A civil-law partnership

A civil-law partnership is neither an entrepreneur nor a separate business entity. Its partners are considered entrepreneurs in the scope of their business activity.

A civil-law partnership is only the name of a deed of partnership executed by at least two entrepreneurs, under which they undertake to pursue a common business goal by acting in a specified way, especially by making contributions.

A civil-law partnership is not obliged to follow the provisions of the Accounting Act (comprehensive bookkeeping is not required); such an obligation will arise if its net earnings from the sale of goods, products and from financial operations in the previous fiscal year amounted to at least an equivalent of 1 200 000 € in PLN.
Despite having no legal personality, in the light of the Labour Code, a civil-law partnership may be an employer for its employees and partners - as long as other conditions provided by law are fulfilled.

A civil-law partnership may be transformed into any commercial company. The rules are simplified for a transformation into a registered partnership.

Preferrend form of activity	Conducting business activity on a relatively small scale by a minimum of two entities.
Purpose	Under the deed of partnership partners undertake to pursue a common business goal.
Company	The business name of the company has to contain partners’ names and surnames and the designation “spółka cywilna” (civil-law partnership). The full business name may include additional elements, such as designations regarding the object or the place of activity.
Legal personality	A civil-law partnership is not a separate law entity. Only its partners have this status. For tax purposes the term ‘legal entity’ may be used since the partnership is subject to value added tax and excise tax.
Appropriate register	A civil-law partnership is subject to neither CEIDG nor KRS registration. A partnership is subject to separate registration (in: the Inland Revenue Office, the Statistical Office and possibly in ZUS) and has distinct NIP and REGON numbers from those of the partners. Partners who are natural persons have to appear in CEIDG. Official regulations do not specify when a partner has to obtain the CEIDG entry, whether it has to be prior or after the execution of the deed of partnership. What matters is that such an entry has to be obtained prior to undertaking activity within the partnership.
Minimum capital	Minimum capital not required.
Founders/partners	The cooperation of at least two people is required. A partner may be a natural person, a legal person such as a limited liability company, as well as a so-called imperfect person, e.g. a registered partnership. A civil-law partnership is usually established by natural persons.
Partnership's lifetime	A definite (including a period for the performance of a specific task or a period necessary to achieve a specific goal for the pursuit of which the partnership was established) or an indefinite time frame. Begins upon the execution of the deed of partnership; the deed of partnership may set another commencement date. Determining the partnership’s lifetime has practical significance because all partners’ liabilities which arose after the partnership was dissolved are only personal liabilities of ex-partners, whereas for liabilities which arose during the lifetime of the partnership debtors bear joint and several liability, also with their personal assets.
Type contract	The deed of partnership has to be made in writing. Note: certain contributions to the partners’ joint property require an exceptional form, e.g. of a notarial deed if real estate is to be the contribution. The deed of partnership of a civil-law partnership has to specify: the partners, a common business goal, a full business name, contributions made or another way of pursuing the company’s goal; The obligation to make a contribution does not have to lie on all partners, but it does lie on at least one of them. Contributions may be in cash or in kind – partners may transfer the ownership or the use of a specific thing (e.g. hardware, premises, a vehicle) or assume an obligation to perform specific tasks or actions (e.g. seeking customers, bookkeeping), matters regarding management of affairs (making decisions in the partnership) and representation (representing the company towards third parties), share in profits and losses, the profit may be allocated and paid in the partnership’s lifetime. The deed of partnership may also settle other issues which may help frame the partners’ relationship according to their needs. In the absence of partners’ provisions, rules provided in articles 860-876 of the Civil Code (KC)
Partnership's assets	Constitute the partners’ joint co-ownership and cannot be divided in the partnership’s lifetime.
Partnership's representation	In the absence of other provisions - each partner is authorised to represent the partnership. A partner may be deprived of this right pursuant to the deed of partnership or a partners’ resolution.
Managing partnership's affairs	Managing the partnership's affairs is each partner’s right and obligation. Scope of authorisation to manage the partnership’s affairs: Ordinary operations.Before an ordinary operation is completed, each of the other partners may object to the completion thereof – in such a case a partners' resolution is required. Every urgent act which, if not taken, could expose the partnership to irreparable loss (regardless of its scope, even without a prior partners' resolution).	The rules of managing and representing a civil-law partnership are not effective in regard to cash available in a joint bank account. In case of a joint bank account kept for natural persons, unless its contract provides otherwise, every co-owner may: individually use cash available in a bank account, at any time terminate the contract with effect towards the other co-owners. The above mentioned issues may be regulated differently in a bank account contract of partners of a civil-law partnership. (article 51 and article 51a of the Banking Law).
Taxation	Income tax payers are partners, not the partnership itself. Each partner pays income tax on the partnership’s profit. Depending on who the partners are, a civil-law partnership’s activity is subject to PIT (a personal income tax for natural persons - when a partnership is formed by natural persons or organisational units without legal personality) or CIT (a commercial income tax when a partnership is formed by legal persons). A civil-law partnership may be a value added tax (VAT) payer and an excise tax payer. Partners bear liability for VAT and excise tax obligations.
ZUS premiums	Entrepreneurs who are natural persons are obliged to pay social and health premiums. Sickness insurance is voluntary. The partnership shall be a premium payer only if it engages employees or contractors. Note: beginner individual entrepreneurs have the right to a so-called Small ZUS, that is lower social premiums for the first two years of activity. These premiums are paid based on a decreased assessment, that is a 30% of the projected average monthly salary.
Liability	Joint and several liability of all partners for all obligations arising within the partnership. Liability includes the partners’ joint assets accumulated within the partnership, as well as personal assets of particular partners

