For some time now, tax authorities have been challenging B2B service arrangements provided by company board members to their own companies (commonly referred to as “invoicing your own company”) as potential aggressive tax planning. We have written about this issue before. The latest judgment of the Supreme Administrative Court (NSA) of November 5, 2024 (case ref. II FSK 996/24), confirms that such practices may raise a justified presumption of tax avoidance.
Invoicing Your Own Company – A Recap
Invoicing one’s own company by a board member (or shareholder) refers to situations where the owner or a managing person provides services to their company under a B2B arrangement. This model is popular because it allows the individual to apply more favorable tax regimes, such as a flat-rate tax (e.g., 8.5%) or a 19% linear income tax.
While this structure has existed for years, entrepreneurs have increasingly sought protection, while tax authorities have been looking for ways to argue that separating certain duties into a sole proprietorship might be artificial and primarily motivated by tax benefits.
We have already highlighted this shift in the tax authorities’ approach to invoicing your own company on our blog:
In that post, we noted that the Director of the National Tax Information (KIS) began refusing to issue individual tax rulings in such cases, citing Article 14b § 5b of the Tax Ordinance – i.e., the justified presumption that the factual scenario may involve tax avoidance (as defined in Article 119a § 1 of the Tax Ordinance). The authority argued that the mere existence of ownership-management links renders the outsourcing of services to the board member’s external business an artificial arrangement. It claimed that without the potential tax benefit, no rational actor would pursue such a structure leading to invoicing your own company.
Moreover, the tax authorities began interpreting “managerial activities” very broadly, including client relationship management, acquiring business partners, and marketing efforts. In their view, even such “soft” services should be performed as part of the board member’s function, not under a separate B2B contract. We also covered this topic here:
Judgment of the Supreme Administrative Court – Confirmation of the Tax Authority’s Position
On November 5, 2024, the Supreme Administrative Court (NSA) issued a judgment (case ref. II FSK 996/24) concerning a taxpayer who challenged the refusal to issue an individual tax ruling in a scenario just like the one described above. The taxpayer — a shareholder and board member of a limited liability company — provided services to his company through a sole proprietorship (commercial representation, client acquisition, negotiations, brand promotion, etc.). He opted for a flat-rate tax of 8.5% on income generated from invoices issued to his own company.
The Director of the National Tax Information (KIS), after consulting the Head of the National Revenue Administration (Szef KAS), refused to issue the ruling, concluding that the described model showed signs of tax avoidance. Thus the taxpayer lost his case before the Voivodeship Administrative Court (WSA) in Białystok and, ultimately, the cassation complaint to the NSA was also dismissed.
The NSA sided with the tax authority. The Court reiterated that during the individual ruling process, the authority does not conduct full evidentiary proceedings nor definitively confirm tax avoidance — it is sufficient for there to be a justified presumption that the facts presented in the application may lead to the application of the anti-avoidance clause.
NSA says that…
Crucially, the NSA agreed that in the given case, merely isolating the services into the board member’s sole proprietorship under conditions of close ties with the company constitutes artificiality. The Court held:
“It is correct to state that due to the mutual links between the complainant (as a shareholder and board member of the company) and the client, the criterion of artificiality is already fulfilled at the moment of artificially isolating the tasks described in the application into individual business activity. (…) The authority correctly determined that there is a justified presumption that the purpose of implementing this arrangement was to reduce the complainant’s tax burden.”
These words from Poland’s highest administrative court confirm exactly what we previously warned about. If a board member (or shareholder) invoices their own company for intangible services that could be performed as part of their official corporate duties, the tax authority is justified in concluding that the primary purpose of such a structure is to avoid higher taxation.
Invoicing Your Own Company – Can You Still Get a Tax Ruling?
The November 5, 2024 judgment of the Supreme Administrative Court is a significant warning for individuals considering similar arrangements. Since the Court sided with the tax authorities, it is now expected that tax offices will consistently treat invoicing one’s own company as potential tax avoidance — substantially reducing the likelihood of obtaining favorable individual tax rulings in such cases.
Of course, this does not necessarily mean that tax audits will always take the same strict approach. However, caution is advised — especially when invoicing one’s own company for intangible or managerial services.
In light of this ruling, the boundary between legitimate business activity and tax avoidance has slightly shifted — unfavorably for taxpayers. Transferring part of one’s duties to an external business entity owned by the same person may now be regarded as an artificial arrangement. The only way to potentially avoid such classification is if the nature of the services is clearly distinct, “hard,” and unrelated to corporate governance.
However, the tax authority currently takes a very narrow view of such differentiation. For example, highly specialized services (e.g., programming, engineering) provided by a shareholder to the company might be easier to defend than broadly defined intangible services (consulting, marketing, brokerage). Nevertheless, the risk remains high, and each such case must be examined individually.
How Can We Help?
If, as a board member or shareholder, you are planning invoicing your own company through your sole proprietorship, it’s essential to verify the legal and tax safety of such an arrangement. Every case is different — the devil is in the details of the agreement and the actual services performed.
We provide support by reviewing B2B contracts and management agreements for potential tax risks. We assess whether the scope of services overlaps with executive functions and whether the structure of cooperation has an economic justification beyond mere tax savings. For our clients we also prepare comparative calculations of tax burdens and offer recommendations to mitigate risks (e.g., contract modifications, considering a different form of taxation or remuneration).
If you have questions about the taxation of services provided to your own company, contact us! Describe your situation and concerns in detail, and during an individual consultation, we will present tailored solutions and help safeguard your tax compliance.
