On 24 June 2022 an individual interpretation of the signature was issued. 0114-KDIP3-1.4011.344.2022.1.MS2 in respect of the occurrence of a non-remunerated civil partnership shareholder, which, according to the tax authority, generates income from the shareholders remaining in that company. However, in a similar situation in a passenger company, e.g. in a public company, the authorities consistently take the view that in such a case there will be no income with the partner.
Specificity of the civil partnership
The civil partnership is not a separate entity from its partners, it is a contract that binds individuals – partners, and therefore does not own their own property, which is the joint ownership of their partners. As a result of an unpaid occurrence one of the shareholders, the assets of the shareholders of the civil partnership remain unchanged, and the remaining shareholders do not obtain any tangible asset at the date of the occurrence, as they cannot dispose of the joint assets until the civil partnership is dissolved.
The property transferred by the shareholders to the company, as a contribution and acquired by the company in the course of its activities, constitutes the property covered by the joint ownership of the shareholders, rather than the separate assets of its shareholders. At the same time, since, during the duration of the civil partnership, the partners do not have the right to dispose of the share of the common assets, or to participate in the individual components of the property, to settle with the existing shareholder or to lack thereof, the property rights of the shareholders remaining in the company on the date of withdrawal of the shareholder from the company are not affected.
In my opinion, the position of DKIS is too far-reaching. Yes, the property structure of a civil partnership and a public company looks different, while in both cases, the partnership, acting without remuneration, increases the assets de facto, whether it is a public company or a civil company, because in both situations, the remaining partner does not receive individual donations.
In a civil company, unlike in commercial partnerships, the property is the joint ownership of the shareholders, not the separate property of a defective legal person. Under commercial law, a passenger company is a separate entity from its shareholders to which the legal capacity and the ability to act are granted.
The property acquired by the partnership, in connection with the contribution of the shareholders and in the course of its subsequent business, constitutes its property which is separate from the assets of the shareholders according to Article 28 Commercial Companies Code.
Position of Director of National Tax Information
In view of the above, as stated by the Director of National Tax Information (hereinafter: DKIS), in the event of the occurrence of a shareholder from a civil partnership without remuneration, the property benefit is immediately granted to the shareholders of that company.
Therefore, DKIS notes the distinction in terms of the ownership structure of the civil company and the public company. In case of first, the assets of the company are jointly owned at the level of shareholders; in the case of the second, the property belongs to the public company itself.
However, the tax authority does not see that both of these situations have a similar effect on the partner.
I mean, until the surplus assets are distributed between the shareholders or disposed of – in the case of a civil partnership by dissolution, and in the case of a public company by sale of a given asset or liquidation of the company – until the shareholder receives a real delivery.
The assets in question are de facto at the disposal of both a civil company and a public company despite ownership differences.
In this respect, the view of the tax authorities that there is no income on the part of the shareholders of the company, e.g. in a public company, should an accomplice withdraw from it without remuneration, is widely accepted.
The authorities are of the opinion that the property transfer is created at the level of the company, while the shareholder does not receive any specific income at that time. This position is supported by administrative courts. As the Supreme Administrative Court stated in the judgment of 14 September 2012 o reference no.
II FSK 216/11: „in the context of the legal nature of the assets of the public company and its distinctness from the personal assets of its shareholders, as well as the fact that revenues and costs, and consequently income, are accounted directly for for each of the shareholders of the public company, it cannot reasonably be argued that the increase in the company's assets as a result of its withdrawal one from its shareholders, without reimbursement, generates on the part of the shareholders in the company income subject to separate taxation.
This would result in, contrary to the principle that the same value cannot be taxed twice, re-taxed, taxable profits, achieved, inter alia, by exploiting the potential resulting from the increase in the company's assets, or by taxing the actual unprofitable benefits - the direct "beneficiary" of the company's growth, is not its partner, who in the situation under consideration does not gain any specific and measurable asset delivery, in which case any asset value would appear."
Moreover, on the basis of Article 867(1) The Civil Code shall be entitled to an equal share of profits and shall participate in losses in the same ratio, regardless of the type and value of the contribution. The partnership agreement can otherwise determine the proportion of shareholders’ profits and losses. You can even exempt some partners from participating in losses. On the other hand, a partner cannot be excluded from profit participation.
