Polish Limited Partnership Registration
Situated in the heart of Central Europe, Poland stands as a beacon of opportunity for global entrepreneurs. Poland is positioned as an alluring hub for business expansions and startups because of its favorable location and one of the most advantageous tax systems in the European Union. Due to its location, tax benefits, and variety of business models, Poland is an ideal investment and business destination. One of the business structures that is most preferred by entrepreneurs is to establish a limited partnership in Poland.
In this article, we will be covering the procedure for Polish limited partnership registration. Polish limited partnership registration. In addition to that, we will be covering the benefits, costs, taxation, and reasons for choosing a limited partnership in Poland.
What is a Limited Partnership?
A limited partnership is a form of business structure that is created with two or more members. A limited partnership must have at least two members: a general partner with unlimited liability for the firm’s responsibilities and debts, and a limited partner with liability limited to the amount of his capital contribution.
Limited partners function as “silent partners” investing in capital similar to passive shareholders of a publicly traded company, but not having any involvement in the decision-making process of the firm.
Why should you choose the limited partnership?
As per the provisions of the new law, limited partnerships which are based in Poland can register under their name, and be granted all rights & legal responsibilities of the firm. It is also permissible to utilize an abbreviation like “LLP”.
In the case of a limited partnership, the minimum number of partners is 2. With one of the partners as a general partner with unlimited liability for the company, and the other partner is a limited partner with limited liability for the company.
A limited partnership is a pass-through entity since its earnings are not taxed at a business level. Losses or income are included on the tax returns, and any tax due is paid at the personal level.
Limited and general partners are liable for different obligations and liability levels regarding debts. The partnership may not be able to pay for its assets. Every partner pays tax on their portion of profits.
Limited partners can utilize losses to offset the passive income they earn on the tax return. Losses of general partners may be used to protect additional income, up to the amount of their investment within the company, as their losses are typically considered passive.
How much capital is required for the limited Partnership?
A contract for limited partnerships stipulates the number of partners contributing to the partner. It is extremely flexible with regard to capital:
- It is an absolute minimal sum of capital that is specified in the legal regulations.
- The General Partner could join the partnership with the ownership of either movable or immovable real estate ( the real estate) as well as other property rights, knowledge, as well as services.
- A limited partnership can make a contribution through services or work, but only if contributions are sufficient to cover the total amount of the liability.
- Thus it is recommended that the limitation of the partnership amount of liability, which defines the scope of liability for the limited partner must be covered by the tangible assets, which are a security to the creditors of the business.
Procedure of Polish limited partnership registration
Below is the process of Polish limited partnership registration that you must follow in order to register your firm:
Step 1:- Select a name for the business names of the limited partnership that should include the surname(s) of at least one general partner as well as an additional designation such as “spolka Komandytowa”.
Step 2:- You must have an official address for your business that also serves as your firm’s primary address and must choose limited and general partners for your firm.
Step 3:- The next step is to prepare the articles of association which covers details such as the name and address of the registered office, the estimation of the contributions made by every member and their worth, and the sum of money that each limited partner is responsible for paying creditors.
Step 4:- A notarial deed must be used to finalize a limited partnership arrangement.
Step 5:- Register the partnership at the National Court Register. Once the partnership is registered, you will receive a NIP & REGON number.
Cost of Polish limited partnership registration
When it comes to the costs associated with the polish limited partnership registration, this thing you should consider:
1. The cost of making a notarial deed
2. Costs of a certified translation (in the case of someone who doesn’t speak Polish),
3. Court fees are to be entered into the National Court Register for an announcement in the MSiG:
- PLN 350, in event of registration online
- PLN 600, for instance for the “traditional” registry
Taxation of the limited partnership
Since January 1st, 2021, the Polish Tax Law implemented the double taxation of LLCs. In the meantime, limited partnerships are taxed under CIT taxation in the same conditions as a restricted liability corporation (or joint stock company, i.e. at 9%, and then 19% rate (subject to the fulfillment of relevant conditions).
From the 1st of January, 2021 Polish law allows an Estonian CIT (0% tax rate for LLPs). However, every partner pays taxes (PIT or CIT depending upon whether the person is natural or a legal person) on the share of the earnings at the 19% rate.
Read More: Taxes In Poland
Benefits of Polish limited partnership registration
Limited partnerships are particularly attractive to business partnerships when only a specific, short-term project is the primary focus; such as in the movie industry and real estate planning.
Benefits of a polish limited partnership registration typically comprise:
Protection against limited liability
Limited partners are generally not held accountable for liabilities and business debts.
Income tax is not paid by the company. Profits and losses are reported on partners’ tax returns and the tax to be paid is refunded at the individual level.
Control over the day-to-day business
General partners in the limited partnership enjoy full control over every business decision.
Partners are more flexible in their management structure.
Fewer formal requirements
Limited partnerships have fewer formal regulations and paperwork than corporations.
Another source of capital investment
The addition of limited partners can provide another source of capital investment without losing control, just as when you join a business partnership.
Poland offers a favorable business environment for business setup. When two or more individuals want to set up a business together, they can consider starting a limited partnership. A limited partnership is a form of business organization that is formed with a minimum of two or more individuals. It is advantageous to establish a limited partnership because it provides limited responsibility to limited partners, qualifies for “pass-through” taxation, and requires less documentation and governance, among other advantages.
If you want to proceed with Polish limited partnership registration, you may speak with experts from OnDemand International. Our experts will guide you throughout the procedure for setting up your business from gathering the documents to applying for business registration.
The applicant should submit to the Registrar an application for the registration of the Limited Partnership together with a statement of particulars in compliance.
Registration of the partnership firm is not mandatory and it is the choice of the partners if they wish to register the partnership company or not.
Limited partnerships are a special kind that is a variation of a general partnership. Although it’s like general partnerships in many aspects, a limited partnership is comprised of one general partner and one or more limited partners.
A limited partnership isn’t an entity legal in its own right, but it can create accounts with banks to conduct business, and also contract with business partners, customers and customers
At least one partner has to be a general partner, with unlimited liability. One partner at least must have a restricted partner. The liability of this person is usually restricted to the amount of the investment