the highest-risk profile. Empty company, dividend-only income, no reinvestment, only a fraction passed onward, and incorporation timed to a tax change — that’s the exact pattern that loses.
  • “Taxed elsewhere in the EU” is not a shield if the structure is artificial.
  • Don’t trust the calendar. Cross-border structures stay exposed far longer than the nominal limitation period suggests.

The right question to ask is no longer “Do we tick the boxes for the exemption?” It is “Does each company in our chain run a real business we could prove to an auditor?”

If you can’t answer that confidently, the time to review is now — before the tax authority does it for you.

How ATL Law can help

At ATL Law, we advise Polish and international investors on cross-border tax structuring, holding company arrangements, and disputes with the Polish tax authorities. This ruling confirms that the safety of a structure is now decided on economic substance and evidence, not formal conditions alone. We help clients:

  • audit the economic substance of their foreign holding entities against Poland’s anti-abuse standard;
  • assess and de-risk existing cross-border structures and redesign them safely;
  • represent clients in tax and administrative-court proceedings, including withholding-tax and information-exchange cases;
  • advise on ongoing flows — dividends, royalties, and interest — across borders.

If you hold Polish assets through a foreign structure, talk to us — we’ll help you find out whether your structure would survive scrutiny, before it’s tested.

Dr Zuzanna Jęcek Receives the “Doctorate OPEN MIND” Award

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We are pleased to announce that Dr Zuzanna Jęcek, a member of our team has been awarded the “Doctorate OPEN MIND” prize in the 2nd edition of the COOPERANTE Award, granted by the Polish Scientific Network for Labour Law and Social Security at the Faculty of Law and Administration of the University of Łódź.

The COOPERANTE Award is one of Poland’s most respected academic distinctions in the field of labour law and social security. The “Doctorate OPEN MIND” category specifically recognizes doctoral dissertations that combine research excellence with innovative thinking and tangible practical application for the business and social environment.

Dr Jęcek was honoured for her dissertation “Succession Administration in Labour Law” (Zarząd sukcesyjny w prawie pracy) — a comprehensive analysis of how employment relationships and business continuity are preserved following the death of a sole proprietor under Polish law. The topic is of growing strategic importance for family-owned enterprises, cross-border investors, and M&A transactions involving Polish targets, where workforce continuity and post-acquisition employment risk are central due-diligence concerns.

For our clients and partners, this recognition reinforces what defines our practice:

  • Depth of expertise — combining doctoral-level research with day-to-day advisory work,
  • Forward-looking advice — anchored in the latest scholarship on labour and succession law,
  • Practical relevance — guiding investors and business owners through complex transitions, including ownership changes, restructurings, and generational handovers.

We extend our warmest congratulations to Dr Jęcek and remain proud to count her among our team.

🔗 More about the award: https://cooperante.uni.lodz.pl/konkurs/

The Polish Family Foundation (2026)

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Why succession planning matters – the foreign investor’s perspective

A foreign investor doing business in Poland – whether through a Polish operating subsidiary, a holding vehicle, or a real estate or industrial portfolio – sooner or later faces the question of what should happen to the accumulated wealth in the next generation. The challenge is multi-dimensional: it spans tax and corporate law, the operational continuity of the business, the protection of the family’s long-term interests and, very often, the management of latent intra-family conflicts.

Conventional succession tools – wills, lifetime gifts or family-controlled holding companies – frequently fall short, particularly when significant business assets, cross-border family structures or a wide circle of potential heirs are involved. Insufficient succession planning typically leads to fragmentation of the business, forced heir reserve (zachowek) claims, decision-making paralysis and, ultimately, a destruction of the economic value built up over years.

To address these challenges, the Polish legislator introduced the family foundation (fundacja rodzinna) by the Act of 26 January 2023, in force since 22 May 2023. After almost three years of practical experience, this institution has proven to be a sophisticated planning tool – one that is fully accessible to foreign investors and broadly comparable to the family foundations long established in Liechtenstein, Austria, Switzerland or the Netherlands.

