On 22 April 2015 the European Court of Justice (ECJ) delivered its ruling in the case of Drukarnia Multipress. Drukarnia was a Polish limited liability company that intended to carry out a conversion into a limited joint-stock partnership (SKA) and to increase the partnership’s capital with an in-kind contribution of shares of another limited joint-stock partnership, a stock company and a limited liability company.

Drukarnia applied to the Finance Ministry for an individual ruling on the capital duty applying to the increase of the SKA’s capital. Drukarnia claimed that the SKA should be viewed as a capital company and that under the Capital Duty Directive the capital duty should not apply.

Entities that are considered to be capital companies for the purposes of the Capital Duty Directive are listed in Annex 1 of the Directive.

In an individual ruling of 20 November 2012, the Minister indicated that only a part of the SKA’s shares and shareholders met the relevant criteria for the Directive. Also Poland had not included SKAs in Annex I to the Directive but had chosen under Art. 9 of the Directive to consider that SKAs cannot be considered capital companies within the meaning of the Directive. The Minister therefore determined that Polish SKAs do not fall within the scope of the Capital Duty Directive and capital duty should be paid on the increase of capital.

Questions for preliminary ruling

Drukarnia appealed to the Regional Administrative Court of Krakow which referred the matter to the ECJ for a preliminary ruling. The referring Court asked the ECJ on 27 June 2013 for a preliminary ruling on two questions, as follows:

1. Should Art.2(2) of the EU Capital Duty Directive be interpreted to mean that a limited joint stock partnership is a capital company within the meaning of the provision if the legal nature of the partnership is that only part of its capital and partners meet the requirements set out in Art. 2(1)(b) and (c) of the Directive.

2. If the answer is no, should Art. 9 of the Directive, which allows a member state to choose not to recognize the entities referred to in Art.2(2) of the Directive as capital companies, be interpreted to mean that the member state is free to choose whether or not to levy capital duty on those entities.

Capital Duty Directive

The relevant provisions of the Capital Duty Directive are as follows:

Art. 2(2) of the Capital Duty Directive states that for the purposes of the Directive any other company, firm, association or legal person operating for profit is deemed to be a capital company. Article 9 of the Directive on exclusion of certain entities from the scope of application of the Directive provides that member states may choose not to regard the entities referred to in Art. 2 (2) as capital companies.

Art. 2 (1) (b) and (c) include in the definition of capital companies any company, firm, association or legal person whose shares can be dealt in through a stock exchange; or any company, firm, association or legal person operating for profit whose members have the right to dispose of their shares to third parties without prior authorization and are only responsible for the debts of the company, firm, association or legal person to the extent of their shares.

ECJ ruling

On 22 April 2015 the ECJ delivered its ruling. The Court ruled that Art. 2 (1) (b) and (c) of the Capital Duty Directive must be interpreted to mean that a partnership limited by shares under Polish law must be regarded as a capital company within the meaning of the provision, even if only some of its capital and members can satisfy the conditions.