On February 25, 2025, the Court of Justice of the European Union (CJEU) issued a landmark judgment in case C-277/24, which may profoundly reshape the liability of board members for tax debts of companies they once managed.

Background of the case

The case originated when a former board member of a limited liability company was denied participation in a tax proceeding during the hearing. The individual demonstrated that they possesed important information relevant to the facts and legal aspects of the case – information that could impact their personal liability. Nevertheless, they were not allowed to join the proceedings.

It is worth mentioning that, even though the EU law does not require such individuals to be parties to proceedings against the company, the CJEU emphasized that anyone held personally liable must have the right to: 

• access the case file, 

• effectively challenge the factual and legal findings that could determine their liability.

Personal liability under Polish Tax Law 

Under Article 116 of the Polish Tax Ordinance, if enforcement against a company’s assets proves ineffective, the tax authority may pursue the private assets of board members. However, current Polish law offers those individuals no opportunity to challenge the validity or amount of the tax liability previously established against the company. Their ability to defend themselves is extremely limited.

The CJEU held that this lack of procedural safeguards violates fundamental EU law principles, including:

• the right to an effective remedy,

• the right to defense,

• the principle of proportionality,

While the CJEU did not oppose the concept of joint and several liabilities itself, it firmly concluded that the procedures used to impose such liability must comply with EU standards of fairness and due process.

Legislative and procedural implications

This ruling is binding on all Polish courts and administrative authorities. It may trigger: 

• reopening of past tax and court proceedings involving former board members,

• development of new procedural frameworks enabling third parties to defend themselves effectively, 

• increased litigation and prolonged tax proceedings, 

• pressure on the Polish legislator to amend Article 116 of the Tax Ordinance. 

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Text based on: INFORLEX