Maciej Wilczkiewicz

Tax adviser (Poland)
Senior Associate
Phone: + 48 32 330 12 06

According to the judgement issued by the Provincial Administrative Court (PAC) in Warsaw on 29 January 2016 (file no. VIII SA/Wa 363/15) conversion of a limited liability company into a limited partnership is not subject to the transfer tax. 

Pursuant to the Polish Transfer Tax Act, articles of association and partnership agreements as well as amendments thereof are subject to the transfer tax insofar as they increase the company's share capital or the value of the contributions made to the partnership. An amendment to the articles of association or the partnership agreement in terms of the transfer tax means, among other things, conversions or mergers whenever they lead to an increase in the partnership's assets or in the company's share capital. Importantly, the transfer tax is not levied on amendments of articles of association made in connection with conversion of a capital company into another capital company.

The controversies over the consequences of the conversion of a capital company into a partnership for the transfer tax purposes arise mainly from different classification of a limited partnership in the Polish law and in the Community law. Pursuant to the Polish legislation, a limited partnership is regarded as a partnership (Article 1a(1)(1) of the Transfer Tax Act and Article 4(1)(1) of the Polish Code of Commercial Companies). Pursuant to the Community law, a limited partnership for the purposes of the capital duty (such as the transfer tax) should be treated as a capital company (Article 3(1)(b) and (c) and Article 3(2) of Directive 69/335/EEC and Article 2(1)(b) and (c) and Article 2(2) of Directive 2008/7/EC). 

Polish tax authorities take the view that limited partnerships should be treated for the transfer tax purposes as partnerships and, as a consequence, the aforementioned inclusion will not apply to the conversion of a capital company into a partnership. The tax authorities expressed that view also in the case presented here.

However, the Provincial Administrative Court in Warsaw did not share the view stating that a limited partnership should be regarded as a capital company in the light of Directive 2008/7/EC. The court stated that, for the purposes of Directive 2008/7/EC, a capital company means any company, firm, enterprise, association or legal person that meets the following requirements jointly:

1) operates for profit;
2) its members have the right to dispose of their shares to third parties without prior authorisation;
3) its members are only responsible for its debts to the extent of their shares.

The court held that a Polish limited partnership met all the aforementioned requirements.

Consequently, this effectively excludes the restructuring processes involving limited partnerships from the transfer tax.  

The judgement referred to above indicates that the taxpayer-friendly case law in this matter gets firmer. The Supreme Administrative Court also took a similar stance earlier, e.g. in its judgements of 04 July 2014 (file no. II FSK 1915/12) or of 01 October 2015 (file no. II FSK 1732/13).

Our attorneys-in-law also offer legal advice in Poland on other issues. They are at your disposal in Rödl & Partner offices in: Gdansk, Gliwice, Cracow, Poznan, Warsaw, Wroclaw.

2.08.2016 r.