An investor wishing to purchase a Polish company, if not careful, may end up on the hook for the seller's unpaid tax obligations at the time of sale. To guard against such calamity, a purchaser usually obtains a "certificate" from the tax authorities confirming what, if any, tax obligations the target company may have outstanding. With this information in hand a purchaser can ensure that any tax obligations are satisfied by the seller at the time of sale.

Tax obligations include not only corporate income and real property taxes, but also any social security tax obligations payable by the company with respect to its employees. Unfortunately, Poland's social security administration, otherwise referred to as ZUS, does not always agree to issue a similar "certificate" regarding the social security obligations of a target company. In fact, in many cases ZUS refuses to provide any information to the prospective purchaser of a company, leaving the purchaser with no choice but to walk away from the deal or simply take the word of the seller and hope that all required social security payments have in fact been paid. In many cases, the purchaser only learns after the fact that he or she is now on the hook for unpaid social security contributions owed by the previous owner of the company.

It is time for ZUS to step up to the plate and provide the requested certificates of payment when so requested. Recently, ZUS has been ordered to provide such information in several court rulings, but despite such rulings ZUS continues to refuse to issue the requested certificates. Enough is enough.

-- Paul B. Fogo