Liability of a board member, a prosecutor and a proxy in a limited liability company – Part I: liability for tax arrears.

The appointment of a member of the board of directors of a capital company (including a company with an o.o. and S.A.) is responsible for:

• •
• for the company's obligations relating to the company's commercial activities resulting from the Civil Code[1] and the Commercial Companies Code[2],
• •
• for tax arrears on the basis of Article 116 Tax Ordinance[3], and
• •
• criminal and criminal tax.

In practice, it is not only the management of the company that conducts its affairs, since in many cases the company is responsible for the current affairs of the company, appointed by the proxy company or proxy. This article will examine the liability of persons acting on behalf of the company.

Liability of a member of the Management Board

General principles of liability of the members of the management board of the company are regulated for its obligations under Article 299 KSH. At the level of tax obligations by a special provision compared to Article 299 KSH is Article 116 OP.

According to its content, the members of the management board of the Polish limited liability company. are in principle liable for its tax arrears, provided that they cannot be enforced from the company itself.

Tax arrears are defined under Article 51 OP as unpaid tax on the date of payment, and it should be remembered that the tax arrears are also considered as non-payment advance on the date of payment, including the advance in question under Article 23a The OP, or the instalment of the tax, shall also apply to tax receivables, advance payments on taxes and instalments of taxes not paid on the date of payment by the payer or collector.

Members of the Management Board shall be jointly and severally liable to all their assets if the execution of the assets of the company has proved to be wholly or partly ineffective.

Solid liability of debtors is defined under Article 366 KC and it is that a creditor may require all or part of the benefit from all debtors together, from several of them or from each individual, and the satisfaction of the creditor by any of the debtors relieves the others.

However, it should be remembered that in the case of tax liabilities, according to Article 108(1) OP, the tax liability of the person third the tax authority decides by decision . This means that as long as the decision is made against the person third it will not collapse, the person cannot be treated as a debtor.

It follows from the above that the principle of joint and several liability cannot be applied to that person, since the joint and several liability Article 116 The OP only applies to debtors. It is only until a decision has been taken by the tax office which the members of the management board of the company are debtors, i.e.

they are responsible for specific tax arrears, making it possible to choose e.g. one or a few of them and execute them using the principle of solidarity. The joint and several liability is all the more severe for board members, as they bear responsibility for all their personal assets, both present and future.

In a situation where some of the company's tax arrears are not met, this may result in tax liability for board members. However, it is necessary for the creditor to demonstrate the application of enforcement measures to the entire assets of the debtor.

The tax liability of the members of the board of directors of the company is joint and several, but individuals can be released from it provided that they are satisfied. one of three conditions calculated under Article 116(1-2) OP, i.e. if a member of the Management Board:

• •
• demonstrates that an application for bankruptcy has been filed in due course or that proceedings have been initiated to prevent bankruptcy (contractual proceedings) or
• •
• demonstrates that the failure to file for bankruptcy or failure to initiate proceedings to prevent bankruptcy (contractual proceedings) has occurred without fault;
• •
• indicates the assets of the company from which the execution will enable the company to meet the tax arrears to a large extent.

The burden of demonstrating any of the above mentioned liability-free circumstances lies with the board member, but the tax authority should seek, in accordance with the rules governing tax proceedings, to establish objective truth.

The liability of the members of the Management Board shall cover the tax arrears for liabilities whose payment deadline expired at the time of their duties as a member of the Management Board. Doubts arise when a person remains in the board of directors only formally, and in fact does not undertake any management activities.

Is such a person responsible for tax arrears? The jurisprudence indicates that carrying out the duties of board members means actually performing them, and not just passively carrying out the functions to which these duties are linked. However, this position raises serious doubts among tax law scholars.

Similarly, diverging positions concern whether the entry of a member of the Management Board in the Register is merely a declaratory or prejudicing the responsibility of a member of the Management Board.

True, the NSA expressed its view[4], that the undisclosed appeal of a board member does not relieve him of his liability for the company's tax arrears, however, this view was met with strong criticism.

The current position is that the entry of a member of the Management Board in the register is in principle purely declaratory and cannot be the only condition of liability on the basis of Article 116 OP.5

Liability of the prosecutor and proxy

The question of whether the responsibilities of the members of the Management Board envisaged are important under Article 116 The OP may be extended to a proxy acting on behalf of the company. It is widely accepted that this responsibility cannot be extended due to the lack of legal basis.

The exception is only the liability of the proxy in the case of the company of the o.o.

in the organisation - according to Article 116(3) The PO, where such a company does not have a board, shall be liable for the tax arrears of the company to its proxy or to its partners, if the proxy has not been appointed, with the above-mentioned comments regarding the exemption from liability and the subject of liability being applied to the proxy of the company.

______________