SEETING UP BUSINESS IN POLAND 2024

SETTING UP BUSINESS IN POLAND

General Aspects

Poland is situated in the heart of Europe, bordering seven other countries. Its monetary unit is the Polish zloty (PLN). The expected date of introducing the Euro in Poland is not known. With about 312,000 square kilometers Poland is one of the largest European countries. The total population is around 38 million people. The official language is Polish. People, especially entrepreneurs, and the young generation speak English.

On 1 May 2004, Poland joined the European Union and thus became a member of the vast European single market where goods, services, capital, and labor force move as freely as within one country. The accession to the EU crowned years of preparations and reforms. The Polish economy is developing much faster than the Eurozone and higher than the average of all EU members (even

in an economic slowdown in 2008/2009). Poland’s growth has been driven to a significant extent by export growth, industrial production, and investments.

Investors from EU and EFTA member countries may conduct economic activity on the same terms as Polish citizens. Investors from other countries may conduct economic activity on the same terms as Polish citizens only if they hold permits legalizing their stay in Poland and allowing them to conduct commercial activity. Investors from non-EU and EFTA countries who do not hold such permits may conduct an economic activity through:

Establishing limited partnerships, limited joint-stock partnerships, limited liability companies, and joint-stock companies; purchasing and acquiring shares in such companies.

Legal Forms of Business Entities

Legal form Feature

Branch Has no legal identity, but is part of the head office business and its organization. A branch may only conduct activities within the scope of business of the foreign investor who established the entity concerned.

Representative Office A representative office has also no legal identity. It may conduct activity in the area of promotion and advertising of the foreign investor establishing the entity. No other economic activity may be conducted in this form.

Other legal forms In addition to the above-mentioned types of legal forms, it is possible to run various types of companies in Poland.

Sole proprietorship Set up by a single natural person, who is personally liable for the debts contracted by the firm, as well as for firm’s tax and social security obligations. An entry in register of individual entrepreneurs (CEIDG – Central Register of Individual Entrepreneurs; registration at local municipality or online at www.ceidg.gov.pl) is necessary to commence business activity.

Remarks

Suitable for foreign companies looking for a presence in Poland to initiate business.

Suitable for advertising purposes only and thus not very popular.

Other forms of business activity are described on the following pages.

Suitable for small businesses run by one natural person. For foreigners from outside the EU and EEA, there are additional conditions and they need to have specific permits to be able to conduct such business in this form.

Civil Law Partnership (Spółka cywilna)

General partnership (Spółka jawna)

An association of individuals or enterprises united in the achievement of a joint contractual purpose. The partnership agreement should be drawn up in writing.

Suitable for small businesse. Partners have to register in the register of individual entrepreneurs. For foreigners from outside the EU and EEA, there are additional conditions and they need to have specific permits to be able to conduct such business in this form.

Professional partnership (Spółka partnerska)

Limited Partnership (Spółka komandytowa)

Partnership conducts business under its own business name, which has to include at least one of the partners’ surname. The partnership agreement must be drawn up in writing to be valid (the notarial form is generally not required) the general partnership must be registered in the National Court Register.

Only natural persons can be partners. The personal liability of the partners can be excluded with regard to professional errors for which one individual partner is alone responsible.

The difference between a general partnership (spółka jawna) and a limited partnership (spółka komandytowa) is that in the second one, at least one partner (limited partner) has limited liability towards the partnership’s creditors. Consequently, there are two groups of partners in the limited partnership: general partners – which have exactly the same legal status as partners in a registered partnership, and limited partners, which: have limited liability towards the partnership’s creditors (civil right obligations) and are not responsible for example for partnership’s tax obligations.

The classic company form for small and medium-sized businesses with not a big business risk. For foreigners from outside the EU and EEA, there are additional conditions and they need to have specific permits to be able to conduct such business in this form.

A legal form specifically designed for the joint exercising of professional freelance activities. . For foreigners from outside the EU and EEA, there are additional conditions and they need to have specific permits to be able to conduct such business in this form.

