Silent company and Estonian CIT
The Estonian CIT is an attractive form of taxation, but its use comes with certain restrictions on the company’s structure. Can a silent company benefit from this tax regime? Below is the key information on this subject.
Silent partnership – rules and structure
A silent partnership is a type of cooperation where one partner (silent) contributes to the business of the other partner, participating in the profits without disclosing his involvement to the public. This is possible due to the principle of freedom of contract in the Polish Civil Code.
Key condition for Estonian CIT
In order for a company to benefit from Estonian CIT, it must meet strict conditions regarding its shareholding structure. First and foremost, the shareholders must be individuals only, and the company must not hold shares in other companies or investment fund titles.
Shares in a silent partnership and Estonian CIT
In an individual interpretation by the Director of the CIT, ref. 0111-KDIB1-1.4010.806.2022.1.SG, dated February 1, 2023, it was stated that a silent company is not a company under the Commercial Law, as it has no legal personality or shares. This means that a silent company does not affect the fulfillment of the simple shareholding structure required for Estonian CIT.
Benefits of combining a silent partnership and Estonian CIT
Companies can benefit from Estonian CIT and operate as a silent company at the same time, which offers flexibility and tax advantages. A silent company does not create a new legal entity, so it does not violate Estonian CIT’s rules on shareholding structure.
Silent company and Estonian CIT – summary
The Estonian CIT offers entrepreneurs the opportunity to significantly reduce their tax burden, but requires certain structural conditions to be met. A silent company, thanks to its specificity, does not violate these conditions, which allows for the simultaneous use of both solutions.
If you have questions about Estonian CIT or the silent partnership, contact our Martini Tax law firm. Our specialists will be happy to support you and help you optimize the taxation of your business.