Management board members who provide management consulting services to a company as part of their individual business activities may not be entitled to benefit from the flat rate or 15% lump sum rate.

As a result, they will have to pay PIT in accordance with the progressive tax scale, and include the income earned from their business activities in the solidarity levy base.

On 1 September 2022, the Director of the National Treasury Information Service (“KIS”), after receiving an opinion from the Head of the National Tax Administration, announced a decision refusing to issue an individual tax ruling in the case of a management board member who, in addition to performing a corporate function, intended to provide management consulting services to his company as part of his individual business activity (ref. no. 0112-KDIL2-2.4011.442 2022.2.MM - unpublished). The consulting was to include services such as marketing and organizational planning, and optimization of the company's organizational structure in terms of the company's reporting methodology. It follows from the decision that such an employment model for a board member may be subject to the anti-evasion clause, and this precludes the issuance of an individual tax ruling.

In justifying the refusal to issue the ruling, the Director of the KIS stated that the management board member is obliged to provide management services to the company, and contracting him to do so under a separate civil law contract (performed as part of his individual business activity) is artificial and has no business justification. This is because the main, or one of the main purposes of its conclusion is to obtain a tax advantage - and in such a case an individual tax ruling cannot be issued.

Two similar decisions were issued in June and September of this year.

The consequence of the above position may be that such employment structures may be challenged by tax authorities and, as a result, a PIT surcharge and, in some cases, also the solidarity levy, may be required to be paid. In addition, since the conclusion of such a contract, according to the Director of the KIS, is artificial, it may also be unjustified to include the remuneration paid to the management board member for management services in the company's tax expenses.

We do not yet know what impact these decisions will have on the practice of tax authorities. In particular, whether such structures will be considered tax evasion with all its consequences. However, one should assume that they will, and already formulate the scope of the services performed by board members in the B2B model in such a way that they are not related to the broad management of the company, including planning its development and operating strategy.

Finally, it should be noted that the Director of the KIS continues to issue individual tax rulings confirming the applicability of such a model of cooperation and the taxation of income derived from business activities at a flat tax or lump sum rate, in the case of board members providing services other than management consulting.

Find more in the PRO HR November 2022.