The profit of a limited partnership is divided in two steps. First it is split into a part for the general partners and a part for the limited partners in the ratio laid down in the partnership agreement and, if the agreement is silent, in half. The general partners then divide their part in equal shares and the limited partners according to the amount of their paid-up contributions, unless the agreement provides otherwise.
A limited partnership brings together partners whose contributions differ in kind: the general partner brings work, management and personal liability, the limited partner brings capital. The Act takes account of this and divides profit in two steps. The statutory rules are, however, only a fallback for cases where the partnership agreement is silent, and where contributions and work are unevenly distributed they seldom match what the partners had in mind.
Two steps under the Act
The first step determines how much of the profit falls to each group of partners:
The division of profit into the part attributable to the limited partners and the part attributable to the general partners is determined by the ratio laid down in the partnership agreement; otherwise the profit is divided between them in half.
— Section 100(1) of Act No. 513/1991 Coll. (unofficial English translation)
The second step divides the profit within each group:
Unless the partnership agreement provides otherwise, the general partners divide the part of the profit attributable to them in equal shares, and the limited partners according to the amount of their paid-up contributions.
— Section 100(2) of Act No. 513/1991 Coll. (unofficial English translation)
The fallback rule can produce unexpected figures. If the partnership has two general partners and one limited partner and the agreement lays down no ratio, the limited partner alone receives half the profit and each general partner a quarter, regardless of how much each put into the partnership and how much work each did in it. Where there are several limited partners, what counts is the amount of the paid-up contribution, so a limited partner who is late in paying receives less than their contribution under the agreement would suggest.
Who decides what
Business management belongs to the general partners alone (Section 97(1)). On other matters the general partners decide together with the limited partners by a majority of votes, each partner having one vote unless the agreement lays down a different number of votes (Sections 97(2) and (3)). To avoid a dispute about who decides on approving the financial statements and dividing the profit, the partnership agreement should contain an express rule on who approves these matters, by what majority, and whether part of the profit is retained in the partnership. The rules on limited partnerships contain no special provision on bearing losses. The rules on general partnerships apply mutatis mutandis to a limited partnership; under them a loss established by the annual financial statements is borne by the partners in equal shares unless the agreement provides otherwise (Sections 82(3) and (4)), but for the legal position of limited partners the Act refers to the rules on limited liability companies (Section 93(2)). The Act therefore does not clearly determine how a loss affects the position of a limited partner, and it is safer to regulate this expressly in the agreement.
Profit during the partnership’s life and the balance at the end
The same key applies on dissolution of the partnership with liquidation. Each partner is first entitled to the return of the value of their paid-up contribution; if the liquidation balance is insufficient for this, the limited partners have a priority right to repayment. Whatever remains after the contributions have been returned is divided according to the same principles as profit (Section 104(1)). Here too the partnership agreement may provide for a different method (Section 104(3)), and the profit-sharing rule is therefore best drafted so that it also works for the division of the liquidation balance.
The tax dimension
The division of profit has a direct tax consequence. Where a general partner is a natural person, the part of the limited partnership’s tax base attributable to them is included in their own tax base as income from business, in the same ratio in which the profit attributable to the general partners is divided under the partnership agreement, and otherwise in equal shares (Sections 6(1)(d) and 6(8) of Act No. 595/2003 Coll.). Consistently with this, the Income Tax Act treats a limited partnership as a transparent entity only to the extent of the income taxed in the hands of the general partners (Section 17j(2)). How the part attributable to the limited partners will be taxed in a particular case, and whether the agreed ratio is worthwhile, is a matter for your tax adviser; we will make sure the agreement says exactly what you have agreed.
How to proceed
The ratio between the groups of partners, the division within each group, the rules for approving profit and the treatment of losses belong in the partnership agreement from day one. We prepare them as part of our forming a limited partnership service. A related question is what a limited partner is liable for, because the profit ratio and the extent of the risk are assessed together when negotiating with partners.
This answer provides general information on the law as at 12 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
