A massive tax penalty?
poniedziałek, 8 luty 2010
Individual employees, sole proprietors and partnerships generally understand that they are personally responsible for the payment of their own income tax in Poland. Failure to pay can lead to the assessment of interest on any unpaid amount, as well as the imposition of a penalty. And in extreme cases an individual can be sentenced to prison for failure to pay such taxes.
What many management board members do not seem to understand, however, is that they too may be held personally liable for the non-payment of taxes by their employer. And in one peculiar situation personal liability may even extend to shareholders.
Yes, that is right. A shareholder may be held personally liable for the tax liability of a company, although such liability is limited to one particular situation. Now let’s examine just how an unpaid corporate tax liability can lead to personal liability.
Members of a company’s management board, pursuant to Art. 116 of the Tax Code, are jointly and severally liable for a company’s tax arrears if the assets of the company are insufficient to satisfy such tax obligation. In the case of a limited liability “in formation,” meaning during the time between the signing of the company’s articles of association and the moment the company is formally registered in the Commercial Court, the founding shareholders are also personally liable for all debts of the company incurred during the interim period, including the payment of any taxes.
The only way to avoid personal liability is if the members of the management board and/or shareholders can demonstrate that they filed a bankruptcy motion in a timely manner, which is generally understood to mean at the time it became obvious that the company could not pay its debts, including any tax obligation.
Additionally, management may be personally liable not only for the company’s tax arrears, but also for any damages incurred by the company if such liability arose out the individual’s failure to properly perform his or her duties. In a limited liability company, for instance, management staff are liable to the company itself for “damage inflicted through an action or omission contrary to the law or the deed of the company” (Art. 293 of the Commercial Companies Code) for which they are responsible, such as the filing of tax declarations and the payment of taxes.
Personal liability for the payment of a company’s tax obligation is not limited to the amount of the tax. Penalties apply as well.
Pursuant to Articles 56 and 57 of the Fiscal Criminal Code, a member of the company’s management board may be assessed a monetary penalty if convicted of submitting a false tax declaration for the company. Moreover, in particularly egregious cases the individual may be sentenced for up to five years, imprisonment.
Warsaw Business Journal
What many management board members do not seem to understand, however, is that they too may be held personally liable for the non-payment of taxes by their employer. And in one peculiar situation personal liability may even extend to shareholders.
Yes, that is right. A shareholder may be held personally liable for the tax liability of a company, although such liability is limited to one particular situation. Now let’s examine just how an unpaid corporate tax liability can lead to personal liability.
Members of a company’s management board, pursuant to Art. 116 of the Tax Code, are jointly and severally liable for a company’s tax arrears if the assets of the company are insufficient to satisfy such tax obligation. In the case of a limited liability “in formation,” meaning during the time between the signing of the company’s articles of association and the moment the company is formally registered in the Commercial Court, the founding shareholders are also personally liable for all debts of the company incurred during the interim period, including the payment of any taxes.
The only way to avoid personal liability is if the members of the management board and/or shareholders can demonstrate that they filed a bankruptcy motion in a timely manner, which is generally understood to mean at the time it became obvious that the company could not pay its debts, including any tax obligation.
Additionally, management may be personally liable not only for the company’s tax arrears, but also for any damages incurred by the company if such liability arose out the individual’s failure to properly perform his or her duties. In a limited liability company, for instance, management staff are liable to the company itself for “damage inflicted through an action or omission contrary to the law or the deed of the company” (Art. 293 of the Commercial Companies Code) for which they are responsible, such as the filing of tax declarations and the payment of taxes.
Personal liability for the payment of a company’s tax obligation is not limited to the amount of the tax. Penalties apply as well.
Pursuant to Articles 56 and 57 of the Fiscal Criminal Code, a member of the company’s management board may be assessed a monetary penalty if convicted of submitting a false tax declaration for the company. Moreover, in particularly egregious cases the individual may be sentenced for up to five years, imprisonment.
Warsaw Business Journal
