Partnerships

|Partnerships

According to the Civil and Commercial Code (CCC), partnerships can be divided into 2 types:

1. Ordinary Partnership

In an ordinary partnership, at least two partners agree to conduct a certain business and contribute with money, benefits in kind, or services to the partnership. All contributions are to be considered equal, as long as the partners don’t agree otherwise.
All partners must be natural persons and are jointly and wholly liable for all the partnership’s debts and obligations. The partnership is based on an agreement of which the content is determined by the partners.

From a tax perspective, the ordinary partnership has no status as a juristic person and is treated for tax purposes as an individual being subject to Personal Income Tax of its partners.

In case the ordinary partnership is registered with the competent authority, then it is a legally independent entity from its partners and is taxed as a corporate entity being subject to Corporate Income Tax. The registration has an effect on the liability for the company’s debts. Although the partners are still liable for all company’s debts with their private assets, this liability applies only in case the company cannot serve the debts or obligations.

2.Limited Partnership

The limited partnership is an independent legal entity which gains its legal status by registration.
Limited partnerships must have limited liability partners whose liabilities are limited to their capital contribution to the partnership, and at least one managing partner who is liable for all partnership obligations without limitation.

The limited partnership’s management is conducted by the managing partner with unlimited liability. In case a partner with limited liability is involved in management tasks, he loses his status of limited liability and becomes a partner with unlimited liability.

Until the limited partnership is registered, it is deemed to be an ordinary partnership and all partners have joint and unlimited liability.

2018-07-27T14:05:40+00:00
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