Estonian CIT and the Transfer of Partnership Interests: Provincial Administrative Court Annuls Interpretation for Inadequate Legal Reasoning
Does a delayed entry in the National Court Register (KRS) deprive a limited partnership of its eligibility for the lump-sum corporate income tax regime? The Provincial Administrative Court in Gliwice, in its judgment of 20 January 2026 (I SA/Gl 575/25), did not resolve this substantive question — but its annulment of the Director of National Tax Information’s individual interpretation opens the path to a taxpayer-favourable construction. The Court found that the interpretive authority had failed to provide any legal justification for its position and had not engaged with the applicant’s argumentation grounded in the provisions of the Commercial Companies Code and the jurisprudence of ordinary courts.
The Subjective Condition: “Exclusively Natural Persons”
Article 28j(1)(4) of the Act of 15 February 1992 on Corporate Income Tax (ustawa o podatku dochodowym od osób prawnych, hereinafter “CIT Act”) conditions eligibility for the lump-sum regime upon a structural requirement: all partners of the limited partnership must be natural persons who do not hold property rights connected with the right to receive benefits as founders or beneficiaries of a foundation, trust, or analogous fiduciary arrangement.
The provision, on its face, is deceptively simple. It requires an assessment of the partnership’s subjective composition at any given moment — yet the CIT Act is conspicuously silent on the question of when a change in partnership composition takes legal effect. This lacuna compels recourse to the substantive provisions of commercial law, generating a point of intersection between tax and company law that the interpretive authorities have, until recently, failed to navigate with adequate rigour.
The Factual Matrix: A 27-Month Discrepancy
The applicant partnership initially comprised a limited liability company (sp. z o.o.) as general partner (komplementariusz) and a natural person as limited partner (komandytariusz). On 20 December 2021, the sp. z o.o. transferred the entirety of its rights and obligations to a natural person by way of a simple written agreement — a form sufficient under Article 10(1) and (2) of the Commercial Companies Code (Kodeks spółek handlowych, hereinafter “CCC”).
The transfer was duly executed, with the consent of all partners as required by statute. However, the partnership’s legal counsel failed to submit the corresponding amendments to the KRS within the statutory seven-day period prescribed by Article 22 of the Act on the National Court Register. The partners’ resolution amending the partnership agreement was adopted on 16 January 2024, the filing with the registry court occurred on 19 January 2024, and the court’s order registering the change was issued on 26 March 2024 — more than 27 months after the underlying transfer.
In the interim, on 31 January 2022, the partnership filed a ZAW-RD notification electing the Estonian CIT regime. From 2022 onwards, it was taxed under the lump-sum system. Its partners were, de facto, exclusively natural persons — yet the KRS continued to list the sp. z o.o. as general partner.
The Interpretive Authority’s Position
In its individual interpretation of 27 February 2025 (0111-KDIB2-1.4010.613.2024.2.ED), the DKIS concluded that the partnership had not satisfied the condition of Article 28j(1)(4) during the tax years 2022–2024. The reasoning turned on a single proposition: the amendment of the partnership agreement regarding the general partner’s identity occurred only on 16 January 2024, and the filing with the KRS took place on 19 January 2024, constituting a violation of Article 22 of the KRS Act.
The analytical deficiency of this position is striking. The DKIS failed to determine whether the transfer agreement of 20 December 2021 was valid and effective. It did not indicate whether KRS registration bears constitutive or declaratory significance. It cited no provision from which a constitutive character could be derived. Most critically, it did not engage with the applicant’s argumentation grounded in Articles 10 and 103 of the CCC and in the case law of ordinary courts.
The Court’s Assessment: Annulment on Procedural Grounds
The Provincial Administrative Court annulled the challenged interpretation for violation of Article 14c(2) of the Tax Ordinance, which mandates that an individual interpretation recognising the applicant’s position as incorrect must contain a legal justification for the authority’s own position.
It must be emphasised that the Court expressly declined to prejudge the substantive question: “The Court at the present stage does not determine the substantive issue presented in the application for an individual interpretation“. The annulment rests entirely on procedural grounds — the inadequacy of the interpretation’s legal reasoning. This means that the DKIS may, in renewed proceedings, theoretically arrive at the same conclusion, provided it furnishes adequate legal justification.
