Optimizing the taxation of business conducted in Poland with the use of partnerships allows to avoid double taxation that would occur at the stage of dividend payment from a capital company. The use of a foreign partnership allows for a complete reduction of income tax at the stage of repatriation of the generated profits to Poland, usually directly to the actual beneficiary who is a partner of such a company.
Therefore, participation in a foreign partnership constitutes the so-called tax establishment as defined in most double taxation treaties. On the other hand, the profit of a permanent establishment may be taxed only in the country where the permanent establishment is situated, which is equivalent to the seat of a foreign partnership.
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*This article is for general information purposes only and does not constitute a legal advice.