Suitable for medium-sized companies seeking additional start-up capital from persons who prefer a limitation of liability. Limited partnership has to run full accounting (identical as in limited liability company / sp. z o.o.) and submit financial statements with National Court Register.

Limited Joint- Stock Partnership (Spółka komandytowoakcyjna)

In a limited joint-stock partnership there are at least two partners: a general partner and a shareholder. The general partner bears unlimited liability for the obligations of the limited joint-stock partnership. General partners and shareholders may be natural persons, legal persons, organizational units without legal personality that have legal capacity.

The minimum share capital of a limited joint-stock partnership is PLN 50,000. The form is intended for medium businesses.

Limited Liability Company (spółka z ograniczoną odpowiedzialnością – sp. z o.o.)

The minimum share capital of a limited liability company is PLN 5,000 (approx. EUR 1100). The articles of association should be drawn up in the form of a notarial form (we can also establish this company electronically, without a notarial deed, which, however, causes limitations in the provisions of the partnership agreement), and the company needs to be entered into Register of Entrepreneurs (part of the National Court Register).

The company is managed and represented by the management board (board members do not have to be Polish residents), appointed – as to the rule – by the shareholders’ resolution. Shareholders have equal rights and duties in the company, unless the statute or articles provide otherwise. The shareholders are not liable for company debts.

The most popular company legal form, with high flexibility and relatively few obligations. The costs of the founding process are quite low provided that the initial registered capital is PLN 5,000.

Limited liability company has to run full accountability, but the shareholders are not responsible for the company’s obligations. As a rule, the management board is responsible for the company’s obligations up to the amount of the share capital. Shares can be transferred easily.

Joint – stock company (Spółka akcyjna)

Formation requirements are identical as for limited liability company, except for minimum registered capital that amounts to PLN 100,000 (approx. Euro 25,000).

Representation and management rules are identical for limited liability company. A supervisory board must be appointed in the company.

Shareholders have equal rights and duties in the company unless the statute or articles provide otherwise. The shareholders generally are not liable for company debts.

A new form of running a business in Poland. The construction of a simple joint-stock company involves the simplification of some procedures and mechanisms specific to a classic joint-stock company. First of all, it was decided to lower the minimum share capital to the amount of - PLN 1.

Moreover, the new regulation aims to enable entrepreneurs to freely shape the company’s property structure. A simple joint-stock company will therefore also issue shares without a nominal value, and the founders will be able to contribute to it in the form of know-how, work, and services, without the need to prepare any valuations.

Shares can be transferred easily, a joint–stock company can be listed publicly on the stock exchange and enjoys a high market reputation.

The costs of the founding process are quite high in comparison to a limited liability company.

Joint stock company has to run full accountability. There is a statutory requirement for a joint-stock company to carry out an annual audit.

The organizational and accounting obligations and publication requirements are quite extensive. The classic form for big companies.

Perfect form for a start-up.

Simple joint-stock company (prosta spółka akcyjna)

Organizational Questions

Topic Feature

National Court Register (NCR)

REGON and NIP numbers

Partnerships and Companies must be entered in the Register of Entrepreneurs, which is part of the National Court Register managed by district courts, except for civil law partnerships (spółka cywilna). The commercial register is managed electronically, and the company’s excerpts from the register may be obtained online at https://ems.ms.gov.pl/krs/wyszukiwaniepodmiotu

For the business to become fully operational statistical identification number (REGON), as well as taxpayer number (NIP) are necessary. Business registered with the National Court Register fill necessary applications with this register (first registration and any subsequent changes), while civil partnerships and sole proprietorship owners with CEIDG – Central Register of Individual Entrepreneurs.

UBO Once the company is set-up there is an obligation to notify the company to the Ultimate Beneficial Owner (UBO) register. In the UBO register there is an obligation to identify beneficial owners of the incorporated company. The time for notification is 14 days from the date of entry of the company to the KRS register. In the absence of notification to the UBO register, the company is exposed to a very high penalty.

Bank Account To open a bank account individuals from UE states need a valid passport.

