You want to reward the people who are building your company. You give them shares — for free, because that seems fair. The problem is that on the very same day, the tax authorities and ZUS present a bill to someone who has no way to pay it. They cannot sell the shares, they have received no cash, yet the tax is already due.
Sound absurd? That is exactly how shares granted free of charge in a simple joint-stock company work. Receiving shares free of charge constitutes income as soon as they are subscribed for (Articles 11 and 12 of the PIT Act). If the benefit is connected with an employment relationship, ZUS contributions also apply.
The solution sounds counterintuitive: make them pay for the shares. Even a nominal amount — as long as the payment is real. In this article, I will explain how subscribing for newly issued PSA shares in exchange for a cash contribution works, why it defers tax until the shares are sold, and what documents you need to prepare to ensure the structure holds up.
Key terms before we go any further
Before we get into the details, let us establish the terminology. Several terms will come up repeatedly, so it is worth understanding them from the outset.
| Term | Meaning |
|---|---|
| PSA (simple joint-stock company) | A form of company introduced on 1 July 2021, with minimum share capital of PLN 1 and no-par-value shares. Designed for startups. |
| No-par-value shares | Shares with no fixed nominal value — unlike in a traditional joint-stock company, where each share has an assigned value. In a PSA, the issue price must be set separately in a resolution. |
| Issue price | The amount a participant pays for one share when subscribing for a new issue. In a PSA, there is no statutory minimum (other than zero — the price cannot be zero). |
| Cash contribution | An actual cash payment into the company’s bank account in exchange for shares. The funds must genuinely be paid — an accounting entry alone is not enough. |
| New issue | The company creates new shares and offers them to selected individuals. Existing shareholders are diluted, but the company raises capital. |
| SHA (shareholders’ agreement) | An agreement governing relations between shareholders — including buyback rules, transfer restrictions, and exit mechanisms. |
| PIT-38 | The tax return in which a participant independently reports income from the sale of shares (taxed at 19%). |
Two scenarios — one tax, two completely different points in time
The most common mistake founders make is treating shares as a gift. Yet the way in which they are transferred determines when the participant will pay tax.
Scenario 1: free shares
The participant receives shares free of charge. The tax authorities treat this as income on the date of subscription — the market value of the shares becomes the tax base. If the benefit is connected with an employment relationship, ZUS contributions also apply. The participant pays tax on a “paper" benefit without having any cash or being able to sell the shares.
For the company: the risk of overdue obligations as a withholding agent (PIT and contributions), together with interest.
Scenario 2: shares in exchange for an actual cash contribution
The participant subscribes for newly issued shares and pays the agreed price into the company’s bank account. Even if the price is low, no income arises at the time of subscription. Tax becomes due only when the shares are sold: 19% of the income, reported independently in a PIT-38 return.
| Criterion | Free shares | Shares for a cash contribution |
|---|---|---|
| When PIT becomes due | Date of subscription for the shares | Date of sale of the shares |
| Tax rate | Progressive tax scale (12%/32%) | Flat rate of 19% (Article 30b) |
| ZUS contributions | Yes, if connected with an employment relationship | No — income from capital gains |
| Company’s obligations as a withholding agent | Yes — PIT and potentially ZUS | No — the participant settles the tax independently |
| Cash available to the participant on the subscription date | None — yet the tax is already due | They paid the contribution — but pay no tax |
| Tax-deductible cost upon sale | Zero or the value on the subscription date | Amount of the contribution paid (Article 23(1)(38)) |
The difference is fundamental. In the paid-subscription model, the participant pays tax only when they have the funds to do so — because they have sold the shares and received the money.
Contact us — we will help you design an employee share plan tailored to your company.
What makes subscription for shares in exchange for a cash contribution tax-neutral
This mechanism is not a legal loophole. It follows directly from the law and is supported by the established approach taken by the tax authorities in their rulings.
Three pillars of the structure
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Article 12(1)(7) of the CIT Act applies exclusively to non-cash contributions. Subscribing for shares in exchange for a cash contribution falls outside the scope of this provision — irrespective of the difference between the issue price and the market value. (CIT Act – Article 12(1)(7))
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Individual tax ruling issued by the Director of the National Revenue Information Service on 3 October 2024 (No. 0112-KDIL2-2.4011.631.2024.1.WS) confirms that no taxable income arises when shares are subscribed for in exchange for a cash contribution corresponding to their nominal value, even where that value is lower than the market value. (National Revenue Information Service ruling)
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An earlier ruling of 14 September 2022 (ref. 0113-KDIPT2-3.4011.594.2022.1.AK) — cited in the source analysis — also confirms tax neutrality where the contribution is lower than the market value of the shares.
