DGP: Reduction of contribution in a partnership will be taxed
If partners were planning to reduce their capital contribution in a partnership, it is worth considering doing so still this year. Starting from 2022, in such a situation, tax will have to be paid, Dziennik Gazeta Prawna writes.
Łukasz Kupryjańczyk, tax adviser and partner at Thedy & Partners, commenting on the issue in the newspaper, points out that the change is meant to close a certain loophole consisting in the fact that currently we do not have clear rules of taxation of “share reduction” in a partnership. As a result, taxpayers in possession of so-called “silent reserves”, based on a literal interpretation translated into partial jurisprudence, may pay them tax-free. The legislator aims at these silent reserves and wants to make the situation of “share reduction” in a partnership equal to the situation of a partner withdrawing from a partnership, where the rules are defined and in certain situations cause taxation.
– Viewed objectively, the proposed change is not senseless. It closes a certain lack of system and “equates” partial withdrawal of a partner with withdrawal of a partner. It is also not the case that one is taxed on all of the funds received and is entitled to costs. In my opinion, this should also be taken into account when assessing this change – assesses Łukasz Kupryjańczyk.
– Should partners consider reducing their share in the company before the end of 2021?
– Good question. Please bear in mind, however, that this is not an entirely risk-free approach. Although there are judgments that confirm the neutrality of a partial withdrawal of a shareholder (share reduction), there are also voices against it. An example of this can be the judgment of the Supreme Administrative Court of 5 October 2016, ref. no. II FSK 2435/1. Also the tax authorities in the interpretations issued present a rather unfavourable opinion for taxpayers. In my opinion, although in the absence of regulations it is not possible to impose taxation using analogy, nevertheless, when choosing this transaction one should take into account that the authorities are unlikely to let go of the issue without a fight in court – explains Łukasz Kupryjańczyk.
At the same time, he adds that there is not much time left until the end of the year, but in my opinion such a partial share reduction is still possible. Such a change will be connected with changing the articles of association, and therefore requires the consent of all shareholders.
The entire article is published in Dziennik Gazeta Prawna dated 23 November 2021