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Operating through a limited liability company often involves one significant drawback: double taxation. However, there are ways to substantially reduce it. In this article, we describe the five most popular.
An employment contract as a way to withdraw money optimally from a limited liability company
First comes one of the more popular methods of paying a limited liability company’s shareholder optimally: employing them under an employment contract.
This is a lawful and relatively advantageous solution, offering the shareholder stability and all employee benefits and the company the ability to recognise monthly remuneration as a tax-deductible cost.
However, it requires full compliance with all Labour Code requirements and monthly payment of compulsory social and health insurance contributions.
It is also worth knowing that employment contracts with the sole shareholder of a single-member limited liability company are increasingly challenged by authorities and courts. This is because the element of subordination characteristic of employment is doubtful in this case.
Remuneration for appointing a shareholder to the management board instead of dividends as a solution to double taxation
The next method on our list is appointing a shareholder as a management board member or president with remuneration.
For the limited liability company, remuneration paid on this basis may be a tax-deductible cost, as with an employment contract.
The board member must recognise the revenue and pay tax under the general rules, which, depending on remuneration and their situation, may be more favourable than dividends, but there is no obligation to pay social insurance contributions, only a mandatory 9% health insurance contribution.
Incidentally, serving on the board by appointment can be combined with employment under an employment contract in the same company for different duties. The first two methods can therefore be combined, which may be optimal in some situations.
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Civil-law contracts, including a specific-task contract, a mandate contract and a B2B contract, as a way to avoid double taxation in a limited liability company
The third method is concluding a civil-law contract with a shareholder.
In particular, we can choose:
- a specific-task contract,
- a mandate contract,
- a B2B contract.
In all three cases, payments on these grounds can generally be recognised as tax-deductible costs.
In certain situations involving copyright transfer, a shareholder under a specific-task contract can also use tax-deductible costs of as much as 50%, compared with 20% otherwise. A specific-task contract is generally not subject to insurance contributions, making this option worth considering. However, remember the contract’s specific and generally one-off nature.
In some cases, a mandate contract may be optimal. ZUS contributions here depend on whether the contractor has other grounds for insurance.
A B2B contract provides a broad choice of taxation methods, including flat-rate tax or attractive lump-sum taxation. Of course, establishing a business and bearing all related costs will be necessary.
Recurring non-cash services — another way to avoid double taxation in a limited liability company in 2026
The penultimate method on today’s list follows directly from Article 176 of the Commercial Companies Code.
These are recurring non-cash services, which can be specified in the articles of association by type and scope. What are they and why consider such a provision?
They are various recurring services, such as accounting, translation, marketing or IT services, performed regularly and genuinely by the shareholder for the company in return for contractually agreed market-rate remuneration.
Paying remuneration for recurring non-cash services may constitute a tax-deductible cost for the company. For the shareholder, there are no ZUS contributions, including health insurance, which is why this method is frequently used today.
Optimal withdrawals from a limited liability company under a lease agreement
The final method discussed today is withdrawing funds from a limited liability company under a lease agreement with a shareholder.
This allows the company to recognise rent under the lease as a tax-deductible cost. A shareholder leasing an asset, such as real estate, generally pays only lump-sum tax, currently still just 8.5% on rental revenue up to PLN 100,000, with 12.5% on the excess. Neither health insurance nor other social insurance contributions to ZUS are required.
If this article interested you, explore our tax advisory services and read how we can help you:
Summary
5 ways to avoid double taxation in a limited liability company in 2026
An employment contract, a civil-law contract, appointment as a board member or president, recurring non-cash services and a lease agreement are only some ways to avoid double taxation in a limited liability company. Which is best in 2026? The answer depends on the specific situation and requires careful analysis.
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