This article explains the legal architecture and tax regime of the Polish family foundation from the perspective of a foreign investor. It also addresses the current legislative status, including the consequences of the presidential veto of 27 November 2025 on the planned 2026 tightening of the regime, and the statutory review of the Family Foundation Act scheduled to take place after 22 May 2026.

Current legislative status – the regime that applies in 2026

The legal foundation of the institution is the Act of 26 January 2023 on the Family Foundation, supplemented by amendments to the corporate income tax (CIT), personal income tax (PIT), inheritance and gift tax, and civil law transactions tax acts that establish the dedicated tax regime applicable to family foundations.

In 2025 the Polish Ministry of Finance prepared a draft amendment to the CIT Act intended to take effect on 1 January 2026. The draft proposed substantial tightening of the family foundation regime, including a 36-month lock-up on assets contributed to the foundation, the application of controlled foreign company (CFC) and exit tax rules to family foundations, the exclusion of short-term rental income and most commercial real estate rental income from the CIT exemption, and an expansion of the so-called hidden profits category (covering, among others, loans extended to beneficiaries, founders and related parties).

On 27 November 2025 the President of the Republic of Poland vetoed the act passed by the Polish Parliament. The veto was justified, in particular, by reference to the constitutional principle of citizens’ trust in the State and to the premature character of the proposed changes – introduced less than three years after the institution itself, despite earlier assurances of regulatory stability. As a direct consequence, the planned tightening did not enter into force on 1 January 2026 and family foundations remain subject in 2026 to the unchanged regime introduced in 2023.

Foreign investors should nevertheless be aware that, under article 143 of the Family Foundation Act, the Council of Ministers is required to carry out a comprehensive review of the operation of the Act after 22 May 2026 (i.e. three years after its entry into force). This review is widely expected to become the starting point for a new legislative initiative, ideally with broader public consultation and a longer vacatio legis. From a planning perspective, 2026 should therefore be treated as a window of relative regulatory stability – a window that warrants disciplined use to put long-term wealth structures in place.

Legal architecture of the family foundation

The founder – who can establish a family foundation

Only a natural person with full legal capacity may act as the founder of a family foundation. A foundation may be established either by a notarial declaration of incorporation or by way of a will. Critically for foreign investors, the Act imposes no nationality or tax residency requirement on the founder – a non-Polish citizen, including a person permanently resident outside Poland, may validly establish a Polish family foundation.

Several individuals may jointly act as co-founders, provided they are closely related within the meaning of the Inheritance and Donation Tax Act or otherwise constitute a family. A foundation established by will, by contrast, may have only one founder – this restriction reflects the personal nature of testamentary dispositions under Polish law.

Beneficiaries and the international dimension

Beneficiaries of a family foundation may be natural persons and non-governmental organisations conducting public benefit activity. The founder enjoys broad discretion in defining the circle of beneficiaries and the conditions on which they receive distributions, including age requirements, completion of education, involvement in the family business or other criteria the founder considers relevant.

The Act does not restrict the choice of beneficiaries by reference to nationality or tax residency. The beneficiaries of a Polish family foundation may therefore include persons resident anywhere in the world, which is particularly significant for international business families: the Polish family foundation can serve as a centralised vehicle for managing family wealth across multiple jurisdictions, coordinating distributions to beneficiaries located in different countries.

Governance bodies

The mandatory governing body of every family foundation is the management board, which conducts the affairs of the foundation and represents it externally. The management board may consist of one or more members, who may be appointed from among the beneficiaries or from third parties. In foundations holding sophisticated investment portfolios or operating businesses, the appointment of professional managers is a common and recommended solution.

A supervisory board is generally optional, but becomes mandatory once the number of beneficiaries exceeds twenty-five. In practice, the appointment of a supervisory board is also advisable in foundations holding substantial assets or having a complex beneficiary structure, as it provides an internal control mechanism over the management board and a forum for managing intra-family conflicts.

The assembly of beneficiaries is a specific organ whose competences include, in particular, the approval of the foundation’s financial statements and decisions on matters expressly reserved to it in the statute. The scope of the assembly’s powers may be tailored by the founder to suit the specific family situation, allowing the corporate governance of the foundation to be precisely calibrated.

