General partnership and transfer pricing in 2025 – Local file documentation, CIT-15J and TP obligations

The arm’s length principle applies to all entities conducting transactions with related parties and to all transactions – regardless their value. Even if a transaction does not exceed the documentation thresholds and does not trigger the obligation to prepare local transfer pricing documentation, it is not exempt from complying with the arm’s length principle.

Transfer pricing is often overlooked when it comes to partnerships — and that’s a common mistake. If you operate as a partnership, you may still be required to ensure that your related-party transactions are conducted at arm’s length. What’s more, you might also be subject to documentation and reporting obligations under transfer pricing regulations.

What is a general partnership and how does it work?

A general partnership is one of the simplest forms of doing business by at least two partners. The Polish Commercial Companies Code lists it alongside other partnerships, such as a professional partnership, a limited partnership or a limited joint-stock partnership. 

A general partnership does not have legal personality, but it does have legal capacity and may perform legal acts in its own name, e.g. assume liabilities. The partners of a general partnership are jointly and severally liable for the partnership’s obligations, and this liability is unlimited – extending to their entire personal assets.

General partnerships as CIT taxpayers or tax-transparent?

Until the end of 2020, all partnerships were tax transparent. This means that the taxation of the income earned by these partnerships took place at the level of personal income tax (PIT) or Corporate Income Tax (CIT) by its partners.

On 1 January 2021, amendments to the provisions of the Corporate Income Tax (CIT) Act relating to partnerships came into force. Under the recent regulations, general partnership becomes a CIT taxpayer when:

• it has its registered office or management board in Poland and, at the same time, if
• its partners are not exclusively natural persons and
• it fails to submit, prior to the start of its financial year, information regarding CIT and PIT taxpayers who, either directly or indirectly through entities that are not income taxpayers, hold rights to participate in the partnership’s profits (CIT-15J form).

In a tax-transparent general partnership, only the individual partners of the partnership are taxpayers of income tax – they pay personal income tax or corporate income tax when the partner is a CIT taxpayer. Income derived from participation in a general partnership is classified as income from business activity under tax regulations. Each partner recognizes income in proportion to their share in the partnership’s profits.

CIT-15J – obligation and deadline

General partnerships whose partners are exclusively natural persons are not obliged to file the CIT-15J form in order to maintain their tax-transparent status. These partnerships are not subject to corporate income tax at all, and their income is taxed at the partner level under personal income tax regulations.

Transfer pricing and general partnerships – who must meet TP documentation obligations in 2025?

For tax-transparent general partnerships – i.e., partnerships that do not have the status of a CIT taxpayer – the transfer pricing regulations of the CIT Act do not apply directly. But does this mean such partnerships are not subject to transfer pricing rules at all?

What do we know? The documentation and reporting obligations arising from controlled transactions conducted by a tax-transparent general partnership must be assessed from the perspective of its partners. But what does this mean in practice? Is the obligation assessed the same way for every type of transaction – whether it’s the sale of goods, provision of services, financing arrangements, capital contributions or increases, or the admission of a new partner? Who is responsible for filing the TPR form? Which form applies in such a situation – TPR-C or TPR-P? These questions must be addressed each time the documentation obligations of both the general partnership and its partners are being assessed.

Once a partnership – such as a general partnership (subject to certain conditions) or a limited partnership (automatically) – acquires a CIT taxpayer status, the transfer pricing rules in the CIT Act are applicable. As a result, the documentation and reporting obligations related to transfer pricing are significantly less complex in the case of CIT-subject partnerships, as the responsibility lies with the partnership itself. On the other hand, if the other party to the transaction is also a partner of that partnership, the documentation obligation may also arise on the partner’s side (for example, in the case of an amendment to the partnership agreement).

What about amending a partnership agreement?

An amendment to a partnership agreement that involves specific changes in the partnership’s assets is considered a controlled transaction other than those involving goods, services, or financing (Individual Tax Ruling issued by the Director of the National Tax Information Office on January 24, 2025, ref. 0114-KDIP3-1.4011.880.2024.3.EC). Therefore, the applicable threshold for such transactions, determining the obligation to prepare transfer pricing documentation, is PLN 2,000,000.

However, the regulations do not explicitly state how to determine the value of a transaction resulting from an amendment to a partnership agreement in cases involving capital contributions or other events affecting the assets of a partnership. According to Article 11l(1) of the CIT Act, in the case of an agreement establishing a non-corporate partnership, the transaction value is the total value of contributions made to the partnership. However, this provision applies to the initial agreement of a partnership between related entities.

Should a similar approach be taken in the case of amendments to the partnership agreement? Another important question that arises in relation to such transactions is: what is the relevant moment for the documentation obligation to arise? Is it the date the amendment is signed, the date the change is registered with the National Court Register (KRS), or the date the actual transfer of value occurs?

In many cases, an amendment to a partnership agreement may also trigger transfer pricing obligations on the part of the partners themselves.

Profit distribution and transfer pricing obligations

Profit distribution in a partnership is a natural consequence of conducting business activity. But can such a result give rise to transfer pricing obligations for partnerships? Does the distribution of profit to partners qualify as a controlled transaction?

Here, taxpayers can breathe a sigh of relief – the distribution of profit from a partnership to its partners is not considered a controlled transaction, unlike, for example, amendments to a partnership agreement or the initial conclusion of such an agreement.

Profit distribution is not an economic activity itself, but rather the consequence of business operations carried out by the partnership. According to the Minister of Finance, the mere receipt of profit by a partner in a partnership also does not constitute a controlled transaction under the transfer pricing regulations contained in the Personal Income Tax Act.

How should partnerships approach TP obligations in 2025?

Properly determining transfer pricing obligations for general partnerships can raise many questions — and clear answers are often still hard to find directly in the legislation. The responsibility for establishing who must fulfill transfer pricing documentation and reporting obligations, and when, always lies with the partners.

Key questions include:

• Is the general partnership a CIT taxpayer?
• Has the CIT-15J form been submitted correctly and on time?
• Is the partnership required to file a TPR form, or do the partners have that obligation?
• What about amendments to the partnership agreement?
• What transactions were carried out by the partnership, and which by its partners – and with whom?
• Were there any transactions conducted with entities based in so-called tax havens (e.g. purchases of raw materials or goods from Hong Kong)?

These are just a few of the questions that may arise in relation to a general partnership and its partners. A well-executed transfer pricing audit can help mitigate the risk of sanctions and avoid unnecessary tax exposure resulting from such uncertainty.