CJEU challenges Poland’s model of joint and several liability of board members – groundbreaking judgment

The Court of Justice of the European Union (CJEU) has challenged Poland’s system of board liability for tax debts in a groundbreaking judgment in case C-277/24 (Adjak).

The CJEU ruled that the Polish system of joint and several liability for management board members violates EU law. This ruling undermines the current model, which automatically holds board members liable for a company’s tax liabilities without the possibility of effectively appealing tax authority decisions.

The CJEU decision has far-reaching consequences. It could impact both ongoing and completed proceedings and aslo may force a change in Polish law to adapt it to EU standards.

Why do Polish regulations violate EU law?

Under current Polish law, management board members are jointly and severally liable for a company’s tax liabilities if:

• The company has failed to pay its taxes,
• Enforcement against the company has been unsuccessful,
• The management board has not notified the application for bankruptcy in time.

The biggest issue was the lack of a right for board members to challenge tax decisions issued against the company. In practice, this meant that tax authorities’ decisions were automatically binding, regardless of whether the board had any influence over the company’s tax arrears.

Additionally, board members did not have access to the company’s tax proceedings files. This prevented them from effectively defending themselves and presenting their arguments.

These concerns were highlighted by the Voivodship Administrative Court (VAC) in Wrocław, which referred a preliminary question to the CJEU regarding the compatibility of the Polish system with EU principles of fair trial.

Landmark CJEU Rule

The CJEU unequivocally ruled that the Polish system violates EU law and fails to provide board members with adequate procedural guarantees.

The court emphasized that, in joint and several liability proceedings, board members must have the right to challenge tax authorities’ findings against the company. They should also have access to the tax case files, which serve as the basis for their liability.

The ruling means that board members cannot be automatically held liable for a company’s tax debts if they were not given a real opportunity to defend themselves or challenge prior tax decisions.

What are the consequences of the judgment?

Resumption of completed proceedings

The ruling allows for the reopening of cases where board members have already been held liable under previous regulations. Affected individuals can now request a case review and seek the annulment of past decisions.

Changes to ongoing proceedings

Current proceedings must now comply with the new CJEU standards. Board members can:

• Request access to the company’s case files,
• Challenge the findings of the tax authorities,
• Present their own evidence and arguments to defend themselves against liability.

CJEU ruling may impact more than just VAT

Although case C-277/24 specifically concerned VAT, its impact may extend to other taxes subject to joint and several liability rules, including:

• Corporate Income Tax (CIT),
• Excise duty,
• Property tax.

Short deadlines for action!

Board members seeking to benefit from the CJEU ruling must act quickly. The following deadlines apply for reopening proceedings:

• 1 month from the publication of the judgment in the Official Journal of the EU – for reopening cases before tax authorities,
• 3 months from the publication of the judgment – for reopening cases before administrative courts.

The ruling is expected to be published within 1–2 months, so affected individuals should analyze its impact and take appropriate legal action as soon as possible.

How will the CJEU judgment affect tax proceedings?

The CJEU ruling fundamentally changes the liability rules for board members regarding company tax debts. Its key effects include:

• The possibility of reopening completed cases and recovering previously paid amounts,
• Greater legal protection for board members against unjustified liability,
• The obligation for Poland to amend its regulations to comply with EU law.

The CJEU ruled that board members must have the right to challenge tax decisions issued against the company and access the related documentation.

This represents a major shift from Poland’s previous system, which imposed joint and several liability on board members without adequate legal safeguards. Until now, tax authorities’ findings were automatically binding with no option for appeal.

The ruling could directly impact ongoing cases and allow for the reopening of previously settled disputes. This provides board members with new tools to defend themselves more effectively against tax liability.

Need legal assistance?

If you are in a similar situation and want to find out whether you can challenge a tax decision or reopen a completed case, seeking professional legal advice is highly recommended.

Our experienced tax law experts will analyze your case, identify possible solutions and take necessary legal actions to protect your rights.

Contact us to discuss your case and explore the steps you can take to avoid unjustified liability for your company’s tax obligations.