Does the reclassification of a B2B or civil-law contract into employment by the Polish National Labour Inspectorate automatically trigger PIP tax sanctions? It should not. Where the cooperation was documented, remuneration disclosed and taxes and social security contributions settled, there are strong arguments for distinguishing contractual misclassification from undeclared employment. However, the Polish Ministry of Finance has not completely ruled out the tax risk.
Since 8 July 2026, the Polish National Labour Inspectorate – Państwowa Inspekcja Pracy (PIP) – has new powers concerning the review of civil-law and B2B arrangements. In practice, this makes the distinction between genuine independent business activity and an employment relationship even more important.
Employment-law reclassification may, however, be only the beginning of the problem. The next question is tax-related: could the Polish tax authorities apply sanctions designed for illegal employment after a B2B or civil-law contract has been reclassified as employment?
PIP tax sanctions – where does the problem come from?
Polish legislation on illegal employment provides for significant tax consequences.
In certain circumstances, a business may be required to recognise additional taxable income and may lose the right to treat remuneration paid to the individual as a tax-deductible cost.
Those rules were primarily introduced to combat undeclared employment and remuneration paid outside the official tax and social security system.
The situation is much less straightforward where the parties had a written B2B or civil-law agreement, remuneration was officially disclosed and taxes and social security contributions were settled, but PIP subsequently challenges the legal classification of the relationship.
I commented on this issue for Rzeczpospolita.
Dr Piotr Sekulski, Tax Advisor, Outsourced.pl:
“Reclassifying a civil-law or B2B contract as employment should not automatically result in tax sanctions designed for undeclared employment. Where the cooperation was confirmed by a written agreement and remuneration was disclosed in tax and social security settlements, there are grounds for distinguishing contractual misclassification from concealed employment.”
PIP tax sanctions and the purpose of the undeclared employment rules
This distinction is crucial.
Employing someone without properly documenting the relationship or deliberately concealing remuneration is fundamentally different from a disclosed B2B or civil-law relationship that is subsequently found to have been incorrectly classified.
A purpose-based interpretation of the legislation is also important. The special sanctions were designed to combat undeclared employment and off-the-books remuneration rather than to automatically penalise every incorrect assessment of the legal nature of a contract.
Dr Piotr Sekulski, Tax Advisor, Outsourced.pl
“In my view, automatically recognising additional taxable income and excluding remuneration from tax-deductible costs in such a situation would be inconsistent with the purpose of the provisions, which were intended to combat undeclared employment and off-the-books payments. The risk cannot, however, be completely excluded because the statutory definition of illegal employment refers to the timely confirmation of the type and terms of the agreement, while the fact that taxes and social security contributions were paid does not itself determine that the definition is not met.”
The second part of this statement explains why the issue cannot currently be regarded as fully settled.
The Ministry of Finance has not excluded PIP tax sanctions
The position of the Polish Ministry of Finance reported by Rzeczpospolita remains cautious.
The Ministry referred to the statutory definition of illegal employment. If the circumstances established following reclassification meet that definition, the provisions imposing negative income tax consequences may potentially apply.
This does not mean that every B2B reclassification automatically leads to PIP tax sanctions. It does mean, however, that businesses should not assume that the consequences are limited to employment law and social security.
PIP tax sanctions – what does this mean for businesses in Poland?
For companies using B2B arrangements in Poland, the key conclusion is that reclassification risk does not end with employment law.
Information gathered by PIP may also become relevant to the Polish tax authorities and the Social Insurance Institution, ZUS. We discussed this in more detail in our previous article:
We have also previously discussed the broader risks of B2B reclassification in Poland:
A B2B review should therefore not be limited to the wording of the agreement. The actual manner in which the services are performed is equally important, including the contractor’s independence, supervision, organisation of working time and place, responsibility for the result and genuine business risk.
Does B2B reclassification automatically trigger tax sanctions?
No. Reclassification of a B2B or civil-law contract as employment should not automatically result in tax sanctions originally designed for undeclared employment.
Where the cooperation was transparent, documented and properly disclosed for tax and social security purposes, there are significant arguments against such an automatic approach.
The risk cannot, however, be completely excluded. Following the changes concerning PIP, companies using B2B arrangements in Poland should therefore analyse not only employment-law exposure, but also the potential PIT, social security and other tax consequences.