Additional safeguard: Article 24(11)–(12b) of the PIT Act
Since 2021, Article 24(12b) of the PIT Act has expressly extended the tax deferral mechanism to PSA shares awarded under a qualifying incentive plan. Income arises only when the shares are disposed of for consideration. (Amending Act – Journal of Laws 2021, item 2105)
Condition: the plan must be established by a resolution of the general meeting and cover individuals receiving benefits from the company under Article 12 (employment relationship) or Article 13 (activities performed personally, including contracts of mandate) of the PIT Act. (PIT Act – consolidated text)
Restriction for B2B contractors
The remuneration of a typical B2B contractor constitutes income from non-agricultural business activity (Article 10(1)(3) and Article 14 of the PIT Act) — outside the express scope of Article 24(11). This means that, as a rule, a B2B contractor will not benefit from the statutory tax deferral. The timing and source of income when such a participant subscribes for shares require a separate analysis.
Three tax points — and three different roles for the company
An employee share plan in a PSA gives rise to three separate tax events. Each has a different rate, a different settlement method, and a different role for the company.
| Point in time | Tax event | Rate | Who settles the tax | ZUS contributions |
|---|---|---|---|---|
| Subscription for shares in exchange for a cash contribution | No income | — | — | No |
| Sale of shares | Income from capital gains (Article 17(1)(6)(a)) | 19% (Article 30b) | The participant independently in a PIT-38 return | No |
| Payment of dividends | Income from capital gains (Article 30a(1)(4)) | 19% flat-rate tax | The company as withholding agent (Article 41(4)) | No |
Note three things:
- Upon subscription the company has no obligations as a withholding agent — for either PIT or ZUS.
- Upon sale the participant settles the tax independently. The company does not remit the tax. However, you must inform participants of this obligation — a lack of awareness leads to tax arrears for the very people the plan was intended to reward.
- Upon payment of a dividend the company withholds and remits 19% flat-rate PIT. The participant does not file a PIT-38 return in respect of that income.
The contribution paid is not a lost expense. When the shares are sold, it constitutes a tax-deductible cost (Article 23(1)(38) of the PIT Act) — reducing the tax base.
No-par-value PSA shares — why you must set the price yourself
In a traditional joint-stock company, each share has a nominal value, and Article 309 § 1 of the Commercial Companies Code prohibits issuing shares below that value. This provides a statutory benchmark.
A PSA has no such benchmark. Its shares have no par value — no value is assigned to them. The share capital is the sum of the contributions actually made, and the minimum is PLN 1. (PARP – Simple joint-stock company)
What this means for an employee share plan:
- You must set the issue price yourself and state it expressly in the resolution of the general meeting.
- The price cannot be zero — but it may be low, even nominal. The condition is that it must actually be paid into the company’s bank account.
- Justifying the issue price in the resolution is your main line of defence against allegations that the price was artificially understated. A natural benchmark is the value adopted when the company was incorporated.
- The absence of an actual bank transfer weakens the entire structure. An accounting entry alone is not enough — the contribution must actually be paid, and transfer confirmations should be included in the issue documentation.
Cash contributions for PSA shares may be paid within 3 years after the shares are subscribed for — but the sooner they are paid, the stronger your position will be.
PSA vs. traditional joint-stock company — comparison when issuing shares to employees
| Criterion | PSA | Traditional joint-stock company |
|---|---|---|
| Nominal value of shares | None (no-par-value shares) | Mandatory |
| Minimum capital | PLN 1 | PLN 100,000 |
| Prohibition on issuing shares below par value | Not applicable | Yes (Article 309 § 1 of the Commercial Companies Code) |
| Form of shares | Electronic | Document form or dematerialised |
| Subscription for shares | Possible by email | Requires written/notarial form |
| Contribution in the form of work | Permitted (not included in the share capital) | Not permitted |
| Supervisory board | Optional | Mandatory |
A PSA offers greater flexibility when designing incentive plans — lower formal thresholds, simpler issue procedures, and no restriction based on nominal value.
Issue arithmetic — how to make sure the percentages add up
“More or less" is not good enough when agreeing percentage interests with plan participants. If you promise someone 3% of the company but they end up with 2.87% after the issue, you have a relationship problem and potentially a legal one.
Five rules for planning an issue
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Calculate the size of the issue backwards. Start with the target percentage interests and calculate how many shares each participant must subscribe for to produce whole numbers. Fractional shares do not exist.
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Include the founder in the new issue. If you want to maintain the exact proportions, the founder should subscribe for a small portion of the new issue on the same terms and at the same price. Otherwise, the proportions will not add up.
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Check how the issue affects the cap table. Every new issue dilutes the existing shareholders. Calculate how many percentage points the founder will lose and whether that level is acceptable.
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Set the same issue price for all participants within a single tranche. Different prices in the same issue complicate the documentation and may raise doubts with the authorities.