The statute – the foundation’s constitutional document

The statute of the family foundation, executed in the form of a notarial deed, is the foundation’s constitutional document. It must regulate, among other matters, the foundation’s purpose, the rules for maintaining the list of beneficiaries and the identification of beneficiaries (or categories of beneficiaries), the principles for granting and paying distributions, the structure and appointment of the foundation’s organs, and the rules for amending the statute and for dissolving the foundation.

The long-term effectiveness of the foundation as a succession tool depends critically on careful drafting of provisions addressing future family scenarios – including divorces, remarriages, the birth of further generations and conflicts among beneficiaries. Superficial or template-based statutes frequently become the source of serious legal complications and unforeseen tax exposure later in the foundation’s life.

The founding fund

The founder must contribute assets to cover the founding fund of the foundation, the value of which – as specified in the statute – may not be less than PLN 100,000. The founding fund may be covered both by cash and by other assets, including shares in companies, real estate, intellectual property rights or an enterprise within the meaning of the Civil Code.

The value of assets contributed to cover the founding fund is determined by reference to their market value at the date of contribution. After the foundation has been established, additional assets may be contributed to it, both by the founder and by third parties, including by way of donations or inheritance. Each such contribution must be reflected in the asset register (spis mienia), which has direct tax consequences for distributions subsequently paid to beneficiaries.

Permitted scope of business activity

A family foundation may conduct business activity exclusively within the closed catalogue set out in article 5(1) of the Family Foundation Act. This catalogue includes, among other items, the disposal of assets (provided they have not been acquired solely for resale), the leasing or other gratuitous or paid grant of use of assets, accession to and participation in commercial companies, investment funds, cooperatives and similar entities, the acquisition and disposal of securities, derivatives and similar rights, the granting of loans to specified categories of recipients, foreign exchange transactions, and certain types of agricultural and forestry activity.

The closed character of this catalogue requires careful analysis of the foundation’s intended business model already at the stage of drafting the statute. Income generated from activity falling outside the catalogue is taxed at a punitive 25% CIT rate – a substantial deterioration relative to the preferential regime applicable to in-catalogue activity.

From a foreign investor’s perspective, the most important provisions are those allowing the foundation to acquire and hold shares in commercial companies, both Polish and foreign. This makes it possible to use the family foundation as a holding company for the family’s entire corporate structure, centralising governance and rationalising dividend flows within the group.

Tax treatment of the family foundation

Subjective CIT exemption – tax-deferred accumulation

The family foundation is a CIT taxpayer but, as a general rule, benefits from a subjective CIT exemption in respect of income generated within the permitted scope of business activity. The construction is conceptually similar to the Polish Estonian-style CIT regime: the tax liability arises only at the moment a distribution is made to a beneficiary or assets are released upon dissolution of the foundation.

In practice this means that the family foundation may receive dividends from Polish and foreign subsidiaries, interest from loans and bank deposits, long-term rental income, proceeds from the disposal of securities or income from participation in investment funds – all without current CIT being payable. These funds accumulate within the foundation in their full amount, and their reinvestment in further assets does not trigger any tax liability at the foundation level.

Distributions – 15% CIT at the foundation level

When the foundation makes a distribution to a beneficiary or releases assets upon dissolution, it becomes liable to CIT at a rate of 15% calculated on the value of the distribution or assets. The taxable base is the value of the distribution, and the foundation may not reduce that base by deductible costs or depreciation.

The result is that – unlike a classical capital company, where profit is first subject to CIT and then the dividend distributed to shareholders is again taxed as capital gains – the aggregate tax burden on a distribution to a Group Zero beneficiary is 15%. For long-term family wealth this is a meaningful reduction relative to traditional dividend distribution models.

Beneficiary-level PIT – the role of family proximity

The PIT treatment of distributions in the hands of beneficiaries depends on the beneficiary’s family relationship to the founder, determined by reference to the categories used in the Inheritance and Donation Tax Act. Beneficiaries belonging to the so-called Group Zero in relation to the founder – that is, the spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother – are fully exempt from PIT on distributions, irrespective of their amount.

