According to the provisions of the Corporate Income Tax (CIT) Act, a general partnership becomes a CIT taxpayer if an entity other than a natural person becomes one of its partners, and at the same time, before the start of the financial year, it does not submit the CIT-15J information to the tax office, thereby informing that its partners are not only natural persons. It turns out that such a general partnership can revert to the status of a transparent tax entity, losing the CIT taxpayer status.
Why will a general partnership be a CIT taxpayer?
General partnerships become CIT taxpayers if they meet the conditions specified in Art. 1 para. 3 point 1a of the CIT Act:
- They have management or a registered office in Poland.
- The partners of the general partnership are not exclusively natural persons.
- The general partnership does not submit the required information or CIT-15J update within the specified timeframe.
The tax administration takes the position that a general partnership that acquires CIT taxpayer status retains that status until its liquidation or removal from the business register. Changes in the composition of a general partnership (e.g., sale of all rights and obligations in the partnership or withdrawal from the partnership) that has already obtained CIT taxpayer status do not affect this status. This interpretation obliges the partners in the liquidation of the partnership, if they do not want the partnership to remain a CIT taxpayer. Subsequently, the partners can establish a new partnership – already tax-transparent (due to the participation of only natural persons).
Can a general partnership lose CIT taxpayer status?
It turns out that the tax authorities’ views are not shared by administrative courts. Contrary positions were expressed in judgments of the Regional Administrative Court in Łódź on October 19, 2023 (case file I SA/Łd 618/23) and the Regional Administrative Court in Krakow on May 12, 2022 (case file I SA/Kr 192/22). In both cases, the courts opposed the claims that if a general partnership has once become a CIT taxpayer, then despite changes in the composition, it will remain a CIT taxpayer until its liquidation. According to the courts, the withdrawal of entities other than natural persons from the composition of the partners of a general partnership means the loss of CIT taxpayer status for that partnership – a general partnership whose partners are exclusively natural persons cannot be a taxpayer of corporate income tax. The cited judgments are not final, although it seems that the Supreme Administrative Court will share this view.