Kancelaria Prawna Skarbiec


Limited Partnership in Poland

A limited joint-stock partnership is a partnership established with an objective to operate a company under own legal business name, in which at least one partner (general partner) is unlimitedly liable for the company liabilities against its creditors, and at least one partner is its shareholder.


Therefore the major point about this company is the participation of two categories of partners: general partners and shareholders. These can be both natural and legal persons. The limited partnership is represented by general partner, a limited partner on basis of power of attorney or by an appointed proxy.

The economic rationale behind this structure renders it significant for the company to have one general partner and a number of shareholders, since it enables the entity to gain additional capital through its recapitalization by the shareholders by way of shares acquisition.

Limited partnership doesn't have a legal personality, but it does have a legal capacity instead. In fact it may acquire rights in its own name as well as sue or be sued.

Limited partnership is an interesting type of company especially in more advanced forms where a limited liability company is a general partner. Even in its most basic forms it is actually quite a complex type of company which requires legal assistance in relation to establishment because of multiple opportunities this form of company offers with regard to liability or taxation.

Restrictions for foreigners

Under Polish Law limited partnership is a form of partnership without any restrictions on availability to foreigners.

Company formation

To establish limited partnership the deed of partnership should be executed in notary form and later registered in the National Court Register. There are no capital requirement for establishing this type of company.

Tax issues

A limited joint-stock partnership is tax transparent which means that it is non-existent in the light of income taxes and instead it is her partners who are taxed. Therefore, depending on its status – in a capital company 19% tax rate applies, whereas with regard to natural persons – tax scale or flat tax. What we see here is taxation of the due revenue and an obligation to make monthly advance payments in the amount of a difference between tax due on the income gained since the beginning of the year and the total amount of advance payments due for previous months. The data required for tax settlements are stated in the book of accounts which the company is obliged to keep.

The Goods and Services Tax Act provides that such company is a VAT taxpayer.

Doubts as to the taxation of dividend distributed to shareholders, which were raised in case law and legal literature, stem from the non-adequacy of tax provisions for the peculiarity of income received by shareholders of a limited joint-stock partnership. This is because a shareholder is “just” a passive investor awaiting profits from the shares held. The Polish Supreme Administrative Court ruled, in its widely discussed resolution of 16th of January 2012, case citation II FPS 1/11, that income of a capital company with a status of a shareholder of a limited joint-stock partnership shall be subject to taxation on the day of receipt of dividend distributed to shareholders on the basis of a shareholders general meeting resolution on the division of profits. Therefore it was decided for the determination of income at the moment the shareholder actually receives incoming payments from the company gains. Automatically, the obligation to determine income and make advance payments within one year from the increasing company income was negated. The acceptance of such interpretation of the provisions renders the company attractive in terms of taxes.

A direct benefit of being a shareholder in a limited joint-stock partnership rather than a shareholder in a capital company is related to the distribution of dividend. When distributing profits (dividend) to shareholders of a limited liability company, both tax and flat-rate personal income tax in the amount of 19% should be settled. Therefore for instance in case of profits in the amount of PLN 100,000, the tax burden amounts to PLN 34,390.

In other words, for a partner of a capital company who receives income directly from the capital company (in form of dividend), tax burdens (CIT on company profit, PIT on the dividend) will be higher than if he conducted his business through a partnership, since the burden is such situation would amount to 19% or a tax scale would apply.
It should be underlined that in-kind contribution into such company is tax-neutral. In-kind contribution into a capital company on the other hand, if contributed in a form other than an enterprise or its structural part, constitutes revenue for the contributor in the amount of the nominal value of shares acquired.

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Kancelaria Prawna Skarbiec
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