Beneficiaries falling within Tax Group I or Tax Group II under the Inheritance and Donation Tax Act (for example parents-in-law, son- or daughter-in-law, nieces and nephews, the founder’s parents’ siblings) are taxed at a preferential 10% PIT rate. Other beneficiaries – including unrelated persons and more distant relatives – are taxed at 15% PIT.

Distributions from a family foundation are not subject to social security contributions or to the health insurance contribution, and they are not included in the base for the so-called solidarity levy (a 4% surtax applicable above PLN 1 million of annual income). For high-net-worth families this represents a meaningful reduction relative to traditional capital income channels.

Effective tax rates – at-a-glance summary

The combined CIT and PIT burden on distributions from a Polish family foundation can be summarised as follows (assuming the foundation is funded entirely by a single founder and the beneficiary stands in the indicated relationship to that founder):

Beneficiary category (in relation to founder) PIT rate on distributions Effective combined burden (with 15% CIT at foundation level)
Founder; spouse; descendants; ascendants; siblings; stepchildren; stepfather; stepmother (so-called Group Zero)

 

 

 0% (full exemption) 15%
Other relatives within Tax Group I or II under the Inheritance and Donation Tax Act (e.g. parents-in-law, son-/daughter-in-law, nieces/nephews, parents’ siblings)

 

 

 10% 23.5%
Unrelated beneficiaries and other persons 15% 27.75%

 

Where the foundation has multiple founders, or where assets have been contributed by third parties, the PIT exemption (or the reduced 10% rate) applies only to that portion of a distribution which corresponds proportionally to the assets contributed by the relevant founder. This makes the structure of contributions, and a precise asset register, central to the achievable tax outcome.

Specific considerations for foreign investors

Foreign founder, internationally dispersed beneficiaries

Polish law imposes no nationality or residency restriction on the founder. A foreign investor with assets in Poland – whether shares in Polish companies, real estate, securities issued by Polish issuers or other property – may therefore validly establish a Polish family foundation and contribute Polish or foreign assets to it. Equally, the beneficiary group may include persons resident in any jurisdiction, which is particularly relevant where the family is geographically dispersed.

Distributions to non-resident beneficiaries

As a general rule, a Polish family foundation is a Polish tax resident with unlimited tax liability in Poland. Both the foundation-level CIT (15%) and any beneficiary-level PIT are settled within the Polish tax system, regardless of the beneficiary’s residency. Where the beneficiary is resident abroad, careful analysis of the applicable double tax treaty becomes essential.

Distributions made by a Polish family foundation do not always map cleanly onto the traditional treaty categories (dividends, interest, other income), which raises substantive interpretive questions. Each cross-border distribution scenario therefore warrants individual analysis combining Polish tax rules and the domestic tax law of the beneficiary’s state of residence – ideally supported, where appropriate, by an individual tax ruling issued by the Polish tax authorities.

Holding shares in Polish and foreign subsidiaries

The family foundation may hold shares in Polish and foreign capital companies, allowing it to operate as a family holding vehicle. Dividends received from Polish subsidiaries are covered by the foundation’s subjective CIT exemption.

In the case of dividends received from foreign subsidiaries, the relevant double tax treaties apply, as do – for EU-based subsidiaries – the rules implementing Council Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (the Parent-Subsidiary Directive). Withholding tax exemption on a dividend paid by an EU subsidiary requires verification of the applicable conditions, including the minimum shareholding period and the substantive economic activity (substance) requirements that the Polish implementing rules impose.

Cross-border succession and private international law

Once assets have been contributed to the family foundation, they cease to form part of the founder’s personal estate and do not pass through inheritance on the founder’s death. Distributions made by the foundation after the founder’s death are governed by the foundation’s statute, not by inheritance law.

In a cross-border context, particular attention should be paid to Regulation (EU) No 650/2012 of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession. The Regulation – applicable in most EU Member States – generally subjects the entirety of the succession to the law of the State of habitual residence at the time of death, with an option to choose the law of the State of nationality. Properly aligning the family foundation structure with these cross-border succession rules is one of the most important elements of wealth planning for the foreign investor.

