Civil partnership and the e-commerce industry – Key information

What is a civil partnership?

Civil partnerships are a type of business activity, or more precisely, a type of agreement concluded between partners — natural persons, legal persons, or organizational units with legal capacity — and regulate the rules of cooperation between them.

Let’s add that a civil partnership, alongside sole proprietorship, is a type of civil law company regulated by the Civil Code.

Civil partnership and legal personality

It is important to emphasize that a civil partnership does not have legal personality, and legal actions are carried out by the partners of the civil partnership.

Status of partners in a civil partnership

The status of partners is defined in the partnership agreement. The right to manage the affairs of a civil partnership belongs to each partner, however, if the agreement stipulates, partners can be deprived of this right or it can be limited.

Similarly, the right to represent the civil partnership belongs to each partner, and the detailed scope can be specified in the agreement.

Contributions to a civil partnership

Partners also make contributions to the partnership, which can include:

• Cash;
• Contributions in kind;
• Transfer of real property rights;
• Transfer of obligational rights;
• Provision of services for a specified or unspecified period.

It is worth noting that there is no minimum contribution required for a civil partnership.

Nature of property in a civil partnership

The characteristics of a civil partnership also include issues of the agreement and property. Let’s now focus on the second aspect.

The property of a civil partnership is based on joint ownership, composed of contributions made by the partners. However, due to this joint ownership, after making the contribution to the partnership, partners cannot manage their shares or the shares in the assets. As a result, if they would like, for example, to sell the property they contributed — it will not be possible. Moreover, during the existence of the civil partnership, partners cannot demand the division of the common property.

The settlement of partners occurs when the civil partnership is dissolved or when there is a change in the partners of the civil partnership.

Scope of liability in a civil partnership

The liability of partners in a civil partnership applies to all obligations they incur while acting on behalf of the partnership. However, the partnership cannot have its own assets. Therefore, the contributions and assets acquired as a result of the partnership’s activities become the joint ownership of the partners.

Additionally, there is joint and several liability for the obligations of the civil partnership, meaning partners are liable with their own assets for the partnership’s obligations. However, if one partner pays the partnership’s obligations from their assets, the others are relieved from this duty.

How to establish a civil partnership step by step?

Step 1 – Registration in CEIDG or KRS

First, individuals planning to establish a civil partnership must register in CEIDG. Legal persons need prior registration in KRS.

Step 2 – Partners must conclude an agreement

After registration of partners in CEIDG and/or KRS, establishing a civil partnership requires signing a civil partnership agreement, which should include:

• The economic purpose of the civil partnership;
• Contributions made by the partners;
• Rules for managing the affairs of the civil partnership;
• Rules for representing the civil partnership;
• Rules for sharing losses and profits.

It is worth noting that if partners’ contributions include real estate, the agreement must be in the form of a notarial deed.

Step 3 – Notification to GUS and obtaining REGON number

Registration of a civil partnership also requires notification to the statistical office in the province where the partnership’s headquarters are located, within 14 days of registration in CEIDG or KRS.

In the office, an application must be submitted for the civil partnership to be entered into the REGON register, resulting in obtaining a REGON number, required for obtaining a NIP. For this purpose, partners must submit an RG-OP form and provide information about the partners on the RG-SC form, along with the partnership agreement. Documents can be submitted in person, by mail, or through a representative — in which case a power of attorney must also be attached.

After submitting correctly completed applications and required documents, GUS will enter the company in the REGON register. It will be available online, from where confirmation can be downloaded. You can also request the statistical office to issue a certificate of the REGON number.

Step 4 – Notification to the tax office and obtaining NIP

When the REGON number for the civil partnership is assigned, the next step is notification to the tax office, where a NIP-2 application must be submitted along with the partnership agreement. If the documents are correctly filled out, the NIP number will be assigned to the civil partnership within 3 days.

Step 5 – Updating the entry in CEIDG

The last step, which completes the establishment of a civil partnership, is updating the data in CEIDG. Partners must update the entry with the previously assigned REGON and NIP numbers.

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Changing partners in a civil partnership

When the registration of the company is completed correctly, changes in the group of partners can occur during its operation.

