You have appointed a director of a Polish LLC and decided not to pay them a salary — perhaps because they are also a shareholder, or simply because it seems easier. No salary, no costs, no problems, right? Not quite. Polish tax law works differently. In certain situations, the very absence of remuneration triggers taxable income for the company. This article unpacks the mechanism — with concrete scenarios, the position of the tax authorities, and practical takeaways.

Legal Basis: What KSH and the CIT Act Say
The Commercial Companies Code (KSH) does not require that board members be paid. Under Art. 201 KSH, the management board may include both shareholders of the company and persons from outside the shareholding circle. Remuneration is a right, not an obligation.

However, Art. 12(1)(2) of the CIT Act establishes that the company's taxable income includes the value of gratuitous services received (nieodpłatne świadczenia). Under well-established case law and tax authority guidance, a "gratuitous service" is any economic enrichment of the taxpayer that is not associated with a cost on its part or with any counter-performance.

In other words: if the director works for free and the company has no counter-obligation towards them of any kind, the company — in the view of the tax authorities — receives an economic benefit without incurring a cost, and that benefit is subject to CIT.

Three Key Scenarios

Scenario 1: The Director Is Also a Shareholder
This is the most common situation in small business. A shareholder-director manages the company for free — and the company does not recognise taxable income from gratuitous services.

Why? The shareholder is not in a position of "pure gratuitousness" vis-à-vis the company. As counter-performance for their management role, the shareholder receives the right to dividends and other membership rights under Art. 191 § 1 KSH. The service is therefore equivalent in nature — even if not in monetary form.

The Director of the National Tax Information Office (KIS) has confirmed this position on multiple occasions. It is considered settled and is not disputed.

💡 Takeaway: if the director is simultaneously a shareholder of the company, no taxable income arises from gratuitous services, and no additional CIT is due.

Scenario 2: The Director Is a Third Party (Not a Shareholder, Not an Employee of a Shareholder)
This is the highest-risk case. If the director is not a shareholder of the company and has no other counter-obligation connected to it, their unpaid work is unambiguously treated by the tax authorities as a gratuitous service.

The company's income in this case is measured by the market value of the management services provided for free (Art. 12(6) of the CIT Act). This means that even in the absence of any actual cash payments, the company must increase its CIT base by an amount equal to the market remuneration of the director.

The Supreme Administrative Court (NSA), in its ruling of 30 October 2019 (II FSK 3717/17), confirmed: when the director is merely an employee of the shareholder — rather than the shareholder themselves — taxable income does arise at the subsidiary level. This ruling has become a reference point for the tax authorities.

⚠️ Appointing as director a person who is not a shareholder and is not linked to the company by any contractual obligation through the parent carries a high tax risk. CIT income at the company is almost certain to be recognised.

Scenario 3: The Director Is an Employee of the Shareholder (Parent Company Staff)
This is the most ambiguous scenario — the tax treatment has evolved over time. The logic is straightforward: an employee of the parent company receives a salary from the parent, meaning their work at the subsidiary is, in economic terms, indirectly compensated.

The Director of KIS, in a series of individual tax rulings (including those of 24 January 2022 — 0111-KDIB2-1.4010.543.2021.1.AP, and 1 July 2022 — 0111-KDIB1-2.4010.247.2022.1.AW), agreed that no income arises at the subsidiary: the parent, in appointing its employee as director, acts within its investor rights and receives counter-economic benefit in the form of higher dividend returns.

Nevertheless, the NSA ruling of October 2019 showed that courts may reach the opposite conclusion in similar factual circumstances — particularly where the arrangement appears artificial or where no management services agreement exists between the parent and subsidiary.

⚠️ Where the director is an employee of the parent company, the risk of the arrangement being treated as a gratuitous service is material. It is strongly advisable to put in place a management services agreement or staff secondment agreement between the companies that evidences counter-performance.

Summary Table: When Does Taxable Income Arise?


* The tax authorities' position has been confirmed in a series of individual rulings, but case law (NSA 2019) may diverge. Documentation is strongly recommended.

How Is the Income Calculated?
If the tax authority determines that the company has received a gratuitous service, the amount of income is measured by reference to the market value of comparable management services (Art. 12(6)(4) of the CIT Act). In practice, the company will need to establish what the market rate for a director's services in comparable conditions would be, and include that amount in its CIT base.

At a CIT rate of 9% (for smaller companies with income up to EUR 2 million) or 19% (for larger companies), the tax consequences can be significant — particularly where the unpaid management arrangement has been in place for an extended period.

Practical Recommendations

• Director = shareholder: no action required. A shareholder-director is a zero-risk scenario.
• Director = third party: it is strongly recommended to establish remuneration — even if nominal — formalised in the articles, a corporate resolution, or a separate agreement (management contract, service agreement). This removes the gratuitous service risk entirely.
• Director = employee of the parent: put a management services agreement or staff secondment agreement in place between the companies that evidences counter-performance, even if no cash actually flows. The economic equivalence must be documented.
• Foreign shareholder appointing a director: if the director is a non-Polish tax resident, withholding tax (WHT) questions arise upon payment of any remuneration. A prior analysis considering the applicable double tax treaty is necessary.

Conclusion

Operating a Polish LLC with an unpaid director is not simply a matter of saving on salary costs. It is a tax question — and the answer depends on who the director is and what their relationship with the company is. A shareholder-director: zero risk. A third party with no counter-obligation: CIT income is almost certain. A parent company employee: an uncertain zone requiring documentation.

Before appointing a director, we recommend a legal and tax analysis of the specific structure.