Division by Separation in Poland: Carving Out a Business Unit

Division by separation in Poland, known as podział przez wyodrębnienie, is a corporate restructuring method under which part of a company’s assets and liabilities is transferred to one or more existing or newly incorporated companies in exchange for shares in the receiving company, which are taken up by the company being divided. Unlike a traditional demerger, the shareholders of the divided company do not receive shares in the acquiring or newly formed entity. The divided company continues to exist and becomes the direct shareholder of the entity receiving the carved-out business unit [1]. This form of division was added to the Commercial Companies Code by the amending Act of 16 August 2023, which entered into force on 15 September 2023 [2].

This structure is particularly relevant where a Polish company intends to separate a business line, real estate portfolio, operational division, intellectual property function or regulated activity while retaining group-level ownership and control, which makes it a practical tool for building holding structures.

How a division by separation works in Poland

Article 529 §1 point 5 of the Polish Commercial Companies Code provides for division by separation. A company transfers a defined part of its assets to:

• one or more existing companies, or
• one or more newly incorporated companies.

In return, shares in the receiving company are taken up by the company being divided [1]. This distinguishes a division by separation from a division by acquisition, a division by formation of new companies or a division by spin-off (podział przez wydzielenie), where shares are allocated to the shareholders of the divided company.

From a business perspective, this mechanism may support a carve-out of a business unit from a Polish company without changing the ultimate ownership of the group. It can be used to isolate risks, prepare a business for sale, separate regulated operations, establish a joint venture vehicle or improve internal governance.

Statutory restrictions on division by separation in Poland

Under Article 528 of the Commercial Companies Code, the following three restrictions apply [1]:

1. A company in liquidation which has commenced distribution of its assets cannot be divided (Article 528 §3).
2. A company in bankruptcy cannot be divided (Article 528 §3).
3. A joint-stock company or a joint-stock limited partnership whose share capital has not been fully paid up cannot be divided (Article 528 §1).

In addition, the availability of a division by separation depends on the legal form of the entities involved and the particular transaction structure. The statutory rules apply to capital companies, namely limited liability companies, joint-stock companies and simple joint-stock companies, and to joint-stock limited partnerships; the receiving company must be a capital company or a joint-stock limited partnership. Other partnerships cannot be divided (Article 528 §2) [1]. Cross-border divisions within the EU/EEA are subject to separate rules (Article 528 §1¹ and Article 550² et seq.), and regulated business or public-law permits may require additional analysis.

Division plan and KRS registration

The division process begins with a written division plan. Where the business unit is transferred to an existing company, the plan is agreed in writing between the divided company and the receiving company; where it is transferred to a new company, the divided company prepares the plan itself (Article 533). The content requirements are set out in Article 534 of the Commercial Companies Code. In a division by separation, the plan must state the number and value of the shares in the receiving company taken up by the divided company. The plan should identify the participating entities and describe precisely which assets, rights, contracts, employees, receivables, liabilities and other components are transferred [1].

For a carve-out of a business unit from a Polish company, vague asset allocation creates material risk. The plan should address, among other matters:

• real estate, leases and security interests;
• commercial agreements and change-of-control clauses;
• employment relationships and employee documentation;
• intellectual property, software licences and data access rights;
• financing arrangements, guarantees and intra-group loans;
• administrative decisions, concessions and permits.

The division plan is filed with the registry court and announced at least six weeks before the first shareholders’ resolution on the division, or made available free of charge on the company’s website for the same period. The division requires a resolution of the shareholders’ meeting or general meeting of the divided company and of each existing receiving company, adopted by a three-quarters majority of votes representing at least half of the share capital and recorded by a notary. For a division by separation, the statute itself simplifies the procedure: the management board report justifying the division and the examination of the plan by a court-appointed expert are not required (Article 529 §2). However, where the receiving company is a joint-stock company, the rules on the valuation of in-kind contributions by a statutory auditor apply accordingly (Article 538¹ §3) [1].

The division becomes effective on registration in the National Court Register, or KRS. Where the receiving company is newly formed, the separation takes place on the date on which that company is entered in the KRS. Where the receiving company already exists, it takes place on the date on which the increase of its share capital (or the issue of new no-par-value shares) is registered (the separation date, Article 530 §2) [1].

Legal succession and creditor protection in company division

On the separation date, the receiving company acquires the rights and obligations allocated to it in the division plan through partial universal succession. This means that separately transferring every listed asset may not be necessary. However, practical transfer steps can still be needed, especially for land and other registers, bank accounts, contractual notices, data systems and foreign assets.

Permits, concessions and reliefs connected with the assets allocated in the plan generally pass to the receiving company unless a statute or the relevant administrative decision provides otherwise. For financial institutions, the authority that granted the permit may object within one month of the announcement of the division plan. This issue should be examined before the transaction, particularly in regulated sectors [1].