The Court nevertheless identified a fundamental incoherence in the authority’s reasoning. If the DKIS derives a breach of Article 22 of the KRS Act from the failure to register the partner change within seven days of the 2021 agreement, it implicitly concedes that the agreement itself effected the change. Yet simultaneously, the DKIS appears to treat the KRS entry as a precondition — without articulating this position or identifying its legal basis. As the Court observed: “Where the interpretive authority has failed to discharge its statutory obligation to present its own position and its argumentation, the Court has nothing to evaluate”.
The Declaratory Character of KRS Entries: The Applicant’s Argumentation
Although the administrative court did not resolve the material-law question, the applicant’s argumentation — which the DKIS conspicuously failed to rebut — merits examination, as the authority will be required to address it in renewed proceedings.
Under Article 10(1) of the CCC, the aggregate rights and obligations of a partner in a personal partnership may be transferred to another person, provided that the partnership agreement so permits. No further formality — neither notarial form, nor amendment of the partnership agreement, nor KRS registration — constitutes a conditio sine qua non of the transfer’s legal effect.
The Court of Appeal, in its order of 30 June 2020, held expressis verbis that the entry of a given entity in the KRS as a partner bears declaratory character. Whether a given entity holds the status of partner is determined not by the entry itself, but by the legal event to which provisions of substantive law attach the consequence of acquisition or loss of partner status.
Practical Implications
The judgment carries two implications of practical importance. First, it reinforces the standard of adequate reasoning required of interpretive authorities — the DKIS may not dispose of complex company-law questions by mere assertion. Second, the case signals a potentially taxpayer-favourable construction of Article 28j(1)(4), though this question will be resolved only in renewed proceedings or on further appeal.
Limited partnerships utilising or contemplating the Estonian CIT regime should ensure timely KRS registration of partner changes. Where a transfer has already occurred and registration remains outstanding, meticulous documentation — the transfer agreement, evidence of partners’ consent, and contemporaneous correspondence — assumes critical importance.
Legal basis: Judgment of the Provincial Administrative Court in Gliwice of 20 January 2026, case no. I SA/Gl 575/25; Article 28j(1)(4) of the Act of 15 February 1992 on Corporate Income Tax; Articles 10(1)–(2), 26(2) in conjunction with Article 103(1) of the Commercial Companies Code; Article 14c(2) of the Tax Ordinance.
Robert Nogacki – licensed legal counsel (radca prawny, WA-9026), Founder of Kancelaria Prawna Skarbiec.
There are lawyers who practice law. And there are those who deal with problems for which the law has no ready answer. For over twenty years, Kancelaria Skarbiec has worked at the intersection of tax law, corporate structures, and the deeply human reluctance to give the state more than the state is owed. We advise entrepreneurs from over a dozen countries – from those on the Forbes list to those whose bank account was just seized by the tax authority and who do not know what to do tomorrow morning.
One of the most frequently cited experts on tax law in Polish media – he writes for Rzeczpospolita, Dziennik Gazeta Prawna, and Parkiet not because it looks good on a résumé, but because certain things cannot be explained in a court filing and someone needs to say them out loud. Author of AI Decoding Satoshi Nakamoto: Artificial Intelligence on the Trail of Bitcoin’s Creator. Co-author of the award-winning book Bezpieczeństwo współczesnej firmy (Security of a Modern Company).
Kancelaria Skarbiec holds top positions in the tax law firm rankings of Dziennik Gazeta Prawna. Four-time winner of the European Medal, recipient of the title International Tax Planning Law Firm of the Year in Poland.
He specializes in tax disputes with fiscal authorities, international tax planning, crypto-asset regulation, and asset protection. Since 2006, he has led the WGI case – one of the longest-running criminal proceedings in the history of the Polish financial market – because there are things you do not leave half-done, even if they take two decades. He believes the law is too serious to be treated only seriously – and that the best legal advice is the kind that ensures the client never has to stand before a court.
