In the face of the COVID-19 pandemic, the Polish Development Fund (PFR) played a key role in providing financial support to Polish entrepreneurs. Under the so-called "anti-crisis shields," entrepreneurs received subsidies to maintain their current operations, which were intended to help them survive the difficult period of lockdowns and economic restrictions. However, recently, many beneficiaries of these programs have begun receiving demands for repayment of the granted funds, which often result in court cases. In this article, based on the experience of attorneys at Graś i Wspólnicy, who, having represented numerous entrepreneurs, can boast a 100% success rate in disputes regarding the repayment of PFR subsidies , we will take a closer look at this situation, analyzing whether PFR has factual and legal grounds to demand repayment of the subsidy, especially in the context of "additional audits" conducted after the termination of subsidy agreements.
PFR support during the pandemic
In response to the crisis caused by the COVID-19 pandemic, the Polish government implemented the PFR Financial Shields, which aimed to protect jobs and ensure the financial liquidity of businesses. Under these programs, the PFR disbursed over PLN 74 billion, supporting approximately 355,000 businesses. The subsidies were partially non-repayable, provided they met certain criteria, such as maintaining employment or continuing their business operations. Entrepreneurs submitted applications based on the program's regulations, and after positive verification, they received funds and, in many cases, decisions to waive portions of the subsidies.
Subsidy return requests and court disputes
Several years after the end of the aid programs, the Polish Development Fund (PFR) began the process of verifying the accuracy of subsidy payments. As a result, thousands of businesses have received demands for repayment – according to media reports, this number already affects over 5,600 companies, and this number may increase. It's important to note that these demands are usually extremely succinct – and any dispute with their content remains impossible, as refusal to pay by the due date results in PFR filing lawsuits.
There are no factual or legal grounds for demanding a refund
The main objection to PFR's actions is the lack of a solid factual and legal basis for demanding the repayment of the subsidy. The Fund bases its claims on so-called "additional audits," which, however, raise serious doubts as to their legality. Below, we present key arguments pointing to the potential illegality of these actions.
1. Inspections carried out after the end of the subsidy contract
The fundamental problem is that "additional inspections" were typically conducted after the subsidy agreement had ended. According to the Financial Shield regulations, the Polish Development Fund (PFR) had the right to verify compliance with the program's terms and conditions until the unforgiven portion of the subsidy was fully repaid or a decision was issued to waive it. After that time, the agreement expired, and businesses were entitled to assume that their obligations to the PFR had been terminated.
Under civil law, after a contract expires, the parties cannot unilaterally introduce new obligations or demand actions not provided for in the contract. Conducting audits after the subsidy agreement has ended may therefore be considered an abuse of the PFR's authority. Businesses rightly argue that such actions are inconsistent with the principle of legal certainty, which requires that the parties be able to foresee the consequences of their actions based on applicable contracts and regulations.
2. Lack of concrete evidence and justifications
In its demands for subsidy repayment, the Polish Development Fund (PFR) often fails to provide detailed allegations or evidence to support its claims. Businesses receive general statements about "irregularities" or "risk of abuse," without specifying which specific program conditions were violated. This approach contradicts fundamental principles of procedural law, according to which the party pursuing the claim (in this case, the PFR) is obligated to prove its claims.
The lack of precise justifications makes it difficult for businesses to defend their rights and undermines the credibility of the Fund's claims. In practice, this means that the PFR shifts the burden of proof to businesses, which is inconsistent with applicable rules of civil and administrative procedure.
3. Retroactive approach to verification
Many issues are complicated by the fact that the Polish Development Fund (PFR) appears to be adopting a retroactive approach to interpreting program regulations. Businesses submitted applications for subsidies based on regulations and guidelines in force during the pandemic, which were often unclear or subject to subsequent amendments. Now, several years after the funds were disbursed, the Fund is questioning the compliance of these applications with the new interpretations, even though they complied with the applicable rules at the time of submission.
This practice violates the principle of protecting trust in public authorities, which is a cornerstone of the Polish legal system. It should be noted that PFR acts in disputes with businesses as a State Treasury company, managing public funds under the Financial Shield government program. Any natural or legal person entering into a legal relationship with such an entity has the right to act in confidence in the State, in accordance with the principles arising from Article 2 of the Constitution of the Republic of Poland. A State Treasury company managing public funds should operate within the law, and its actions should be diligent, transparent, and reliable.
4. Defective implementation of aid programs
In addition to the above, it should be noted that the very procedure for granting benefits under the Financial Shield Program was designed and implemented in a manner inconsistent with the aforementioned principles of trust in the State. Therefore, the actions of the Polish Development Fund, which disbursed public aid funds to entities affected by the COVID-19 epidemic without properly verifying the applicants' data, should be assessed negatively. It is also worth reserving its right to conduct an audit at a later stage and demand repayment of the funds with interest. It is important to note the conditions of implementation of the program in question, the need to act quickly in extreme conditions, unprecedented in practice, and the urgent need to provide support to a wide range of entities as quickly as possible. Nevertheless, these circumstances could not justify actions contrary to the principles of social coexistence or applicable regulations. The manner in which public funds were managed and the principles of program implementation also raised concerns of the Supreme Audit Office, which is currently conducting an investigation into this matter, a fact widely acknowledged.
An analysis of the procedure for applying for and receiving benefits under the Financial Shield leads to the clear conclusion that the entire risk of incorrect declarations or incorrect assessment of program conditions was transferred to entities affected by the epidemic. The payment of benefits was intended to constitute assistance to entrepreneurs, aimed at mitigating the negative economic impact of the epidemic, particularly in maintaining jobs. The design of the benefit payment procedure, which disbursed funds without any verification, followed by a later verification of the application's accuracy, and the possibility of the Polish Development Fund issuing a unilateral, uncontrollable decision requiring the repayment of disbursed funds with interest, meant that instead of providing assistance, the program became, in certain cases, a trap for its beneficiaries.
Due to their nature and intended use, funds obtained under the program were typically spent almost immediately upon receipt for ongoing operations. Therefore, PFR's audits, conducted under the agreement, occurred after the funds had been spent, in principle, in accordance with their intended purpose. In such a situation, the entity receiving the subsidy was required to immediately repay the funds, along with interest, which clearly placed it in a worse situation than if it had not applied for the aid at all.
Judicial perspective and recommendations for entrepreneurs
The growing number of court cases filed against the Polish Development Fund (PFR) indicates significant controversy surrounding subsidy repayment claims. Although many proceedings are ongoing, in some cases courts have issued rulings in favor of businesses, citing the Fund's lack of sufficient evidence and the illegality of the "additional inspections." Determining whether the PFR acted within its authority and whether its claims are based on the subsidy agreements will be crucial to the outcome.
We therefore recommend that entrepreneurs who have received refund requests take the following steps:
- Collection of documentation: Confirmation of fulfillment of program conditions (e.g. maintaining employment) and the decision to cancel the subsidy.
- Legal consultation: Using the assistance of a lawyer specializing in civil and administrative law.
- Case law monitoring: Tracking judgments in similar cases, which can help you develop an effective defense strategy.
Summary
The Polish Development Fund's demands for subsidy repayment raise serious doubts about their legality. Conducting "additional audits" after the subsidy agreements expire, the lack of concrete evidence, and the retroactive approach to verification indicate a weak legal basis for these actions. Entrepreneurs who received support under the anti-crisis shields and are now facing demands for repayment have solid arguments to challenge the PFR's claims in court. In the face of these disputes, ensuring the protection of entrepreneurs' rights and compliance with the principles of legal certainty and justice becomes crucial.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of February 25, 2025
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