Creditor protection in company division is an important planning issue. Under Article 546 §2 of the Commercial Companies Code, creditors of the divided company and of the receiving company who lodge their claims between the announcement of the division plan and the announcement of the division, and who credibly demonstrate that the division jeopardises satisfaction of their claims, may ask the court to grant them appropriate security, unless security has already been provided by the company. Under Article 546 §1, the divided company is also jointly and severally liable with the receiving company for obligations assigned to that receiving company in the division plan for three years from the announcement of the division, with that liability limited to the value of the net assets allocated to each company in the plan [1].

Tax neutrality of a demerger in Poland

The tax neutrality of a demerger in Poland should never be assumed solely because the restructuring is completed under the Commercial Companies Code. The corporate income tax treatment depends on the assets transferred, the valuation method, the ownership structure and the commercial purpose of the transaction.

In particular, under Article 12(1) point 9 and Article 12(4) point 3h of the Polish Corporate Income Tax Act, a division by separation is tax-neutral for the divided company only if both the assets transferred and the assets remaining in the divided company constitute an organised part of an enterprise; otherwise, the market value of the transferred assets is taxable income of the divided company. For the receiving company, neutrality requires continuation of the tax values from the divided company’s books (Article 12(1) point 8c and Article 12(4) point 3e). These exemptions do not apply where the main or one of the main purposes of the division is tax avoidance, which is presumed where the division is not carried out for valid economic reasons (Article 12(13)–(14)) [3]. Tax rulings issued in 2025 confirm this approach for a division by separation [4]. Because the business unit must qualify as an organised part of an enterprise, its actual operational, financial and organisational separation must be documented rather than merely described in corporate resolutions.

VAT treatment also requires a separate review. Article 6 point 1 of the Polish VAT Act excludes a transaction involving the disposal of an enterprise or an organised part of an enterprise from VAT. Whether the transferred unit meets that standard depends on the facts of the case [5].

Key business risks in a carve-out spin-off in Poland

The principal risks arise before registration rather than at the KRS stage. A transaction may fail to deliver its intended commercial result if the carved-out unit lacks the personnel, contracts, IT access, licences or financing required to operate independently.

Management boards should also consider contractual consent requirements, employee transfer rules under Article 23¹ of the Polish Labour Code [6], confidentiality restrictions, financing covenants and potential reputational effects where the separation follows a dispute, investigation or financial distress.

This is informational material, not legal advice. For a transaction-specific assessment of a planned carve-out, including the division plan, tax exposure and creditor issues, contact the Kopeć & Zaborowski legal team.

FAQ – Division by Separation in Poland

What is division by separation in Poland?

It is a statutory form of corporate division, available since 15 September 2023, where part of a company’s assets is transferred to another company, while shares in the receiving company are taken up by the divided company rather than its shareholders.

Does the company being divided cease to exist?

No. In a division by separation, the divided company remains in existence. It retains the assets and liabilities not allocated to the receiving company under the division plan.

Can a newly formed company receive the carved-out business unit?

Yes. Article 529 §1 point 5 of the Commercial Companies Code permits transfer to an existing company or a newly incorporated company.

When does the division become effective?

The separation takes effect upon registration in the KRS. Where an existing company receives the assets, this is the registration of the increase of its share capital (or of the issue of new no-par-value shares); where a new company receives the assets, it is the registration of that new company.

Is a division by separation tax-neutral in Poland?

Not automatically. For corporate income tax purposes, both the transferred and the retained assets must constitute an organised part of an enterprise, tax values must be continued and the division must have valid economic reasons.

Can creditors challenge a company division?

Creditors who lodge their claims between the announcement of the division plan and the announcement of the division, and credibly demonstrate that the division threatens satisfaction of their claims, may ask the court for appropriate security. The divided company also remains jointly and severally liable for obligations assigned to the receiving company for three years.

Bibliography

[1] Act of 15 September 2000 – Commercial Companies Code (consolidated text: Journal of Laws of 2024, item 18, as amended), in particular Articles 528, 529, 530, 531, 533, 534, 535, 538¹, 541 and 546.

[2] Act of 16 August 2023 amending the Commercial Companies Code and certain other acts (Journal of Laws of 2023, item 1705), in force since 15 September 2023.

[3] Act of 15 February 1992 on Corporate Income Tax (consolidated text: Journal of Laws of 2026, item 554), in particular Article 12(1) points 8c and 9, Article 12(4) points 3e and 3h and Article 12(13)–(14).

[4] Director of National Tax Information, individual tax ruling of 30 April 2025, ref. 0111-KDIB1-1.4010.102.2025.2.SH (division by separation of an organised part of an enterprise).

[5] Act of 11 March 2004 on Tax on Goods and Services, Article 6 point 1.

[6] Act of 26 June 1974 – Labour Code, Article 23¹.