Companies need an excerpt from the commercial register, some banks require also articles of association, the confirmation of obtaining a statistical identification number (REGON), shareholders structure of the company’s shareholder if the shareholder is a legal entity. Please note that banks require also notification of the beneficial owners to the UBO (Ultimate Beneficial Owner) register.

Remarks

A partnership may commence its operations after it is entered in the register. This rule does not apply to companies, which may commence their activity before they are entered in the register. A company is entered in the register upon an application made by its management board.

Possibility to obtain NIP and REGON numbers by submitting registration documents online in an easy and quick way.

The obligation for such a notification arises from the Polish Act of Anti Money Laundering.

Some banks allow you to open an account over the phone or online.

Transfer of Goods and Machinery

Within the EU goods and machinery can circulate freely. Imports from non-EU states to Poland cause customs, import VAT, and in some cases special excise taxes.

Transfer of Capital Within EU capital can be moved in and out of Poland without any restrictions.

Capital transfers from and to non-EU counties are subject to various restrictions.

Imports of certain goods (e.g. fuels) may require permits

Certain capital transfers must be reported to the National Bank of Poland (Narodowy Bank Polski), for statistical purposes.

Visa and Residence permit

Polish Investment Zone

All EU citizens can set up businesses and take up self-employed work in Poland without the requirement of any permit. Stay over a period of more than 3 months must be registered at local authorities. Most non-EU nationals need a visa to enter Poland, but there are several exceptions.

Polish Investment Zone is an instrument designed to support entrepreneurs in making new investments on Polish territory. In principle, this suport is based on the granting of a tax exemption as part of the entrepreneur’s impelmentation of new investments. The tax exemption takes place on the basis of the suport decision granted.

As a rule, foreigners from countries outside the EU, EEA, and Switzerland who want to work legally in Poland must have a work permit.

Carry out of certain investments in Poland may allow the entrepreneur to be exempt from income tax for a certain period of time.

Public aid

Polish Public Institutions offer support for entrepreneurs who conduct business activities and meet requirements to receive public aid. Public aid is offered in various forms. Mostly the support comes mainly from EU funds.

Carry out of certain business activities and investments in Poland may enable the entrepreneur to obtain public aid provided that certain requirements are met.

Employment

Topic Feature Remarks

Work permit EU citizens are released from the obligation to obtain a work permit. Foreigners from the aforesaid countries and their families will have to register their stay in Poland, if it is longer than 3 months.

As a rule, non-EU citizens, as employees or board members of Polish companies, require work permits.

Working visas are granted by the consulate in the foreigner’s permanent place of residence upon presentation of the work permit promise.

Labour law

Polish labour law issues are mainly regulated in the Labour Code. It specifies the rights and duties of all employees, regardless of the category of work and the legal basis of the employment relationship. This does not apply to workers rendering services on the basis of civil law contracts (i.e. service contracts).

The minimum remuneration for work for full-time employees is specified by law and in 2024 (from 1st of January) amounts to PLN 4242,00 (gross amount, i.e. prior to the payment of any taxes, social security, or other mandatory payments) and will be 4300,00 from 1st of July 2024. A minimum of 20 days of paid holidays a year is guaranteed (26 days for employees with 10 years of seniority). In general, working time may not exceed eight hours per day and an average of 40 hours per week in a five-day week on average within a reference period not exceeding four months. The total weekly working time with overtime hours cannot on average exceed 48 hours in a reference period.

The notice period for termination of employment depends on the seniority of the employee and ranges between 2 weeks and 3 months.

The social security system may be different for a sole proprietorship, partnership, and employees working under employment contracts or civil law contracts. This means that different contributions will be paid in different situations. Each case requires a separate analysis..

In the case of a contract of employment insurance premiums depends on the amount of remuneration, you can calculate here: https://wynagrodzenia.pl/kalkulator-wynagrodzen

Taxation

As a rule, corporations are subject to corporate income tax (podatek dochodowy od osób prawnych, also called CIT), whereas natural persons are subject to personal income tax (podatek dochodowy od osób fizycznych, also called PIT).

