A characteristic feature and fundamental advantage of certain companies (General Partnerships, Private Company Limited by Shares, Limited Liability Companies, Public Limited Companies) is the non-liability of their members with their personal assets regarding the company’s debts. However, concerning the company’s debts to the Public Treasury, it is possible, under certain conditions, that beyond the undisputed liability of the company as a legal entity, personal liability of some of its members may also arise.
Specifically, by way of exception to the applicable provisions on the operation of Public Limited Companies, the Tax Procedure Code stipulates in Article 50 the following: “The persons who are executive chairpersons, directors, general managers, managers, CEOs, persons entrusted with administration, and liquidators of legal entities and legal persons, as well as persons who actually exercise the management or administration of a legal entity or legal person, are personally and jointly liable for the payment of income tax, withheld tax, any imposed tax, Value Added Tax, and the Uniform Real Estate Ownership Tax owed by these legal persons and legal entities, regardless of the time they were assessed, as well as for interest, fines, surcharges, and any administrative financial penalties imposed thereon, provided the following conditions cumulatively apply:
- The above persons held one of the aforementioned positions either during the operation of the legal entity or at the time of its dissolution, liquidation, or merger, or during its winding-up,
- The debts became overdue during their term under one of the aforementioned positions, subject to the following sentences. If the debts are determined after an audit, the jointly liable persons under this paragraph are only those who held the positions of items a and c during the tax year or period to which the debts relate. In case the tax debts under paragraph 1 have been subject to a settlement, joint liability extends to those who held the positions of items a and c when each installment of the settlement became overdue or when the settlement was lost. Regarding the amounts of interest, surcharges, fines, and other financial penalties, joint liability burdens the persons jointly liable for the principal debt on which these amounts are calculated and imposed,
- The above debts were not paid or remitted to the Public Treasury due to the fault of the above persons.”
Regarding the condition of fault, the same article provides that the burden of proof for the absence of fault lies with the persons listed in the first paragraph, i.e., those who will be called upon to pay the existing debt of the company.
Therefore, those managing a company must be particularly careful regarding the company’s debts to the Public Treasury, as liability with their personal assets is not excluded if the conditions set out in the article are met.
