During our practice we have served versatile consulting to foundations, public funds, corporations and individual investors.
The limited partnership is one of partnerships, which is recently also popular among entrepreneurs. In this regard, tax opportunities of this type of organization should be analyzed the.
This type of partnership has no legal personality status and is not required to pay corporate tax. The taxpayer of corporate tax is a partner of a company. In the case the founders of this partnership are individuals, they make choices settlement according to the general rules or pay a flat rate tax. They will not take a different tax. What is important, in order to use lump sum it is no need to have a registered individual entrepreneur. The partners of the LP make this decision acting independently of one another. Income of the partnership shall be calculated in proportion to the entitlement of the taxpayer to share in the profit.
It is also a popular option, when a General partner of a limited partnership is a limited liability company. As is known, the income of this type of company is taxed twice before it reaches the shareholder. First is the corporate income tax (CIT rate - 19%), and then dividends are taxed (also 19%) that are paid to shareholders from previously taxed income. The limited partnership offers its partners only individual income tax. Personal income tax (pit) is paid by partners only (not by the company) from income in proportion arising from the Agreement of limited liability partnership.
It is followed from the Polish commercial code that the limited partner participates in profits of the partnership in proportion to his contribution actually paid to the company, unless otherwise provided by the Agreement (article 123 of Polish Commercial Code). A similar rule is concluded in article 5 of the CIT Act, though here we use the term "in proportion to their shares". However, it should be understood as profit share. In addition, the Company’s Agreement may determine the interest in the profits in isolation from the amount of paid contributions. This solution gives great freedom in shaping the financial condition of the partnership.
Therefore, there is no obstacle to put other criteria for the sharing of the capital gain in the agreement of limited partnership between the limited partner and general partner (for example: 95% - limited partner and 5% - general partner). If a General partner is a limited liability company, it allows minimizing the amount is rated by double taxation.