The Limited Partnership: An Ancient Solution to a Modern Problem
The limited partnership—spółka komandytowa, in Polish—traces its lineage to the same mercantile traditions that gave us double-entry bookkeeping and maritime insurance. When medieval Italian merchants needed capital for trading expeditions to the Levant, they devised an elegant arrangement: one party would furnish the goods or money, another would brave the journey, and the profits—if any materialized—would be shared according to terms agreed upon beforehand. The commenda, as this arrangement came to be known, solved a problem that persists to this day: how to marry capital with competence when one party is willing to risk more than the other.
The logic endures. A young ophthalmologist with impeccable credentials but modest savings wants to open a practice. A bank loan means fixed payments regardless of whether patients materialize. An investor with capital to spare wants better returns than bonds offer but lacks the appetite for unlimited exposure. The limited partnership lets them find each other—and structure their collaboration in a way that reflects their actual circumstances.
Two Classes of Partners, Two Different Worlds
What distinguishes the limited partnership from its simpler cousin, the general partnership, is a fundamental asymmetry. There are, in effect, two species of partner, and their rights and obligations differ as dramatically as their risk profiles.
The general partner—komplementariusz—runs the show. She manages the enterprise, represents it to the outside world, signs the contracts, hires the staff. In exchange for this control, she accepts unlimited personal liability for the partnership’s debts. If the business fails spectacularly, creditors can pursue her personal assets: the house, the car, the retirement account. This is not a role for the faint of heart.
The limited partner—komandytariusz—occupies a different position entirely. He contributes capital and shares in the profits, but his exposure stops at a predetermined figure called the komandytowa sum, specified in the partnership agreement. If he contributes capital equal to or exceeding this amount, he bears no personal liability whatsoever for the partnership’s obligations. He has, in effect, purchased a ticket to the upside while capping his downside.
The same person cannot hold both roles simultaneously—a restriction that follows logically from the structure’s entire purpose. There are no limits, however, on how many partners of each type a given partnership may include.
Forming a Limited Partnership: A Procedural Guide
The Partnership Agreement
Unlike a general partnership, which can be established with a simple written contract, the limited partnership requires a notarized agreement—a formality that adds cost but also legal certainty. Polish law mandates several elements:
The firm name must include the surname of at least one general partner plus the designation “spółka komandytowa” (or its abbreviation, “sp.k.”). When the general partner is a legal entity rather than a natural person, its complete corporate name appears instead. One must never include a limited partner’s name in the firm name; doing so would expose him to unlimited liability, defeating the entire purpose of his participation.
The registered office determines which court has jurisdiction over the partnership’s affairs.
The scope of business defines what the partnership actually does, classified according to Poland’s standardized system.
Capital contributions from each partner must be specified precisely—their nature, their value, their timing.
The komandytowa sum for each limited partner establishes the ceiling of his potential liability to creditors.
Duration, if the partners intend the arrangement to be temporary rather than indefinite.
Contributions and Their Consequences
Partners may contribute cash, property, intellectual property, or—in the case of limited partners—even services, though services cannot count toward the komandytowa sum.
The relationship between a limited partner’s actual contribution and his komandytowa sum determines his real exposure:
- Contribution less than the sum: he remains liable for the difference
- Contribution equal to the sum: no personal liability
- Contribution exceeding the sum: still no personal liability, but more capital at risk within the partnership
The Terms That Actually Matter
Beyond the required elements, a well-drafted agreement addresses the questions that generate disputes when relationships sour:
Representation: Which general partners can bind the partnership, and under what circumstances? The default rule—any general partner acting alone—may not suit every situation.
Management: How are internal decisions made? Can limited partners participate in certain categories of decisions?
Profit allocation: In the absence of specific provisions, statutory defaults apply—which may not reflect the partners’ actual intentions.
Exit mechanisms: How does a partner withdraw? What happens to her interest? At what valuation? These questions, easily ignored when everyone is optimistic, become critical when they’re not.
Registration
The limited partnership comes into legal existence only upon registration with the National Court Register (Krajowy Rejestr Sądowy, or KRS). Until that moment, the agreement binds the partners to each other, but the partnership itself—as a legal entity capable of owning property and incurring obligations—does not exist.
Applications are submitted electronically through the Court Registry Portal. Errors or omissions trigger requests for correction, and depending on the court’s backlog, delays can stretch to several months—an uncomfortable limbo during which planned operations remain suspended.