According to Article 871(1) The civil code of the company's shareholder shall be returned in the nature of the goods which he contributed to the company for use, and the value of his contribution in the company's contract shall be paid in money, and in the absence of such a designation shall be the value which he had at the time of the contribution. The value of the contribution to the provision of services or the use by the company of goods belonging to the partner is not reimbursed.
Based on section 2 The above-mentioned article, in addition, shall be paid to the existing shareholder in the money such a portion of the value of the common assets remaining after deduction of the value of the contributions of all shareholders corresponding to the ratio in which the existing shareholder participated in the profits of the company.
The doctrine of civil law quite commonly indicates that Article 871 The civil code is relatively valid. This means that partners of a civil partnership may specify in the contract different rules for the accounting of the shareholder present in the company. This position is confirmed, inter alia, by the Supreme Court judgment of 22 July 2004 o reference no. IV CK 537/2003.
The formation and remission of claims by body resulting in income
Body having regard to Article 353 The Civil Code, he concluded that the partner would withdraw from the civil partnership while giving up repayments to him from the remaining partners.
On the part of the existing shareholder, there will therefore be a claim on the participation in the common assets (corresponding to the debts remaining in the company). According to section 1 that provision, the obligation is that the creditor may request a benefit from the debtor and the debtor must comply.
In addition, according to section 2 The above-mentioned regulation may consist of action or omission.
In the assessment of the body, the waiver by the existing shareholder of a civil partnership of payments due by the other shareholders in the company by multilateral agreement shall mean the remission of claims by those shareholders. Consequently, the value of that claim corresponding to the amount to be paid to the existing shareholder is the tax revenue referred to in Article 14(2)(6) PIT Act.
According to that provision, the business income is the value of decommitted or outlawed liabilities, subject to section 3 point 6 (for restructuring or bankruptcy proceedings), including loans (loans), with the exception of loans granted from the Labour Fund.
In my opinion, the position of DKIS is too far-reaching. Yes, the property structure of a civil partnership and a public company looks different, while in both cases, the partnership, acting without remuneration, increases the assets de facto, whether it is a public company or a civil company, because in both situations, the remaining partner does not receive individual donations.
A small number of decisions in the subject matter
Moreover, it must be stressed that it is vain to look for previous positions of tax authorities or administrative courts in relation to the subject in question. In this respect, it is possible to indicate the individual interpretation of the Director of the Tax Chamber in Bydgoszcz on 8 November 2016 The signature.
ITPB1/4511-743/16-1/MR, in which the body used a similar argument as in the interpretation indicated at the outset, while the taxpayer did not support its position of case-law or the decisions of the tax authorities.
The tax interpretation issued by DKIS can also be distinguished on the day 24 June 2022 The signal. 0115-KDIT3.4011.318.2022.1.PS. However, it is almost identical to that indicated in first the paragraph, it should therefore be assumed that another partner has asked the same question. In addition, in both identical interpretations, taxpayers referred to interpretations/judgments concerning public companies rather than civil companies, as the Authority also pointed out.
As indicated in the literature, see Rafał Bernat, Statement of a partner from a civil partnership – tax effects – "Pay to the existing shareholder in money such a portion of the value of the common assets remaining after deduction of the value of the contributions of all the shareholders, which corresponds to the relationship in which the existing shareholder participated in the profits of the company (Article 871(2) KC).
If the partners do not have such a value, the company should return the contribution in kind.
The partners shall be obliged to repay the contributions and even if the partner makes a declaration of resignation, there is a likelihood of a return on the partners.’ In view of the small number of decisions in the matter under consideration, decisions by administrative courts should be expected to shed new light on the issue at issue.
Written by Mateusz Krawczyński. A junior tax consultant in Russell Bedford Poland. Graduated from bachelor's degree in Logistics and Master's degree in Finance and Accounting. He is currently studying law at the Łazarski University. Previous professional experience in tax matters, gained at one of the Big Four companies. He specializes in tax on goods and services, in particular with regard to VAT settlements in local government units.