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What are the penalties for failing to submit financial statements?

Karina KOPCZYŃSKA
Accounting Senior at RSM Poland

Before we shall answer the question concerning legal consequences for undertakings failing to submit financial statements, a few matters should be recollected regarding financial statements in general.

What is stated in the Accounting Act?

The main source of regulations on keeping account books and preparing financial statements is the Accounting Act of 29 September 1994 (consolidated text: Journal of Laws of 2013, item 330, as amended). Here we shall find answers to questions related to obligations imposed on companies regarding accountancy and financial reporting.

What are, in fact, financial statements? They are a collection of data and information reflecting the financial situation of an undertaking. Who prepares them? Financial statements are prepared by individuals in charge of keeping the account books. Who is responsible for their preparation? It is the manager of an undertaking (in the case of companies it is a member of the board or of other managing body and if the body is composed of more than one member – all its members; in the case of general partnerships or civil partnerships –  partners managing the affairs of the partnership; in the case of professional partnerships – partners managing the affairs of the partnership or the management board; in the case of limited partnerships or limited joint-stock partnerships – general partners managing the affairs of the partnership). The manager of an undertaking is obliged to transfer financial statements to the competent authority for them to be approved. When should financial statements be prepared? Within three months counting from the balance sheet date. When should they be approved? Within six months counting from the end of the financial year.

It is from the day of the approval of the annual financial statements that two periods start to run: the period for submitting required documents at the National Court Register and at the competent local tax office. Commercial companies shall submit an application for entry into the register and submit annual financial statements, statutory auditor’s opinion, if the statements were subject to an audit, the copy of the resolution or decision on the acceptance of the annual financial statements and division of profits/loss coverage within the period of 15 days since the day of the approval of the statements. The documents must be submitted at the competent local tax office within the period of 10 days. It is also the manager of an undertaking who holds responsibility for meeting the time limits laid down in the Act. 

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Possible liquidation for failure to submit financial statements

Art. 79 p. 4 of the Accounting Act indicates that whosoever, contrary to its provisions, fails to submit financial statements or management reports to the relevant court register, is liable to a fine or penalty of restriction of liberty. Under Art. 33 par. 1 of the Penal Code of 6 June 1997 (Journal of Laws of 1997 No. 88, item 553, as amended), a fine shall be imposed in terms of daily rates. The lowest number of daily rates shall be 10, and the highest shall be 540. When settling the daily rate, the court shall consider the income of the perpetrator – the manager of an undertaking, his or her personal circumstances, family situation, property and earning capacity. The daily rate shall not be lower than PLN 10.00 or higher than PLN 2,000.00. The lowest fine shall be, therefore, PLN 100.00 (10 daily rates × PLN 10.00), and the highest – PLN 1,080,000.00 (540 daily rates × PLN 2,000.00). The penalty of restriction of liberty shall be for not less than one month and not more than 2 years.

Penalties for failure to submit financial statements are also due to the Fiscal Penal Code. On 1 January 2015 an Amendment to the Fiscal Penal Code of 10 September 1999 (consolidated text: Journal of Laws of 2014, item 101, as amended) came into force. Under Art. 80b, failure to submit financial statements at the tax office is treated as a fiscal misdemeanour subject to a fine of at least one tenth and up to twentyfold the amount of minimum wage (in 2015 it shall be the amount ranging from PLN 175.00 to PLN 35,000.00)  

Penalties for failure to submit financial statements are also due to the National Court Register Act of 20 August 1997 (consolidated text: Journal of Laws of 1997, No. 121, item 769). All entities failing to submit financial statements on time will be fined as stated in the Code of Civil Procedure concerning the enforcement of non-cash benefits. The fine is imposed by the registry court under the National Court Register Act. Under Art. 24 p. 1 of the abovementioned Act, if the financial statements are not submitted despite the passing of the due date, the court shall request the submission of financial statements within an additional 7-day due date, under penalties stated in the provisions of the Code of Civil Procedure concerning the enforcement of non-cash benefits. Under Art. 1052 of the Code of Civil Procedure of 17 November 1964 (consolidated text: Journal of Laws of 2014, item 101, as amended). The court, by one decision, may impose a fine of not more than PLN 10,000.00, unless the double imposition of fines proved to be ineffective. In the case when, in spite of fines, a legal person still fails to submit financial statements, the registry court may, under Art. 26 of the National Court Register Act, establish for it an administrator for a period of up to one year and 6 months, who, ultimately, may take actions aimed at the liquidation of a legal person. In the case, however, when in spite of fines, a registered commercial partnership still fails to perform the obligation to submit financial statements, the registry court may, ex officio, for material reasons, decide to dissolve the company and to establish a liquidator (Art. 25 of the National Court Register Act). Since January 2015 registry courts may take actions in order to delete an entity from the register if it fails to fulfill its obligations.

With the help of active repentance

Whoever did not manage to fulfill the obligation to submit financial statements should do it as soon as possible. One should also undergo the, so-called, active repentance proceedings at the tax office to mitigate the consequences of an illicit act. It is also possible to submit an application for conditional discontinuance of criminal proceedings at a court. The court, examining a number of conditions stated  in Art. 66 of the Penal Code, shall ultimately decide whether to discontinue the case of failure to submit financial statements. It shall be the only possible way to avoid penalties.

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