CJEU: board member has the right to defend himself – another important judgment on joint and several liability

On 30 April 2025, the Court of Justice of the European Union (CJEU) delivered another important judgment in Case C-278/24 (Genzyński) concerning the compatibility with EU law of the Polish rules on the joint and several liability of board members for company tax arrears.

The CJEU ruled that the current regulations – while permissible under EU law – cannot deprive management board members of a real opportunity to defend their rights.

Joint and several liability of management board members – current legal provisions explained

Pursuant to the provisions of the Polish Tax Ordinance (Ordynacja podatkowa), members of a company’s management board may be held jointly and severally liable for the company’s tax liabilities incurred during their term of office, provided that enforcement measures against the company’s assets have proven unsuccessful.

Under Polish law, members of the management board may be exonerated from such liability if:

• a bankruptcy petition was filed at the right time, or
• the failure to initiate insolvency proceedings was not attributable to the board member’s fault.

In practice, however, the application of these statutory exemptions is often unduly restrictive, and liability is frequently imposed almost automatically, without adequate regard to the individual circumstances.

CJEU: Right to defence must be genuine

The CJEU did not, in principle, call into question the compatibility of the current Polish legislative framework with EU law. It did, however, clarify the manner in which national provisions should be interpreted in order to ensure compliance with the fundamental rights guaranteed by EU law.

The Court emphasised that a current or former board member must be afforded a real and effective opportunity to exercise the right of defence during administrative or judicial proceedings. In particular, the individual must be able to prove that:

• they exercised due diligence in managing the company’s affairs, and that the conditions for initiating insolvency proceedings did not exist during their tenure;
• any failure to initiate such proceedings, where necessary, was not the result of their fault.

The judgment implies that the Polish mechanism of joint and several liability must be applied on an individualised basis, taking into account the specific role and actions of each board member. The Court expressly stated that such liability cannot be based on a presumption of risk, but rather must be predicated on a demonstrable causal link between the board member’s conduct and the accrual of tax arrears.

Furthermore, the CJEU held that the mere existence of tax arrears does not automatically give rise to an obligation to file for bankruptcy. The necessity of such a step must be assessed in the light of the company’s overall financial situation and may only arise where insolvency is both persistent and manifest.

Legal Consequences of the CJEU Judgment

The Genzyński judgment paves the way for:

• the reopening of concluded proceedings before tax authorities and administrative courts, and
• the enhanced defence of board members in ongoing cases, by providing new arguments to contest the imposition of joint and several liability.

One swallow doesn’t make a summer…

…but two might just do! This is now the second CJEU judgment within a short time concerning the joint and several liability of management board members. In Case C-277/24 (Adjak), issued on 27 February 2025, the Court of Justice of the EU ruled that a board member must be granted access to the case file concerning the company and be able to effectively challenge the the tax authorities findings in this regard.

Taken together, the Adjak and Genzyński judgments represent a material development in the judical interpretation of joint and several liability provisions and underscore the necessity of reform in domestic administrative practice.

What’s next? Deadlines and actions

The Adjak ruling was published in the Official Journal of the European Union on 22 April 2025, triggering the following deadlines:

• 22 May 2025 – deadline to submit motions to reopen tax proceedings,
• 22 July 2025 – deadline to submit motions to reopen proceedings before administrative courts.

While the Genzyński ruling has not yet been officially published, it is advisable to analyse the cases in which the joint and several liability mechanism has been applied and prepare for possible actions.