With respect to the Polish forced heir reserve (zachowek), the Civil Code introduces a meaningful limitation – under article 994 § 1¹, the value of distributions received by a beneficiary from the family foundation, and of assets received upon its dissolution, is added to the estate for the purposes of calculating the reserve only within the scope set out in the statute. This creates room for effective wealth planning that mitigates the risk of claims from disinherited heirs, which is of particular value in complex family configurations.

Practical implementation – key recommendations

The statute as a long-term governance instrument

Drafting the statute of a family foundation requires careful design of mechanisms for situations that may arise across several generations. The statute should, in particular, precisely define the circle of beneficiaries and the criteria for acquiring or losing beneficiary status, the principles and procedure for paying distributions (including any conditions attached), mechanisms for managing conflicts among beneficiaries, and the rules for amending the statute after the founder’s death. Any of these matters left unaddressed may, years later, become the source of significant legal complications requiring costly judicial intervention.

Asset register and its tax implications

Each contribution of assets to the family foundation must be reflected in the asset register, which records the origin of each component of the foundation’s wealth. This has direct consequences for the taxation of subsequent distributions: where the foundation has multiple founders, or where third parties have contributed assets, the PIT rate applicable to distributions is determined proportionally to the relevant founder’s share in the total assets of the foundation.

From a tax planning perspective, it is important to ensure that all – or at least the predominant part – of the foundation’s assets originates from the founder whose immediate family will be the principal beneficiary group. In structures where the foundation receives assets from more than one founder or from third parties, the effective tax rate on distributions may be materially higher than the headline rates suggest.

Compliance and monitoring of the regulatory environment

Given the statutory review of the Family Foundation Act expected after 22 May 2026, and the announced resumption of legislative work on the tax regime, every family using a foundation as part of its wealth structure should implement systematic monitoring of regulatory developments. Decisions on significant restructuring or disposal of foundation assets in 2026 should be considered in light of the risk that a future amendment may introduce a lock-up period or other restrictions materially affecting the efficiency of comparable transactions in the new regime.

International groups – transfer pricing discipline

Where the family foundation forms part of an international corporate group and engages in transactions with related parties – in particular where it operates as a holding company controlling foreign subsidiaries – appropriate transfer pricing policies must be implemented. Related-party transactions exceeding the statutory thresholds require local transfer pricing documentation, and remuneration for services must be set on an arm’s-length basis. Failure to comply may not only trigger ordinary transfer pricing consequences but also expose the foundation to recharacterisation of the transactions as hidden profits subject to the 15% CIT.

Conclusions and strategic recommendations

The Polish family foundation is a powerful instrument for foreign investors planning the succession of wealth accumulated through investment activity in Poland or via Polish holding structures. The combination of a flexible legal architecture, a preferential tax regime and effective limitation of forced heir reserve claims places it in line with the most sophisticated international family wealth planning tools.

The current legal framework – stabilised in 2026 by the presidential veto of 27 November 2025 against the planned tax tightening – creates a window of relative regulatory certainty that warrants disciplined use to put long-term wealth structures in place. At the same time, the upcoming statutory review after 22 May 2026 and the announced return of legislative work on the regime require ongoing attention and the willingness to adapt wealth management strategies as the regulatory environment evolves.

Effective use of the family foundation requires an individually tailored design that takes account of the founder’s asset base, the beneficiary structure, the planned distribution policy and the international dimension of the family. The support of legal and tax advisers with significant experience in advising foreign investors remains essential to achieve the intended outcomes and to avoid tax exposures which – in the case of misclassified transactions or documentary shortcomings – can materially erode the benefits of the family foundation regime.

ABOUT ATL LAW

ATL Law is a Polish law firm specialising in comprehensive legal services for foreign investors active on the Polish market. We provide multilingual advice in corporate law, tax law, succession planning and employment law. We have substantial experience in designing family foundation structures for international business families, including the drafting of statutes, tax planning and obtaining individual tax rulings to secure long-term wealth strategies. We support our clients at every stage – from structural concept and implementation, through ongoing operations, to representation in tax proceedings and forced heir reserve disputes