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Document the calculations in an appendix to the resolution. A table showing the number of shares, issue price, contribution amount, and target percentage interest of each participant should form part of the corporate documentation.
Why the founder should not sell their shares
The founder may simply want to sell some of their existing shares to new participants — without an issue, without amending the articles of association, and without a resolution. It sounds simpler.
The problem is that this model falls outside the favourable line of rulings issued by the National Revenue Information Service. The rulings confirming tax neutrality concern subscription for newly issued shares from the company, not the sale of shares by the person controlling the company.
Additional risks associated with a sale by the founder:
- Risk of reclassification — the authority may regard the founder’s sale of shares to employees as a disguised form of remuneration.
- Inconsistency with the incentive plan — Article 24(11) of the PIT Act concerns a plan established by a resolution of the general meeting, not a private transaction between a shareholder and an employee.
- Tax complications for the founder — the sale generates income for the founder that must be reported.
Conclusion: base the mechanism on a new issue by the company. The documentation process is longer, but it is safer from a tax perspective and consistent with the approach taken by the National Revenue Information Service.
Documents you need to prepare
An employee share plan in a PSA requires a set of documents. Each serves a separate purpose — omitting any of them weakens the structure.
| Document | Purpose | Notes |
|---|---|---|
| Resolution of the general meeting | Approves the plan and specifies its purpose, issue price, and issue rules | An absolute requirement for a qualifying plan (Article 24(11b)) |
| Amendment to the articles of association | Transfers mechanisms from the SHA into the corporate document — buyback upon departure, retirement, or death of a participant | Without an amendment to the articles of association, the mechanisms bind only the parties to the SHA |
| Framework shareholders’ agreement (SHA) | Governs relations between shareholders, buyback rules, and transfer restrictions | May serve as the plan rules if it clearly defines the purpose |
| Conditional share subscription agreements | Specify the contribution amount, payment deadline and method, and condition precedent (e.g. entering into an employment contract) | Until the condition is satisfied, the documents are not submitted to the register |
| Bank transfer confirmations | Evidence of an actual flow of funds | Include them in the issue documentation — the absence of a transfer weakens the entire structure |
| Entry in the register of shareholders | The shares are acquired upon entry in the register | The register is maintained by an entity selected by resolution: an investment firm, bank, or notary |
Two common documentation mistakes
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Buyback mechanisms only in the SHA. A shareholders’ agreement binds only its parties. If a participant leaves and refuses to sell their shares, you have no corporate instrument to enforce a buyback unless the mechanism is included in the articles of association. Transfer it by means of a resolution of the general meeting.
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Informal settlement arrangements in the documentation. The documentary trail must be fully formal and transparent. Any provision suggesting that the cash contribution is fictitious or offset by another benefit undermines the entire structure.
Where it can go wrong — risks and safeguards
Historical risk: rulings from 2016
The source analysis refers to rulings from 2016 in which the authorities challenged the tax neutrality of subscribing for shares in exchange for a cash contribution in cases closely connected with an employment relationship. They treated a substantial price discount as remuneration in kind.
The specific reference numbers of those rulings could not be verified in the available material (Ministry of Finance EUREKA database). This does not mean the risk does not exist — it means you must protect against it.
Three safeguards
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Justification of the issue price in the resolution. State the basis on which the price was determined — e.g. the value adopted when the company was incorporated, an internal valuation, or the company’s stage of development. Do not leave this blank.
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An actual transfer into the company’s bank account. Bank transfer confirmations in the issue documentation prove that the contribution is not fictitious. Without them, the argument falls apart.
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Application for an individual tax ruling. The fee is PLN 40 and the processing time is approximately 3 months. Where the issue price is substantially discounted against market value, this provides an additional safeguard that binds the authority in your case.
Risks for participants
Plan participants must know that:
- They report and pay the 19% tax on the sale of shares independently in a PIT-38 return.
- Tax on dividends is withheld by the company as withholding agent — they do not need to take any action.
- The contribution paid constitutes a tax-deductible cost when the shares are sold — so it is worth retaining the bank transfer confirmation.
Inform them of this in writing. A lack of awareness of the PIT-38 filing obligation leads to tax arrears for the very people the plan was intended to reward — undermining the purpose of the entire plan.
A recruit who has not yet joined the company
You want to attract a specialist and offer them shares as part of their package. The problem is that they are not yet an employee, so you cannot enter them in the register of shareholders.
The solution: a conditional share subscription agreement. You sign it in advance, but make its effectiveness subject to a condition precedent — e.g. entering into an employment contract. Until the condition is satisfied, the documents are not submitted to either the register or the National Court Register.
The date on which the employment contract is entered into = the date on which the condition is satisfied. From that point, you launch the procedure: payment of the contribution, entry in the register of shareholders, and notification of the changes.
