Taxation of a German tax resident serving as a member of the management board in a Polish company – Polish National Revenue Information Service (KIS) interpretation
The issue of taxation of a German resident who is a member of the management board of a Polish company is one of the most frequently raised issues in international capital groups. It concerns both Polish entities employing foreign managers and German entrepreneurs delegating employees to manage subsidiaries in Poland. The interpretation of the Director of Polish National Revenue Information Service (KIS) of 22 April 2025 confirms what tax obligations arise in such a scenario and how the remuneration of a board member who is a German resident should be classified and taxed.
In this article:
Who was the applicant – a German resident holding a management position in Poland?
In order to understand the scope of the interpretation, it is essential to briefly describe the taxpayer’s situation. This was a person who:
- is a German citizen and a German tax resident,
- is employed under an employment contract with a German parent company,
- was seconded to Poland to serve as managing director,
- was appointed to the management board of a Polish capital company,
- does not receive additional remuneration ‘from appointment’ in Poland – the remuneration is still paid by the German company,
- the remuneration is an economic burden on the Polish company, as it covers the cost through settlements with the German entity.
This is a common model of operation in international groups, but one that has specific tax implications in Poland.
Why does Poland have the right to tax the remuneration of a German resident who is a member of the management board?
The interpretation of the Polish National Revenue Information Service (KIS) clearly confirms that the place of taxation is not determined by the country where the remuneration is paid, where the employment contract is formally concluded, or even where part of the duties are physically performed. The decisive factor is the nature of the function – in this case, a management function in a Polish company.
According to Article 16 of the Polish-German double taxation agreement, the remuneration of board members:
may be taxed in the country where the company has its registered office.
This means that since the Polish company is the place where the management functions are performed and the function itself concerns the management of a Polish entity, Poland has the right to tax the remuneration of a German resident in the part that relates to the performance of the function of a member of the management board of a Polish company.
The commentary to the OECD Model Convention emphasises that Article 16 is a special provision (lex specialis) and takes precedence over regulations concerning employment. Consequently, even if the entire remuneration is paid by a German company, the remuneration related to the management function is taxable in Poland.
Classification of remuneration under the Polish PIT Act
The remuneration of a management board member performing duties in a Polish company is classified under the Polish PIT Act as income from personal activities referred to in Article 13(7). The following factors are irrelevant:
- who pays the remuneration,
- whether there is an additional resolution on appointment,
- whether the employment contract is concluded with a German entity,
- or the fact that no separate remuneration is paid for the appointment.
The only thing that matters is the fact of performing a management function in a Polish company.
Taxation of a German resident – a member of the management board of a Polish company at a rate of 20%
If a German resident does not have a place of residence in Poland within the meaning of Article 3(1a) of the PIT Act, they are subject to so-called limited tax liability. In such a situation, Article 29(1)(1) of the PIT Act applies, which provides for a 20% flat-rate tax on income from activities performed personally.
This tax:
- is calculated on gross income,
- does not allow for the deduction of income-related costs,
- does not take into account the tax-free allowance or tax relief.
The remuneration of a German resident, in the part corresponding to a management function in a Polish company, is therefore subject to a 20% flat-rate tax in Poland.
Who is the tax payer in Poland?
Although the remuneration is paid by a German employer, the interpretation practice of the National Tax Information Service indicates that in a situation where the cost of this remuneration is borne by a Polish company (e.g. through re-invoicing), it is the Polish company that acts as the PIT payer.
This means that the Polish entity is obliged to:
- collect 20% tax,
- transfer it to the Polish tax office,
- prepare IFT-1R information for the German resident.
This does not result from a separate provision explicitly indicating such a construction, but from the established interpretation of the payer’s obligations in the case of benefits borne economically by a Polish entity.
Why is this interpretation important for Polish and German entrepreneurs?
The 2025 interpretation confirms the clear and consistent position of the tax authorities. Both Polish and German entrepreneurs should take into account that:
- the performance of the function of a member of the management board in a Polish company by a person who is a resident of Germany generally gives rise to an obligation to collect tax in Poland,
- the place of payment of remuneration and the country of the employer are irrelevant for determining the place of taxation,
- the responsibility for collecting tax lies with the Polish subsidiary,
- failure to collect tax entails the risk of arrears and payer liability,
- procedures for the secondment of management staff should be part of the group’s compliance policy.
All this means that the taxation of a German resident who is a member of the management board of a Polish company must be analysed whenever an organisational change involving the management board of a subsidiary in Poland is planned.
If you need assistance in interpreting tax regulations concerning foreign members of the management board or other issues related to cross-border settlements, the getsix® team provides professional tax advisory services. Please feel free to contact us.
Legal basis:
- Agreement between the Republic of Poland and the Federal Republic of Germany for the avoidance of double taxation
- Act of 26 July 1991 on personal income tax
- Individual interpretation of the Director of National Tax Information of 22 April 2025, No. 0115-KDIT1.4011.176.2025.1.MR.
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