(April 22, 2015)

On April 22, 2015 the European Court of Justice (CJEU) ruled in Case C‑357/13 Drukarnia Multipress sp. z o.o. versus Minister Finansów (ECLI:EU:C:2015:253). 

·        Should Article 2(1)(b) and (c) of [Directive 2008/7] be interpreted as meaning that a [PLS] should be regarded as a capital company within the meaning of those provisions if it follows from the legal nature of that partnership that only some of its capital and partners are able to meet the requirements set out in Article 2(1)(b) and (c) of the directive?

·        If the first question is answered in the negative, should Article 9 of [Directive 2008/7], which allows a Member State to choose not to recognise the entities referred to in Article 2(2) of the directive as capital companies, be interpreted to mean that that Member State is also free to choose whether or not to levy capital duty on such entities?

The dispute in the main proceedings and the questions referred for a preliminary ruling

·        Drukarnia, intending to convert itself into a PLS and then to increase its capital by a contribution in kind made up of shares in another PLS, shares in a share company and shares in a limited liability company, applied to the Minister on 21 September 2012 for a written interpretation of provisions of the PCC Law.

·        Drukarnia submitted that a PLS was a capital company within the meaning of Article 2(1)(b) of Directive 2008/7. Consequently, by virtue of Article 4(1)(b) in conjunction with Article 5(1)(c) of that directive, those restructuring operations cannot be subject to the tax on civil-law acts.

·        By written interpretations of 20 November 2012, the Minister considered that Drukarnia’s position was incorrect and that a PLS was not a ‘capital company’ within the meaning of that directive.

·        The Minister noted that Article 2(1)(b) and (c) of Directive 2008/7 does not allow a partnership to be classified as a capital company if only some of its shares and members satisfy the conditions laid down in that provision. Thus the Member States which wished to include PLSs within the scope of Directive 2008/7 had ensured that that category of partnership appeared in the list in Annex I to that directive. The Republic of Poland had not chosen to include PLSs in the list in Annex I, principally because of their dominant partnership character, and had instead preferred to make use of the option in Article 9 of Directive 2008/7, PLSs being classified as partnerships by the PCC Law. Consequently, a PLS cannot be regarded as a capital company on the basis of Article 2(2) of Directive 2008/7 either, so that Articles 4(1)(b) and 5(1)(e) of that directive do not apply to the dispute in the main proceedings.

·        Drukarnia brought an action in the Wojewódzki Sąd Administracyjny w Krakowie (Regional Administrative Court, Cracow) for annulment of the Minister’s written interpretations of 20 November 2012, on the ground that they infringed in particular Article 2(1) of Directive 2008/7. The Minister repeated his arguments and contended that the action should be dismissed.

·        That court states that under Polish commercial law a PLS is a partnership with the object of carrying on a business under its own name, having the characteristic elements of a partnership together with features of a capital company. In particular, in a PLS at least one of the partners, the ‘general partner’, is liable without limit for the partnership’s liabilities to its creditors and at least one of the partners, the ‘limited partner’, is not personally liable for the partnership’s liabilities. The capital of a PLS consists of the shares of the limited partners and the contributions of the general partners. While the general partners’ contributions cannot be dealt in on a stock exchange, the limited partners’ shares may be dealt in there under the same rules as those applicable to the capital of share companies. In addition, the transfer by a general partner of his rights and obligations is in principle subject to the agreement of the other partners, whereas the shares in a PLS are transferable, although the transfer of registered shares may be restricted, as in the case of registered shares in share companies.

·        In those circumstances, the Wojewódzki Sąd Administracyjny w Krakowie decided to stay the proceedings and to refer the following two questions to the Court for a preliminary ruling:

(1)    Should Article 2(1)(b) and (c) of [Directive 2008/7] be interpreted as meaning that a [PLS] should be regarded as a capital company within the meaning of those provisions if it follows from the legal nature of that partnership that only some of its capital and partners are able to meet the requirements set out in Article 2(1)(b) and (c) of the directive?

(2)    If the first question is answered in the negative, should Article 9 of [Directive 2008/7], which allows a Member State to choose not to recognise the entities referred to in Article 2(2) of the directive as capital companies, be interpreted to mean that that Member State is also free to choose whether or not to levy capital duty on such entities?

The CJEU ruled as follows:

Article 2(1)(b) and (c) of Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital must be interpreted as meaning that a partnership limited by shares under Polish law must be regarded as a capital company within the meaning of that provision even if only some of its capital and members are able to satisfy the conditions laid down by that provision.

For further information click here to be forwarded to the text of the ruling.

Interested in more CJEU rulings regarding Indirect taxes on the raising of capital? Then click here to be forwarded to the section CJEU where we amongst others have a section in which we have included a selection of CJEU rulings regarding Indirect taxes on the raising of capital.

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