Transfer of shares in a civil partnership is impossible. Therefore, changing partners can sometimes be problematic but is definitely possible. It is important to remember that before one partner exits, another must join the partnership — it should also be emphasized that a civil partnership must have at least two partners at all times during its operation and sign a new agreement.

An alternative is to dissolve the civil partnership, sign a new agreement, and register another business with new partners.

Transformation of a civil partnership

It is also worth mentioning that there is a possibility to transform a civil partnership into other types of business activities, e.g., a general partnership or a limited liability company (LLC).

However, according to the Commercial Companies Code, a civil partnership cannot be transformed into a commercial company other than a general partnership while maintaining existing property rights and obligations.

The transformation itself takes place by adopting a resolution of the partners of the civil partnership, followed by the appropriate entry in the register of entrepreneurs.

Concerning the transformation of a civil partnership into a general partnership, it is possible to carry out this process in a simplified mode. This requires a resolution of the partners of the civil partnership and signing a general partnership agreement, followed by notification to the registration court.

Taxation of a civil partnership

A civil partnership itself is not treated as a business entity and is not subject to PIT or CIT. In such a case, the entrepreneurs are the partners of the civil partnership, who are required to pay income tax proportionally to their shares in the partnership’s profit as stipulated in the partnership agreement.

For legal persons, the applicable rates are 9% and 19%. The first applies to small taxpayers, and the second to large taxpayers.

For natural persons, three forms of taxation are available, also applicable to sole proprietorships, namely: progressive tax scale, flat tax, or lump sum tax on recorded income.

In addition to paying income tax, partners of a civil partnership are also required to pay ZUS contributions — social and health insurance contributions — and, in some cases, it will be necessary to pay a solidarity tax. If the civil partnership employs workers, the company must register it as a payer by submitting ZUS-ZPA.

Taxation of a civil partnership in e-commerce

If the partners of a civil partnership conduct activities in the e-commerce sector, they can apply a 3% lump sum tax rate (applicable to online store activities), general rules with a rate of 12% or 32%, or a flat tax of 19%.

If you want to compare how different methods of taxation in the e-commerce sector look, depending on revenues and costs, we encourage you to check our article about sole proprietorships in the e-commerce industry, where we illustrate different scenarios with specific examples.

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Accounting obligations in a civil partnership

The operation of a civil partnership is regulated by civil law, which states that within its framework, simplified accounting can be maintained in the form of a revenue and expense ledger or a lump sum record.

However, it is important to remember the statutory income limit of PLN 2,000,000 in the financial year. Upon exceeding this limit, the civil partnership must implement full accounting and maintain accounting books. Additionally, maintaining accounting books is also necessary when a legal person, e.g., a joint-stock company, is a partner in the civil partnership. In such cases, the amount of income is irrelevant.

Pros and cons of a civil partnership — Summary

A civil partnership, as a civil law company, differs from other types of business activities, which has its pros and cons, which we will now summarize.

Advantages of a civil partnership

Let’s start with the advantages, which include:

1. Simplicity of establishing a civil partnership and low registration costs;
2. Flexibility of the agreement — not only is the process of forming the partnership quite simple, but signing the agreement is not heavily regulated. This gives partners great flexibility in adjusting the structure and rules of the company to individual needs and preferences.
3. No requirements related to minimum share capital.

Disadvantages of a civil partnership

On the other hand, the disadvantages of a civil partnership include:

1. Lack of legal personality — partners incur obligations in their own name, not the partnership.
2. Joint and several liability — partners are liable with their own assets for the partnership’s obligations, even if the obligations result from the decisions of another partner.
3. Complicated share transfers and division of property.

In summary, a civil partnership can be an excellent solution for many entrepreneurs, including those in the e-commerce sector. However, it is important to remember its characteristics, which can sometimes be disadvantageous, as well as accounting obligations that partners must fulfill — e.g., maintaining a revenue and expense ledger, sales records, or accounting books.

Additionally, the operation of a civil partnership requires VAT settlement, and if conducted in foreign markets, it is necessary to comply with local regulations. Therefore, if you need support with VAT & VAT OSS issues — registrations, declarations, and settlements — or with e-commerce accounting, schedule a consultation, indicate what constitutes a challenge, and our specialists will take care of the rest!