Within seven days of registration, the partnership must also file beneficial ownership information with a separate registry maintained by the Ministry of Finance—an anti-money-laundering requirement carrying financial penalties for non-compliance.
The LLC as General Partner: A Popular Configuration
In practice, limited partnerships frequently feature a limited liability company (spółka z ograniczoną odpowiedzialnością, or sp. z o.o.) as their sole general partner. This arrangement—entirely legal and explicitly contemplated by the statute—achieves something no single entity type can accomplish alone: limited liability for every natural person involved.
The mechanics are straightforward. The LLC, as general partner, bears unlimited liability for the limited partnership’s debts—but the LLC’s own shareholders are liable only to the extent of their contributions to the LLC. Natural persons participate as limited partners (with capped liability) and simultaneously as shareholders of the LLC (also with capped liability). No individual faces unlimited exposure.
Additional advantages recommend this structure:
Stability: Replacing the people who actually manage the business requires only changing the LLC’s officers, not amending the limited partnership’s roster of partners.
Continuity: A natural person’s death does not automatically dissolve the partnership.
Succession planning: Transferring ownership becomes more tractable when family members can receive LLC shares or limited partnership interests according to their intended roles.
- Further reading: LLC Limited Partnership Formation and Registration in Poland
Taxation: The 2021 Watershed
Until January 1, 2021, limited partnerships enjoyed “tax transparency”—they were not themselves subject to corporate income tax, and profits flowed through to partners for taxation at the individual level. That era has ended. Limited partnerships now pay corporate income tax (CIT) at rates of either nineteen per cent (standard) or nine per cent (for qualifying smaller taxpayers).
General Partners
General partners may credit the CIT paid by the partnership against their personal tax on distributed profits, in proportion to their profit share. At the nineteen-per-cent CIT rate, this mechanism effectively eliminates personal tax on distributions. At the nine-per-cent rate, the combined effective burden runs to approximately seventeen per cent.
Limited Partners
Limited partners receive an exemption for fifty per cent of their profit share, capped at sixty thousand złoty annually. Beyond this threshold, standard rates apply.
The “Estonian CIT” Option
Since 2022, limited partnerships may elect a regime modeled on Estonia’s corporate tax system: no current taxation of retained earnings, with tax triggered only upon distribution. Effective rates run to twenty per cent for smaller taxpayers, twenty-five per cent for others.
The catch: only partnerships whose partners are exclusively natural persons qualify. The moment an LLC serves as general partner, the Estonian option vanishes—forcing a choice between this favorable tax regime and the liability insulation that an LLC provides.
Who Should Consider This Structure?
The limited partnership suits particular circumstances:
Expertise meeting capital: When one party contributes knowledge and effort while another contributes funding, and both want the risk allocation to reflect these different roles.
Family enterprises: Active family members as general partners, passive members as limited partners, with straightforward mechanisms for transferring interests across generations.
Higher-risk ventures: Where investors want defined maximum exposure rather than open-ended liability.
Professional practices: Law firms and consulting partnerships where practicing professionals bear unlimited liability while outside investors or junior colleagues participate with capped risk.
Social insurance optimization: Limited partners who are not otherwise engaged in business activity may avoid mandatory social insurance contributions—a meaningful consideration in Poland’s system.
Comparative Considerations
Against the general partnership, the limited partnership offers the possibility of limiting some partners’ liability, at the cost of notarization requirements and greater structural complexity.
Against the LLC, the limited partnership provides more favorable tax treatment for general partners (via the CIT credit mechanism) and flexibility in defining partner roles, but requires at least one party to accept unlimited liability.
Against the limited joint-stock partnership (spółka komandytowo-akcyjna), the limited partnership is simpler and less expensive to operate, but cannot issue shares or raise capital from large numbers of investors.
A Note on Professional Guidance
The limited partnership’s structural possibilities—multiple partner classes, variable liability exposure, optional LLC involvement, competing tax regimes—reward careful planning at formation. An agreement drafted without attention to these considerations may generate disputes, tax inefficiencies, or representation problems that prove expensive to remedy.
Professional advice at the formation stage—encompassing both legal structure and tax implications—typically costs far less than the consequences of structural errors that reveal themselves only years later, when relationships have changed and stakes have grown.
The limited partnership endures because the problem it solves endures: how to combine what one party has with what another party knows, in proportions that let both sleep at night. Eight centuries after Venetian merchants first worked out the terms, the essential bargain remains the same.
