CJEU Judgment on the Liability of Management Board Members for Companies’ Tax Liabilities (C-277/24, Ajdak)

On February 27, 2025, the Court of Justice of the European Union (CJEU) issued a landmark judgment in case C-277/24 (Ajdak), in which it questioned the Polish practice of holding management board members liable for the tax debts of companies.

What is the issue?

Generally, taxpayers are responsible for their own tax liabilities. However, if the taxpayer is a capital company that fails to meet its tax obligations, under certain circumstances a member of the management board—who held that position at the time the tax liability became due—may be held liable for the company’s tax debts. This often occurs when the company lacks sufficient assets to cover the tax liability.

In practice, it happens that the tax proceedings against the company are conducted at a time when the board member in question is no longer in office—sometimes they are no longer associated with the company and may not even be aware of the proceedings. According to Polish practice, a former board member has no right to participate in the proceedings, and therefore cannot respond to the evidence collected, present their own explanations, or appeal the tax authority’s decision issued against the company.

Meanwhile, once the decision against the company becomes enforceable and enforcement against the company fails, the authority may initiate proceedings regarding the joint liability of the board member. In such proceedings, the decision determining the tax amount is considered final and binding—meaning it cannot be challenged, and the board member has no opportunity at that stage to present comments or evidence concerning the tax arrears. The board member’s liability is imposed "automatically" following the decision against the company and the failed enforcement attempt.

This legal situation is particularly severe for former board members and has long been controversial. Is it compatible with the right to defense that a former board member is held liable for the company's tax debt without any opportunity to challenge the findings of the authorities or present their own evidence and arguments? Often, companies that lack the assets to cover tax liabilities are nearing the end of their existence, and no one ensures proper representation before the authority. In such cases, the company has little interest in incurring the costs of tax-legal representation, knowing that ultimately the former board member will be held liable. It may happen that the company does not engage in the proceedings at all, presents no evidence, or does not contest the authority’s findings—even if those findings are inaccurate. As a result, the authority may issue a flawed decision, overstating the amount of tax owed. At the same time, the person most interested in fully clarifying the matter—the former board member—is not allowed to participate in the proceedings, yet the conclusions from those proceedings are binding in the subsequent case against them. Such a legal framework appears contrary to basic notions of justice and has long faced strong criticism in the tax community.

Question to the CJEU

Against this background, the Voivodeship Administrative Court in Wrocław referred a preliminary question to the CJEU, asking whether it is compatible with EU law for a board member to have no right to participate in tax proceedings conducted against the company, and at the same time, in the subsequent joint liability proceedings, to have no possibility of challenging the findings from the earlier tax proceedings.

On February 27, 2025, the CJEU ruled that:

In light of the CJEU's ruling, a former board member must have the opportunity, during the subsequent liability proceedings, to:

Implications of the judgment

The CJEU's judgment is effectively revolutionary and undermines the existing practice of tax authorities. Although the Court confirmed that a former board member does not have the right to participate in the company’s original tax proceedings, once proceedings are initiated against the board member, they must be fully entitled to challenge the outcome of the earlier case.

This means that a board member may essentially require the tax authority to conduct a new, independent investigation before they can be held liable. Moreover, this renewed evidentiary process is subject to judicial review—meaning if the authority does not change its assessment following the board member’s input, the decision can be appealed in court.

Impact on closed proceedings

Former board members who have already been held jointly liable for the company’s tax obligations may, based on this judgment, request the reopening of their cases. However, one must keep in mind the short deadlines for submitting such a request:

How can I help?

If you find yourself in a similar situation, I can help analyze your case and assess the chances of reopening the proceedings or succeeding in an ongoing case. Should you decide to work with me, I will represent you in the dispute before the tax authority and the administrative court.