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We discussed various ways to pay remuneration optimally to a limited liability company’s shareholder on our blog in May 2025. One option was Article 176 of the Commercial Companies Code, involving payment for recurring non-cash services. This avoids ZUS contributions, particularly health insurance. However, alongside significant advantages, the solution has risks that must be remembered and are described here.
Article 176 KSH: remuneration for a shareholder’s recurring non-cash services to a limited liability company – is it worthwhile because no social insurance contributions apply?
Paying a limited liability company’s shareholder for recurring non-cash services is an option expressly provided by Article 176 of the Commercial Companies Code.
Its first paragraph states: “If a shareholder is to be obliged to perform recurring non-cash services, their type and scope must be specified in the articles of association”.
Specifying their type and scope in the articles allows remuneration without ZUS contributions. Although taxed under the personal income tax scale as income from other sources, it is not subject to ZUS contributions, including health insurance.
The latter is a particular advantage allowing real savings. This is precisely why many entrepreneurs operating through limited liability companies adopted the solution.
Years later, however, it turns out these entrepreneurs were often unaware of its details and associated risks...
Challenges and risks of paying a shareholder for recurring services – is Article 176 KSH a trap? Articles of association, service characteristics and market remuneration
The first point to remember follows directly from the quoted provision: the articles must specify the type and scope of non-cash services for which remuneration will be paid.
Services to the company must be recurring, not continuous. They must also be actually performed and properly documented. They must not overlap with activities performed within the shareholder’s business activity.
Failure to meet even one condition may lead tax authorities or ZUS to challenge the Article 176 relationship, with resulting consequences, including appropriate insurance contributions.
Remuneration for recurring services must match market rates and be paid even if the company’s financial statements show no profit.
Amending the articles in this respect requires visiting a notary and waiting for the entry to appear in the National Court Register. Only then can the specified activities be performed and paid for. Even a single notarial amendment means the company loses “S24” status, so all subsequent changes must also be made before a notary, even where they could previously be made through S24.
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Remuneration for recurring non-cash services to a limited liability company – what else should you watch for? VAT
Besides the above, VAT must also be considered when paying for recurring non-cash services...
For shareholders who are active VAT taxpayers, their services will be subject to VAT. This is particularly disadvantageous if the shareholder forgot or did not know about the obligation, potentially facing liability for failing to declare and pay output VAT on time, or if the company uses a VAT exemption and cannot reduce output VAT by input VAT.
Shareholders using the turnover-based VAT exemption must remember that the value of non-cash services counts towards the VAT exemption threshold, which will be PLN 240,000 from 1 January 2026. Remuneration for these services may therefore cause loss of the VAT exemption if it pushes revenue over the threshold or if the nature of the activities excludes exemption.
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Summary
Remuneration in a limited liability company through recurring non-cash services (Article 176 KSH) – a way to avoid ZUS contributions or a trap?
Using Article 176 of the Commercial Companies Code and paying for recurring non-cash services may allow optimal payments to a limited liability company’s shareholder, particularly because no insurance contributions apply.
The most important include:
· Amending the articles, requiring a notary visit and refraining from providing services until the relevant National Court Register entry appears;
· Precisely specifying in the articles the type and scope of non-cash services remunerated at market rates;
· Services must be recurring, not continuous, actually performed and properly documented. They must not overlap with activities within the shareholder’s business;
· VAT issues: taxing remuneration where the shareholder is an active VAT taxpayer and including it in the exemption threshold where the shareholder uses the turnover-based VAT exemption.
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