Milewska Legal
Subsidies

Obligation to repay financial aid from European funds

Author Daria Milewska

 Regardless of the field of activity of the recipient of the aid, and the purpose for which the funds were obtained, it is always important to strictly respect the terms of the contract concluded with the institution concerned, and to scrupulously account for the use of the funds.

 

The possibilities for entrepreneurs to benefit from European funding are very broad. Whatever the field of activity of the co-financing beneficiary, and whatever the purpose for which the funds were obtained, it is always important to remember to comply strictly with the provisions of the agreement concluded with a given institution, and to account meticulously for the funds used. Failure to comply with procedures for using funds and documenting their use can unfortunately backfire.

 

Obligation to return EU funds

 

The reasons for the obligation to return co-financing with EU funds are set out in article 207 of the law of August 27, 2009 on public finance. It imposes an obligation on the beneficiary to return the funds if they have been:

 

  1. used contrary to their intended purpose,
  2. used in violation of the procedures set out in article 184,
  3. collected unduly or for an excessive amount.

 

What does this mean? To put it plainly, breach of the provisions of the agreement concluded with the institution or, for example, overestimation of the cost of the project covered by the grant or use of the funds obtained for purposes other than those intended, entails the obligation to return the grant. It is important to note that the obligation to repay funds arises ipso jure. This means that the call for repayment, followed by the repayment decision, merely confirms that, in the opinion of the institution, at least one of the three statutory conditions for repayment referred to in article 207 has been met.

Daria Milewska

Attorney

Do you have any questions related to this topic?


     

    Request for repayment

     

    If the financial institution considers that there are grounds for returning the grant, it invites the beneficiary to return the funds, with interest calculated in the same way as for tax arrears, within 14 days of the date on which the letter is sent. It should be borne in mind that in the event of one of the reasons referred to in article 207 arising, interest is calculated from the time the funds are transferred to the beneficiary, and not from the time the call for repayment is sent. Consequently, if the entire amount of co-financing has been transferred to the contractor, say 4 years before the call for repayment, the amount to be repaid will be much higher than the amount actually used by the contractor (because we will be adding interest on the entire amount transferred for the 4-year period). As subsidy amounts often reach several hundred thousand zlotys, it’s easy to imagine the amount to be repaid. Currently, interest on tax arrears amounts to 8% per year

     

    A letter requesting the return of a subsidy is a specific equivalent of a request for payment. It does not yet formally initiate proceedings, although the entrepreneur does of course have the right to respond to the summons if he disagrees with the financing institution’s arguments. This is often the case in practice. On the other hand, it is rare for an exchange of correspondence with the authority to end with the contractor’s agreement. In the vast majority of cases, if the beneficiary fails to return the funds after receiving the summons, the financing institution moves on to the next stage of the procedure, i.e. issuing a decision on the return of the funds.

     

    Collection decision

     

    The next stage in the repayment procedure is for the authority to issue a repayment decision. This specifies the amount to be repaid, the date from which interest is calculated and the repayment terms. Only this decision initiates the formal administrative procedure. The beneficiary therefore has the right to appeal against this decision (or possibly request a retrial, depending on the authority that issued the decision). If the appeal proves ineffective (which, unfortunately, happens quite often), all that remains for the beneficiary is the procedure before the administrative court, i.e. the formulation and lodging of a complaint with the voivodship administrative court, followed, if necessary, by an appeal in cassation to the Supreme Administrative Court. An arduous, difficult and time-consuming procedure.

     

    So, do I have any advice for entrepreneurs in receipt of subsidies? I do. Essentially one. Whenever they have doubts as to whether their planned activity complies with the agreement reached with the institution and the procedures, they should first seek legal advice. After all, prevention is easier than cure. But what if it’s too late for prevention? Don’t forget the rules on declaring bankruptcy. With high subsidy amounts and therefore even higher repayments to be made, knowledge of these rules can be extremely important. Particularly from the point of view of the potential liability of the board member.

    Back to blog

    Scope of services

    milewska.legal © 2025 CCIFP