ESOPs in Polish startups — market context
According to a Startup Poland survey cited in the “Polish Startups 2025" report, ESOPs are used by approximately 30% of the startups surveyed, while a further 35% plan to introduce them. (Forbes.pl – ESOPs in startups)
These figures are not surprising. In the IT, SaaS, fintech, and deep-tech sectors, competition for specialists is intense and cash is limited at an early stage. Shares allow companies to share future value without burdening their current budgets.
A PSA is a natural vehicle for this purpose — it has a low capital threshold (PLN 1), no-par-value shares, an electronic format, and the option to increase the share capital without amending the articles of association. This is why more and more startups are choosing a PSA or converting into one specifically to implement an incentive plan.
Alternative instruments — when shares are not the only option
Shares subscribed for in exchange for a cash contribution are not the only way to incentivise a team. Depending on the company’s stage of development, exit plans, and team structure, other instruments may be worth considering.
| Instrument | Shareholder dilution | Company’s payment obligation | Shareholder status | Relief under Article 24(11) |
|---|---|---|---|---|
| New issue of shares in exchange for a cash contribution | Yes | No (the contribution is paid into the company) | Yes | Yes, if the conditions are met |
| Subscription warrants | Yes (upon exercise) | No | No (until exercise) | Requires verification |
| Phantom shares | No | Yes (payment upon exit) | No | No — no subscription for shares |
| Share options | Yes (upon exercise) | No | No (until exercise) | Requires verification |
Phantom shares do not cause dilution, but they create a future payment obligation for the company — usually payable upon exit. Warrants and options lead to a subscription for shares, but only when exercised — until then, the participant is not a shareholder. (Commercial Companies Code – consolidated text)
The tax relief under Article 24(11) of the PIT Act applies to the actual subscription for or acquisition of shares — the name of the instrument alone does not determine its tax treatment.
Design a plan that holds up — not just on paper
An employee share plan in a PSA is a decision that affects the ownership structure, tax burden, and team relationships for years. A mistake at the design stage — the wrong issue price, no resolution, or buyback mechanisms included only in the SHA — may cost more than the plan itself.
If you plan to admit employees or recruited specialists as shareholders, you need coherent documentation: a resolution of the general meeting amending the articles of association, conditional share subscription agreements, a framework shareholders’ agreement serving as the plan rules, and a justification of the issue price.
We help PSA founders navigate this process — from auditing the articles of association and cap table, through preparing corporate documents, to an optional application for an individual tax ruling. Contact us — we will determine how to design a plan tailored to your company’s stage of development.
Frequently asked questions
Will my employees pay tax on shares I give them for free?
Yes. Receiving shares free of charge constitutes income on the date of subscription (Articles 11 and 12 of the PIT Act), taxed under the general rules. If the benefit is connected with an employment relationship, ZUS contributions also apply. The participant pays tax on the value of shares they cannot yet sell.
How low can I set the issue price without it being challenged?
The price cannot be zero, but it may be low — even nominal. The condition is that it must actually be paid into the company’s bank account, and the resolution should justify the amount. A natural benchmark is the value adopted when the company was incorporated. If the price is substantially discounted against market value, consider applying for an individual tax ruling (PLN 40, approximately 3 months).
Do I need to create separate rules for the incentive plan?
Not always. If the framework shareholders’ agreement (SHA) is sufficiently comprehensive and clearly defines the plan’s purpose, it may serve as the plan rules. However, a resolution of the general meeting approving the plan is absolutely mandatory — it is a condition for a qualifying incentive plan under Article 24(11b) of the PIT Act.
Can I simply sell some of my shares to employees instead of carrying out a new issue?
You can, but it is a risky route. The favourable line of rulings issued by the National Revenue Information Service concerns subscription for newly issued shares from the company, not a sale by the founder. The authority may treat such a transaction as a disguised form of remuneration. In addition, the sale generates income for you.
Will the company have any PIT or ZUS withholding obligations when shares are subscribed for in exchange for a cash contribution?
No. When newly issued shares are subscribed for in exchange for an actual cash contribution, the company does not act as a withholding agent — for either PIT or ZUS. The withholding obligation arises only when a dividend is paid (19% flat-rate PIT). When the shares are sold, the participant settles the tax independently in a PIT-38 return.
Can a B2B contractor participate in the plan on the same terms as an employee?
Not entirely. The relief under Article 24(11) of the PIT Act covers individuals receiving benefits under Article 12 (employment relationship) or Article 13 (including contracts of mandate). A typical B2B contractor earns income from business activity (Article 14) — which falls outside the express scope of this relief. This does not mean they cannot subscribe for shares in exchange for a cash contribution, but the timing and source of the income require a separate analysis.
