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A management board member of a Polish company working under an employment contract with a foreign parent company


by Anna Rucińska

29 August 2023

Remuneration for a management board member of a Polish company received under an employment contract made with a foreign parent company may have PIT implications in Poland.

Advance tax ruling of the Head of NRIS

The Head of the National Revenue Information Service (NRIS) reviewed the following situation in his advance tax ruling of 19 December 2022 (file no. 0112-KDIL2-1.4011.754.2022.1.KF).
A management board member of a Polish limited liability company (spółka z o.o.), being a German resident, was an employee of the parent company (shareholder) and received remuneration for that. He was later seconded to Poland. He continued to receive the remuneration for running the Polish company from the parent company. The Polish limited liability company reimbursed the remuneration in full and with no margin. The reimbursement rules were laid down in an agreement between the companies.
The Head of NRIS confirmed that the remuneration for sitting on the board of the Polish limited liability company was classified under the tax treaty as the "directors' fees" taxable in the country where that company was established (i.e. Poland). The authority found it to be income from personal services referred to in Article 13(7) of the PIT Act.
The tax treatment of such income earned by Polish non-residents is described in Article 29 of the PIT Act. The tax is charged at the flat rate of 20% of gross income.
Moreover, as the Polish limited liability company was the ultimate "payer" of the remuneration it was obliged to deduct the flat rate PIT on the board member's remuneration. Indeed the parent company paid the remuneration, but the Polish daughter company refunded it (the parent company did a purely technical job, i.e. transferred the remuneration to the correct account). 
This advance ruling may prompt doubts as to its legal merits, especially when it comes to the classification of the remuneration under the PIT Act and the treatment of the Polish company as a PIT withholder. However, it is noteworthy because it deals with the relationship model that is quite popular in Poland.
It makes sense to review the terms and conditions of your relationship with foreign management board members from the point of view of the Polish PIT legislation. Do you need support in this area? You are welcome to contact our experts. 


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Anna Rucińska

Attorney at law (Poland)


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