In light of this issue, one limited liability company submitted a request for an individual interpretation to the President of the National Health Fund. It sought confirmation that the benefits referred to in Article 176 of the Commercial Companies Code are not subject to compulsory health insurance (health insurance contributions). The authority disagreed with the company’s position and issued a negative interpretation. As it argued, the activities described in the application are typical examples of factual acts which would be difficult to regard as services intended to satisfy the interests of the creditor, which in this case is the company. The partners do not ‘give’ or ‘do’ anything for the benefit of the entrepreneur, but merely carry out activities amounting to the day-to-day running of the company, ensuring its proper functioning and the conduct of its business activities. Furthermore – as the authority stated – such factual acts, by their very nature, are performed on a continuous basis and cannot be regarded as recurring non-monetary benefits falling within the scope of Article 176 of the Commercial Companies Code
The applicant challenged the said interpretation before the Provincial Administrative Court in Warsaw, which upheld the company’s position and set aside the unfavourable individual interpretation. In the opinion of the Court of First Instance, the decision contained in the individual interpretation was vitiated by a material procedural error. The authority had based its reasoning on factual circumstances which had not been indicated by the party in the application, but which were derived from the National Court Register, in particular regarding the functions currently performed by the shareholders within the company. The Court noted that the authority had determined that the scope of the partners’ activities overlapped with the scope of activities performed as part of their functions within the company, or with the scope of actual activities undertaken to ensure the proper functioning of the company. On this point, the Provincial Administrative Court emphasised that the authority is not entitled to issue an interpretation based on information other than that contained in the application for interpretation, and which was not indicated by the party in the application.
The President of the National Health Fund, however, disagreed with this state of affairs and lodged a cassation appeal against the judgment of the Court of First Instance. By judgment of 27 August 2024, ref. no.: II GSK 500/24, the Supreme Administrative Court quashed the contested judgment and dismissed the Company’s appeal.
In the grounds for its judgment, the Supreme Administrative Court referred in detail to the interpretation of Article 176(1) of the Commercial Companies Code. The Court held that the non-monetary benefits referred to in the aforementioned provision require a precise and accurate specification of their type and scope. The subject of a partner’s obligation may be any type of performance (dare, facere, non facere, pati), but a mandatory element of such performance should be its repeatability; thus, the partner’s obligation should be of a periodic nature. As the Supreme Administrative Court emphasised, this condition is not met by one-off, continuous or permanent obligations. Referring to civil law doctrine, the Supreme Administrative Court stated that a permanent obligation consists of specific, consistent conduct on the part of the debtor throughout the duration of the contractual relationship, and the passage of time is inherent in the structure of such a performance. A periodic performance – in the light of the judgment in question – is, however, the continuous provision, for the duration of the legal relationship and at specific regular intervals, of a certain quantity of performances (money or other fungible items). What therefore distinguishes a continuing obligation from a periodic one is an additional criterion on the part of the recurring obligation – the number of performances fulfilled within a single relationship.
The scope of activities to be performed under Article 176 of the Commercial Companies Code must not overlap with the scope of activities carried out by the partners in the course of performing their functions within the Company, nor with the scope of actual activities undertaken to ensure the proper functioning of the company. If a partner’s obligations overlap, then – in the opinion of the Supreme Administrative Court – we are dealing with continuous rather than periodic services, and therefore these will not be obligations as defined in Article 176 of the Commercial Companies Code.
In summary, therefore, before shareholders of limited liability companies decide to make use of the provision contained in Article 176 of the Commercial Companies Code, they should precisely and accurately define the type and nature of the non-monetary contribution in accordance with the conditions set out in the judgment in question, so that such contributions may be classified as periodic (recurring). Otherwise, the National Health Fund (NFZ) and the courts will question the periodic nature of these benefits, and consequently they will be subject to health insurance.
T. Dybowsk (in:) K. Osajda (ed.) Law of Obligations – General Part. System of Private Law, vol. 5, Warsaw 2020, 3rd edition
Frequently asked questions
Are non-monetary contributions of partners in a limited liability company always exempt from health insurance contributions?
No, such contributions are subject to mandatory health insurance if they do not meet the conditions specified in Article 176 of the Commercial Companies Code (KSH). It is crucial that they have a periodic nature, meaning they are recurring at regular intervals. If the nature of the contributions is continuous or permanent, they cannot be considered recurring within the meaning of the law.
What characteristics must a non-monetary contribution have to not be subject to mandatory health insurance?
The contribution must be precisely defined in terms of type and scope and must be characterized by recurrence. This means that the partner’s obligation should have a periodic nature, consisting of regular provision at regular intervals. One-time, continuous, or permanent obligations do not meet these requirements.
Can the scope of a partner’s activities overlap with their duties arising from holding a position in the company?
No, the scope of activities provided under Article 176 of the Commercial Companies Code (KSH) cannot duplicate the duties arising from holding a position in the company. If such overlap occurs, these contributions are treated as continuous rather than periodic. Consequently, they do not meet the conditions for exemption from health insurance contributions.
What happens if partners do not precisely define the nature of non-monetary contributions?
In such cases, the National Health Fund and courts may question the periodic nature of these contributions. This results in a finding that they do not meet the requirements of Article 176 of the Commercial Companies Code (KSH), leading to the obligation to pay health insurance contributions on these contributions.
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