Actions necessary to commence activity in a civil-law partnership:

Concluding the deed of partnership, as a rule, in writing.
Entering the partners (natural persons) in the Central Registration and Information on Business.

When natural persons want to conduct activity in a civil-law partnership each of them has to have a CEIDG entry (all sections of the form concern the data of an entrepreneur-partner, not the partnership) and update it with the partnership’s NIP and REGON afterwards.

When a person who already is in the CEIDG becomes a partner, his obligations are limited to completing the information on the partnership and making other potential changes connected to commencing activity in the partnership, e.g. broadening the scope of activity.

The CEIDG-1 form has also the no. 27 section regarding marital property system!!!. This section has to be completed if the applicant has community of property with a spouse. It also has to be completed in the case of cessation of such community (if a separate property system occurred).

ZUS registration.

A partner in a civil-law company pays his own ZUS premium (like in case of a single-member company).
A partnership is a premium payer for persons performing work for it (e.g. employees and contractors) but there is no need to complete and submit an application in ZUS, because ZUS prepares the first premium payer declaration (ZUS ZFA form) based on information provided in the CEIDG-1 application.

Inland Revenue Office registration

To acquire a NIP number for the partnership, the NIP-2 application with the NIP-D appendix has to be submitted.
An entrepreneur with a status of a VAT payer is obliged to submit a VAT-R registration application to the Head of the Inland Revenue Office .

On 1st January 2015 the obligatory duty to confirm VAT-R registration application was abolished. The Head of the Inland Revenue Office will confirm a taxpayer’s registration only at his request (confirmation procedure is subject to stamp duty of 170 PLN).

Upon the execution of the deed of partnership arises an obligation to pay the tax on civil-law transactions. The tax rate is 0.5% and the taxable base is the value of the contributions. The partnership has to submit declarations (PCC-3, PCC-3A) and pay the tax in the Inland Revenue Office adequate to the partnership’s registered office within 14 days of the execution of the deed of partnership. This excludes a deed of partnership made up in a notarial deed form – the notary collects and settles the tax then. In such case, the notary’s remuneration (the notarial fee) plus VAT for drawing up the deed of partnership is deducted from the taxable base.

Applying for REGON number in the National Official Register of Nationalised Industry Units

RG-OP and RG-SC applications have to be submitted in a statistical office (its branch) of the voivodeship where the partnership’s registered office is. There is also a possibility to submit the application online. In such case a secure electronic signature is required.

A civil-law partnership

Note: certain contributions to the partners’ joint property require an exceptional form, e.g. of a notarial deed if real estate is to be the contribution.

Note: beginner individual entrepreneurs have the right to a so-called Small ZUS, that is lower social premiums for the first two years of activity. These premiums are paid based on a decreased assessment, that is a 30% of the projected average monthly salary.

Actions necessary to commence activity in a civil-law partnership: