The undistributed profits are subject to income tax (at the rate of 19%), if the non-transparent company (e.g. a limited liability company) is transformed to a partnership (which is tax transparent). As from 1.1.2015 this concerns also the profits, which have been credited to the retained earnings account.
According to the recently passed amendment to the CIT Act (which is to come into force as from 1.1.2015), the rules with regard to non-cash dividend will be changed.
As from January 2015, the non-cash dividend will be deemed to be the sales transaction (triggering the tax).