PFR Subsidy Repayment Claims Against Foreign Entrepreneurs: Court Dismisses PFR’s Case in Full

ATL Law secures another victory for a foreign investor operating in Poland through a branch

The District Court has issued a judgment fully dismissing a claim brought by Polski Fundusz Rozwoju S.A. (Polish Development Fund, “PFR”) against our Client – a foreign company operating in Poland through a registered branch – seeking repayment of a financial subsidy granted under the PFR Financial Shield for SMEs.

The ruling adds to a growing body of case law that is increasingly favouring entrepreneurs in disputes with PFR, and carries important implications for all foreign businesses that received subsidies under the Programme and are now facing repayment demands.

Background: The PFR Financial Shield Programme

The PFR Financial Shield for Small and Medium-Sized Enterprises was a government aid programme launched in 2020 in response to the economic disruption caused by the COVID-19 pandemic. The Programme was approved by the European Commission as compatible with EU state aid rules (Decision SA.56996, 27 April 2020) and administered by PFR S.A., a state-owned development institution.

Subsidies were granted to eligible businesses to help them maintain liquidity and employment during the crisis. A portion of each subsidy could be written off following a settlement process conducted in 2021, with the remainder repayable in instalments.

Since 2023, PFR has pursued repayment claims against a number of businesses – including foreign entrepreneurs operating in Poland through branches – arguing that they did not meet the Programme’s eligibility criteria and therefore received subsidies unlawfully.

The Case: Key Facts

Our Client, a foreign company with its registered seat in Sweden, operated in Poland through a duly registered branch. The branch applied for and received a subsidy under the PFR Financial Shield for SMEs, disclosing its status as a foreign entrepreneur operating through a branch at every stage of the process – in the application, the subsidy agreement, and all subsequent correspondence with PFR.

Following the 2021 settlement process, PFR issued a write-off decision reducing our Client’s repayment obligation by 48%. Our Client accepted the write-off and repaid the remaining 60% of the subsidy in full, completing the final instalment in August 2023.

In September 2023 – shortly after the final repayment – PFR issued a demand for return of the entire subsidy, claiming that our Client had never been eligible to participate in the Programme as a foreign entrepreneur acting through a branch. ATL Law represented the Client before the District Court, successfully defending against the claim in its entirety.

The Court’s Findings: Why PFR Lost

1. PFR Lacked Standing to Bring the Claim

The court confirmed one of our principal arguments: PFR S.A. does not have the statutory authority to pursue recovery of subsidies granted as EU-approved state aid before a civil court.

The PFR Financial Shield constituted state aid within the meaning of Article 107 TFEU – funds granted from public resources, approved by the European Commission, and disbursed by PFR as an entity created by the state to administer public support programmes. Under Polish constitutional principles (Articles 7 and 87 of the Constitution) and EU law, the authority to demand repayment of unlawfully granted or misused state aid must have an explicit statutory basis. No such provision exists granting PFR the right to bring civil proceedings for subsidy recovery in cases of this nature.

This position has now been confirmed in multiple judgments, including decisions of the Warsaw District Court (February, March, April and September 2025) and the Łódź District Court (September 2025).

2. The Client Was an Eligible Programme Beneficiary

PFR argued that only entrepreneurs within the meaning of Article 4(1) and (2) of the Polish Entrepreneurs’ Law qualified as Programme Beneficiaries, thereby excluding foreign entrepreneurs operating through branches.

The court rejected this interpretation. The Programme Document – a government act approved by the Council of Ministers and the European Commission, and hierarchically superior to PFR’s own Regulations – defines Programme Beneficiaries by reference to the entirety of Article 4 of the Entrepreneurs’ Law, which expressly includes foreign entrepreneurs conducting business activity in Poland (Article 4(3)). PFR had no authority to narrow this definition in its Regulations in a manner inconsistent with the Programme Document it was tasked with implementing.

This interpretation is further supported by the EC Decision itself (recital 16), which refers to all micro, small and medium-sized enterprises registered and operating in Poland, requiring only that beneficiaries hold tax residency within the European Economic Area – a condition our Client satisfied.

3. PFR Was Aware of the Client’s Status from the Outset

The court noted that PFR’s claim to have learned of the Client’s foreign entrepreneur status only in September 2023 was not credible. The Client’s status as a foreign company operating through a Polish branch was explicitly stated in the subsidy application, in the subsidy agreement dated 29 July 2020, and in PFR’s own write-off decision of 27 August 2021. PFR knew precisely who it was contracting with throughout the entire process.

4. The Write-Off Decision Was Valid and Effective

PFR sought to argue that the 2021 write-off decision was ineffective because it had been issued in circumstances that, in PFR’s view, did not actually exist. The court disagreed.

The write-off decision constituted a unilateral declaration by PFR releasing the Client from 48% of its repayment obligation, within the meaning of Article 508 of the Civil Code. Our Client accepted this release by conduct – specifically, by repaying the remaining instalments in accordance with the schedule issued alongside the write-off decision. No special form is required for acceptance of a debt release under Polish civil law; it may be expressed through conduct implying acceptance.

Crucially, PFR was not induced into issuing the write-off decision by any error regarding the Client’s status – the Client’s identity and form of operation were known to PFR from day one.

5. PFR’s Claim Violated Principles of Social Coexistence

Finally, the court found that PFR’s conduct was incompatible with the principles of social coexistence under Article 5 of the Civil Code. In 2020, PFR itself publicly confirmed – on its website FAQ – that foreign entrepreneurs operating in Poland through a registered branch could apply for subsidies under the Programme. Businesses that relied on this representation and subsequently received subsidies cannot be penalised years later on the basis of a changed interpretation introduced by PFR unilaterally and retrospectively.

As the Supreme Court confirmed in its decision of 18 December 2025 (I CSK 2279/25), PFR cannot ambush entrepreneurs with a new interpretation of Programme conditions after subsidy agreements have already been concluded.

What This Means for Foreign Investors

This judgment is significant for any foreign company that operated in Poland through a branch, received a PFR subsidy, and has since received – or may yet receive – a demand for full repayment.

The key takeaways are:

• PFR’s standing to bring civil repayment claims in cases involving EU-approved state aid is increasingly being challenged and rejected by Polish courts
• Foreign entrepreneurs operating through Polish branches were eligible Programme Beneficiaries under the Programme Document and the EC Decision; PFR’s contrary position in its Regulations lacked legal basis
• Valid write-off decisions accepted by entrepreneurs through conduct (timely repayment) cannot subsequently be declared ineffective by PFR
• PFR’s own public representations from 2020 confirming eligibility of foreign-branched businesses are legally relevant and can be relied upon as grounds for invoking the prohibition on abusing one’s rights

ATL Law’s Experience in PFR Disputes

ATL Law has successfully represented clients in proceedings against PFR at both first and second instance, across multiple courts in Poland. Our team has deep expertise in the intersection of Polish civil law, EU state aid rules, and the specific regulatory framework governing the PFR Financial Shield Programme.

If your company has received a repayment demand from PFR, we strongly recommend seeking legal advice promptly. Limitation periods apply, and the strength of available defences often depends on the specific facts of each case.

Contact us:

📩 office@atl-law.pl

The above article is for informational purposes only and does not constitute legal advice. Each case requires individual analysis.