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CIT on limited partnerships will increase the burden on tens of thousands of Polish entrepreneurs

Warsaw, 2nd October 2020


CIT on limited partnerships will increase the burden on tens of thousands of Polish entrepreneurs


  • Covering limited partnerships with CIT will lead to a significant increase in taxes for nearly 73,000 Polish entrepreneurs.
  • The most thriving businesses will suffer the most, as they will not have the chance to benefit from the lower 9% CIT rate, and the actual taxation of the shareholders of these companies will increase to 34-38% instead of the current 19-23%.
  • Only 1% of limited partnerships have foreign partners, and their share in the total number of partners of limited partnerships amounts to 0.4%, which means that the possible risk of a tax-free transfer of profits abroad is marginal.

– according to the report presented at the joint conference of CRIDO, the Union of Entrepreneurs and Employers and InfoCredit.


Dramatic consequences for business

In connection with the planned tax changes (as of 2nd October 2020), there will be a significant increase in the tax rate for nearly 73,000 Polish entrepreneurs. Approximately 75% of companies with lower turnover will be able to benefit from the 9% CIT rate instead of the hitherto 19%. However, as many as a quarter of limited partnerships responsible for 90% of revenues generated by these businesses (i.e. nearly PLN 300 billion annually!) will pay 19% CIT. Effectively, the tax rate on the partners of these companies, mainly Polish entrepreneurs, will increase to 34% or, in the case of people paying the solidarity levy, to 38%.

Even Estonian CIT won’t help

The new tax benefit in the form of the so-called Estonian CIT does not include limited partnerships. Even assuming that some entrepreneurs will decide to transform their business into a capital company (LLC or joint-stock), others will probably remain in the current form. Apart from the preferential tax regime, this form of activity is popular, in particular, among entrepreneurs operating in the trade and service industry, as there is no capital expenditure which is a condition for using this form of taxation.

Limited partnerships are not widely used for international tax optimisation

Contrary to the justification of the proposed changes, the data do not indicate that limited partnerships are used in international tax optimisation schemes. In Poland, approximately 43,000 limited partnerships conduct active business activity. According to the analysis of CRIDO experts based on data from the InfoCredit database, 92% of limited partnerships are businesses of natural persons from Poland. As many as72,705 Poles run their businesses in this form.

Should one compare, only 0.4% of partners in limited partnerships in Poland are foreigners. The first place is taken by Germany (151 partners) for whom this form of business activity is quite commonplace and is indicated as one of the reasons behind Germany’s economic success. Our Western neighbour is followed by Luxembourg (113 partners), Cyprus (41) and the United Kingdom (39).

The whole country and many industries are in question

Limited partnerships are scattered all over the country. Most of them can be found in the following voivodships: Masovia (11,290), Greater Poland (5611), Lesser Poland (4744) and Silesia (3792). They operate in various sectors, most of them are involved in industrial processing, construction, and trade. Many transport, logistics, and catering companies operate in this way. This form has allowed many Polish entrepreneurs to develop, who with a “flair” for running business could at the same time limit the risk for their family.

“The combination of a 19% single taxation rate with reducing the risk of running a family business is a positive stimulus and motivating factor for the development of entrepreneurship. The example of Germany, whose economic power grew out of family businesses run in the form of limited partnerships, proves this concept to be right. The planned double taxation of limited partnerships will not only be a negative signal for Polish entrepreneurs, but will also put domestic companies in a worse market position in relation to their foreign competitors. Because considering the so-called Parent-Subsidiary EU directive, a foreign investor from the EU will pay no more than 19% of income tax,” comments Mateusz Stańczyk, Partner at CRIDO.

“Covering limited partnerships with CIT is a bad idea. The data do not indicate that these companies were entities used for international optimisation schemes. They are, on the other hand, an attractive form of business for Polish, dynamically developing businesses. It should be emphasised that this is yet another proposal to increase the taxes to emerge in a relatively short time. Meanwhile, the tendency of entrepreneurs to invest is, according to our research, the lowest in years and it is not without reason. Multiple changes in regulations, the sudden introduction of new levies, the lack of elementary legal security for companies are the main reasons why the investment rate in Poland is far from the 25% GDP expected by the Strategy for Responsible Development,” claims Jakub Bińkowski, Director of the Union’s Department of Law and Legislation.

“Today, more than ever before, any proposal to change to the tax system should also be analysed in the context of employment. Greater burdens for tens of thousands of Polish entrepreneurs may mean a diminished willingness to create new jobs or keep the existing ones. InfoCredit will soon conduct a survey among entrepreneurs so that they can assess the proposed changes in taxation in the context of employment and their market opportunities. We will share the results of this survey with you in October. For many months now, the InfoCredit index has been signalling that as the number of jobs is decreasing, the number of sole proprietorships is increasing. And these have a much smaller ability to achieve market success than companies with an established position,” says Jerzy Wonka, Development Director at InfoCredit.




About the analysis

The above analysis was carried out on the basis of information from InfoCredit databases. For the purposes of this report, experts from InfoCredit and CRIDO studied the data and analysed approx.. 43,000 limited partnerships that actively conduct business activities, including 26,462 which published financial statements for 2019 and / or 2018, reporting revenues totalling approx. PLN 330 billion annually. The available data made it possible to identify the shareholders of approx. 41,500 limited partnerships.


02.10.2020 Limited partnerships in Poland – data analysis


Fot. stevepb /


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