Partner remuneration for managing the company as hidden profits in Estonian CIT in Poland

Hidden profits in Estonian CIT in Poland are becoming an increasingly practical risk area — especially where a company (or partnership taxed under the Estonian model) settles recurring benefits with its partners. An amending interpretation issued by the Head of the National Revenue Administration (KAS) on 7 November 2025 (ref. DOP12.8221.9.2025) is a clear signal for taxpayers using the Estonian CIT (ryczałt od dochodów spółek) regime. The authority concluded that remuneration paid to a partner for “managing the affairs” of a limited partnership (spółka komandytowa) should be treated as income from hidden profits, and therefore taxed under the lump-sum corporate income tax framework.

This approach changes the perspective for many businesses that have treated such settlements as standard operational pay for real, ongoing work — especially where the amount was determined on market terms and was not linked to the partnership’s financial result.

Hidden profits in Estonian CIT in Poland: where the real risk sits in partner settlements

Under the Polish Estonian CIT model, taxation is not limited to classic profit distributions. It can also cover specific benefits provided to a partner (or related entities) if they are considered connected to the right to participate in profits. In practice, the highest risk appears when a company transfers economic value to a partner in a form that is not labelled as a dividend/profit distribution, but still flows from the ownership relationship.

In the 7 November 2025 interpretation, the Head of KAS focused precisely on that point: not on the label of the benefit and not even on whether the partnership genuinely needs the partner’s work, but on whether the entitlement to remuneration arises because of the person’s status as a partner and their influence over the entity’s functioning.

Why remuneration for managing a partnership may be treated as hidden profits

In the case analysed by KAS, the authority took the view that granting remuneration for managing the partnership’s affairs is not “corporately neutral”. The reasoning highlighted that:

• As a rule, a partner does not automatically receive remuneration for managing the partnership’s affairs; the possibility of granting it stems from ownership arrangements (e.g., provisions in the partnership agreement or partners’ resolutions).
• The beneficiary is a partner, i.e., an entity entitled to participate in profits.
• This entitlement is seen as closely tied to the partner’s influence over decisions and the partnership’s operations — so, in the authority’s view, it is difficult to demonstrate that it arises independently from the ownership relationship.

The practical consequence is important: even if the remuneration is:

• set on market terms,
• not dependent on revenue, taxable income, or reported profit,
• justified by operational needs,

…it may still be classified as hidden profits if the authority concludes that the decisive factor is the link to profit participation rights.

Non-cash benefits: the interpretation goes beyond cash payments

The authority also made it clear that the form of the benefit is not decisive. As a result, risk under Estonian CIT in Poland may apply not only to bank transfers, but also to non-cash settlements, if they lead to a measurable economic advantage for the partner at the expense of the entity.

In practice, you can also see a stricter approach to remuneration paid to partners for repetitive non-cash services performed for the company — especially when the obligation to perform those services results from corporate arrangements (e.g., the partnership agreement/statute). This matters because many businesses organise cooperation with partners precisely through such mechanisms, assuming that market pricing and real performance reduce tax exposure. The interpretation suggests that, by itself, that assumption may be insufficient if the authority challenges the source of the entitlement (ownership relationship).

What this means for Estonian CIT taxpayers — especially limited partnerships in Poland

For limited partnerships (spółka komandytowa) that opted for Estonian CIT (the lump-sum tax on company income), the interpretation may require revisiting current practice. If the partnership pays partners remuneration for managing the partnership’s affairs based on the partnership agreement or partners’ resolutions, it should anticipate that the authority may treat those payments as hidden profits.

From a risk-management perspective, three areas are key.

1) Identify settlements that may be viewed as “ownership-driven”
In practice, the issue rarely concerns a single payment title. What matters is the overall architecture of value transfers to partners — and whether a benefit is available because someone is a partner.

2) Review the legal basis and how the entitlement is structured
The more corporate the remuneration looks (arising directly from the agreement/resolutions and not reflecting a typical arm’s-length contractor relationship), the easier it is for authorities to build the argument that it is linked to profit participation rights.

3) Documentation and consistency of the settlement model
In disputes involving Estonian CIT and hidden profits, it is almost always crucial whether the business can demonstrate:

• the economic rationale of the settlement,
• the terms and calculation mechanism,
• consistency with the governance model and accounting approach.

A simple declaration that “it’s market-based” may not be persuasive if the authority disputes the ownership-driven source of the entitlement.

How to approach this professionally — before a dispute starts

In many organisations, the issue appears only during pre-entry reviews (before switching to Estonian CIT) or during a tax inspection. A more predictable approach is to act in advance:

• map all value streams transferred to partners (cash and non-cash),
• verify whether a given settlement title functions as a corporate privilege that could be linked to profit participation rights,
• assess whether there are real arguments that reduce the risk of hidden profit classification (including whether statutory exclusions apply and whether the relationship structure and documentation are consistent),
• if needed, redesign the settlement model to make it more predictable under the lump-sum tax regime.

There is no single universal solution. The outcome depends on factors such as the partner’s role, the partnership agreement structure, the scope of activities, the form of benefits, and the overall relationship between the partner and the entity.

If you want to reduce uncertainty, professional tax advisory in Poland can include a structured review of partner settlements under Estonian CIT, risk classification of hidden profits, and preparation of robust internal documentation.

FAQ: most common questions from businesses

If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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