Fiduciary agreements, now widely used to establish ownership structures in Polish limited liability companies (sp. z o.o.), are not regulated in detail by existing legislation and are therefore classed as innominate contracts. For this reason, and under Article 750 of the Civil Code, the rules governing mandate contracts apply, as confirmed by the Supreme Court in its 2004 judgment in case V CK 216/03.
A fiduciary arrangement can separate the formal exercise of rights attached to shares from the investor's economic interest. It does not guarantee anonymity from authorities or obliged entities. AML and CRBR obligations depend on the actual control and rights of natural persons; the agreement's name or structure does not remove the need to identify them. Tax consequences and disclosure obligations require a separate analysis.
Title-transfer or authorisation-based fiduciary arrangements?
Legal scholarship identifies two types of fiduciary arrangement relevant to company law: title-transfer and authorisation-based arrangements. They differ in who holds ownership of the property or shares. In a title-transfer arrangement, the fiduciary is both the formal owner of the shares and the person exercising the attached rights in accordance with the principal's instructions. In an authorisation-based arrangement, the principal retains ownership, while the fiduciary is authorised only to manage the shares in its own name.
An authorisation-based arrangement may arise where an investor joining a company requires the other shareholders to exercise their voting rights in a manner it specifies, to ensure that the company's objectives and direction are maintained. The investor thus not only owns the shares subscribed for or acquired but is also contractually entitled to exercise other shareholders' voting rights indirectly.
Terms of cooperation under a fiduciary agreement
In practice, a title-transfer fiduciary arrangement most commonly requires the fiduciary to acquire or subscribe for company shares in its own name but for the principal's account, using funds provided by the principal, and then to dispose of the shares and manage the company or shareholding in accordance with the principal's instructions.
The fiduciary agreement sets out the fiduciary's remuneration, the exercise of share rights, how the principal gives instructions and the conditions for transferring ownership of the shares to the principal. In particular, it specifies when the fiduciary must transfer ownership, the consequences of the death of either party, the share price, the settlement of costs incurred in connection with the arrangement and the amount of remuneration or commission.
What do the tax authorities say?
Tax considerations are highly important in fiduciary arrangements, as in any transaction. Summarising the tax authorities' present position, there are no significant tax-law objections to this model of cooperation. However, interpretations change frequently, and the authorities' current position should always be checked before deciding to use this arrangement.
At present, both the provision of funds to the fiduciary to acquire or subscribe for shares and the subsequent transfer of ownership to the principal are neutral for the fiduciary for income tax purposes. The first is a form of indirect acquisition by the principal; the second transfers the principal's own assets to it. Nor does the fiduciary's sale of entrusted shares to a third party on the principals' behalf create a tax liability for the formal owner.
As legal scholarship and case law explain, the fiduciary is tax-transparent, so tax consequences are recognised without attributing them to it. All costs and income accrue to the principal. See, among others, the reasons for the Warsaw Regional Administrative Court's judgment of 9 November 2004, case III SA 3031/03, and the Minister of Finance's individual tax rulings of 19 August 2008, no. IPPB2/415-375/08-2/JK; 21 January 2010, no. IPPB4/415-729/09-2/JS; and 11 January 2016 , no. IPPB4/4511-1371/15-3/JK.
According to the ruling of the Director of the Tax Chamber in Warsaw, IPPB1/415-58/13-2/AM, the tax consequences of a dividend payment should likewise be recognised by the principal, not the fiduciary. Where a dividend is passed to the principal through the fiduciary in accordance with the principal's instructions, it is the principal that receives the economic benefit.
In conclusion, as the Warsaw Regional Administrative Court observed in its reasons for the judgment of 9 June 2017, case III SA/Wa 58/15, the tax consequences of acts performed by the fiduciary are analogous to those that would arise if the principal performed them directly
