Tax Authorities Scrutinise Services Provided by Management Board Members

20 September 2023 | Knowledge, News, Tax Focus, The Right Focus

Management board members who also provide services to companies need to exercise caution, as the tax authorities have changed their previous positive attitude and are increasingly refusing to issue tax rulings for this type of arrangement.

The Director of the National Revenue Administration Information Centre (KIS) is now frequently refusing to issue tax rulings regarding the taxation of non-management services provided to a company by its management board members acting as sole traders.

Taxpayers are appealing against the refusals, and the cases end up before administrative courts. And the courts, to the surprise of the taxpayers, are upholding the decisions of the Director of the KIS. We examine the possible consequences for taxpayers of such a ‘line of jurisprudence’.

Change in the approach of the National Revenue Administration Information Centre

Firstly, it is important to consider who may be affected by this situation. The circumstances in which the Director of the KIS is refusing to issue a tax ruling have certain common elements, namely:

  • The applicants are natural persons running sole proprietorships
  • The applicants wish to change the form of taxation of their business to tax on registered revenue without deductible costs
  • The applicants are shareholders and management board members of capital companies to which they will provide services as sole traders

This raises the question of why the KIS is refusing to issue tax rulings in such clearly defined circumstances. The main reason seems to be that the scheme in question results in tax advantages for both the board members and the company itself.

The authorities state that the amount of the actual dividend, which is subject to the 19% flat-rate income tax, is reduced.

In return, this ‘reduced portion’ will be paid to the applicant in the form of remuneration for the provision of services under a B2B contract, which will be taxed, by way of a tax on registered revenue without deductible costs, at a rate that is always lower than the above-mentioned 19% (e.g. 15% for consultancy services or 8.5% for service activities, sales intermediation, etc.).

The tax advantage will also accrue to the company itself. Since the company will benefit from the services provided by the sole trader (the applicant) and will pay them remuneration for these services, this remuneration will constitute a tax-deductible cost.

In summary, the reason for refusing to issue a tax ruling is the suspicion that the activities in question are aimed at tax avoidance.

Refusal procedure

A refusal to issue an advance tax ruling on the basis of a reasonable suspicion of tax avoidance requires a prior request to the Head of the National Revenue Administration (KAS) for an opinion on the matter. Importantly, the Director of the KIS is bound by such an opinion and may not issue a tax ruling if the Head of the KAS confirms that the actions taken or planned may be aimed at tax avoidance (which happened in some of the cases that were the subject of a tax ruling request).

This is also the reason why the courts approve of the actions of the Director of the KIS, pointing out that the provisions on issuing tax rulings are structured in such a way that the opinion of the Head of the KAS is binding on the authority issuing tax rulings, with the latter then being unable to take any action other than refuse to issue a ruling.

What does this mean for taxpayers

It should be noted that no hasty conclusions should be drawn from the aforementioned judgments. First and foremost, it is still possible for board members to provide non-management services to the company in which they exercise their functions, on the basis of a B2B contract concluded as sole traders, and the tax rulings obtained to date in this respect remain in force. In addition, tax rulings may still be requested to confirm the tax treatment of such a cooperation model.

However, taxpayers who are members of the management board and at the same time shareholders of the company should exercise caution, especially if they provide services to the company that are subject to tax on registered revenue without deductible costs.

In their case, the provision of non-management services on the basis of a B2B contract is in principle also permissible if there is a predominant economic or business justification for doing so. However, it will not be possible to secure the applied tax treatment by means of a tax ruling, as has been the case up to now.

In order to exclude the possibility of application of a tax avoidance clause, taxpayers should consider applying to the Head of the KAS for an advance protective opinion, which is a more time-consuming and costly procedure than a standard application for a tax ruling (requiring up to 6 months to obtain the opinion and a fee of PLN 20,000).

However, without such an opinion, there is a risk that the service model used may be challenged in the future on the basis of a tax avoidance clause (GAAR). In addition, depending on the fulfilment of other conditions (apart from the tax advantage, which is beyond question), these taxpayers may also be required to notify the cooperation model as an MDR scheme.


In conclusion, the situation outlined above should not generally be a cause for concern for board members or managers who are not also shareholders in the company to which they provide services under a B2B contract.

However, it does show that the increasing number of managers who switch to providing services under B2B contracts is accompanied by a greater interest on the part of the tax authorities in the legitimacy of the use of this form of cooperation.

Therefore, particular attention should be paid to the justification of such a switch, to the correct separation of the services provided on this basis from the management services and to their documentation. It should also be remembered that, in the case of individuals related to the company (e.g. management board members), the value of the services provided should correspond to the market price.

On the other hand, board members who are also shareholders and who provide B2B services to the company, in particular those subject to tax on registered revenue without deductible costs, should review the commercial/economic justification for such separation of services from the company’s structures, review their obligations regarding MDR and consider requesting an advance protective opinion from the Head of the KAS. In certain situations, it may also be appropriate to change the existing cooperation model.

Questions? Contact us

Mirosław Malczeski

Jan Janukowicz

See other Tax Focus issues

Latest Knowledge

Liability of management board members

The liability of management board members is a complex and multifaceted issue. It is therefore worth taking a closer look at these issues, especially in light of recent developments.

Effectively managing collective redundancies

The labour market is seeing an increased number of collective redundancies. We check what rules govern collective redundancies and what obligations must be fulfilled in order to carry them out effectively.

SME Fund – Tomasz Szambelan accredited IP Scan provider

Tomasz Szambelan has been included in the list of accredited IP Scan providers maintained by the Polish Patent Office. The IP Scan service is part of the grant scheme for the filing of trade marks, designs and inventions from the European SME Fund.

New rules for setting fines for businesses by the President of UOKiK

At the beginning of April 2024, the President of the Office of Competition and Consumer Protection (UOKiK) published new clarifications on the determination of the amount of fines in cases related to the conclusion of agreements restrictive of competition and the abuse of dominant position.

Contact us:

Mirosław Malczeski

Mirosław Malczeski

Attorney at Law / Counsel / Tax Law

+48 608 593 450