Tax Feature

Corporate Income Tax (CIT)

SStarting from 2021, limited partnerships and general partnerships with undisclosed partners are CIT taxpayers as well.

There are two separate income/loss „baskets” – income/loss from capital transactions and income/loss from other sources (business income/loss). The CIT is determined separately for each of the „baskets”. The standard corporate income tax rate is 19%, while certain taxpayers (e.g. taxpayers whose sales revenue does not exceed EUR 2 Mio.) may benefit from a preferential tax rate of 9%.

Certain CIT taxpayers may opt for so called Estonian CIT. Under the Estonian CIT the tax should be paid once the profit is distributed to the shareholders. Moreover, the CIT taxpayers may benefit from certain tax reliefs, for example:

• R&D relief – up to 200% of qualified costs related to R&D may be additionally deducted from the business income,

• relief for prototype – up to 30% of the costs related to trial production of a new product and launch of a new product may be additionally deducted from the business income,

• relief for robotization – up to 50% of the costs incurred for robotization may be additionally deducted from the business income,

• relief for expansion – expenses related to the increase in revenues from the sale of products may be additionally deducted from the business income (up to PLN 1,000,000, ca. EUR 227.000).

In 2022 Poland introduced tax on so called shifted profits. The tax on shifted profits may apply to certain expenses that are made to related entities, including for example „excessive” financing costs or „excessive” expenses with respect to intangible services.

Moreover, the regulations regarding minimum income tax were postponed till the end of 2023. Thus, this new type of income tax is applicable starting from 2024. The minimum income tax refers to taxpayers which report tax loss or whose tax profitability (ration of tax income to tax revenue) does not exceed 2%. Nevertheless, the tax regulations provide certain exceptions from the obligation to pay minimum income tax.

Remarks

Some expenditures, are not tax-deductible e.g. entertainment costs, some kinds of administrative or contractual penalties, etc.). Advertising costs are entirely tax deductible, while representation costs are not.

Personal Income Tax (PIT)

There are two applicable personal income tax rates: 12% and 32% (when the threshold of PLN 120,000 is exceeded). Moreover, all taxpayers who pay their PIT according to the progressive rates can benefit from a tax-free amount of PLN 30,000. PIT taxpayers may be subject to some reliefs, ex.:

• PIT relief for return – under certain conditions taxpayers who move their tax residence to Poland may benefit from PIT exemption for 4 years. The income limit was set at PLN 85,528 per year,

• PIT relief for parents with at least four children - the income limit was set at PLN 85,528 per year;

• thermo-modernisation relief for owners/co-owners of a single-family residential building that incur expenses related to thermo-modernisation of this building.

Starting from January 1, 2022 the health insurance contribution is no longer deductible from PIT.

Additional tax bonuses are available for parents. Capital gains from trading in shares, sale of real estate and other securities derived by individuals outside the scope of their economic activity are taxed at a 19% rate.

Personal Income Tax in case of partnerships and persons running its own business

As partnerships (except for limited partnerships and general partnerships with undisclosed partners) are transparent for income tax purposes, the partners themselves are subject to CIT or PIT.

Persons running their own registered business activity may pay PIT according to the progressive tax rates (12% and 32%) or according to a flat rate of 19%. There is also a simplified form of taxation – lump sum tax on registered revenues.

As of January 1, 2022 the health insurance contributions are no longer deductible from PIT. Moreover, from 2022 persons running their own registered business activity cannot pay the flat health insurance contributions – the contributions are calculated by reference to the income/revenue.

Value Added Tax (VAT)

The standard VAT rate is 23%. Certain goods and services are covered by the reduced VAT rates, for example:

• the rate of 8% applies to hotel services or passenger transport services,

• the rate of 5% applies to certain agricultural products or books. Moreover, the VAT rate for for the basic food products was temporarily reduced to 0% as anti-inflation measure,

• the rate of 0% may apply to intra-community supply of goods and export of goods.

Some services, including for example healthcare, are VAT-exempt.

In certain cases the reverse-charge-system has to be applied.

From January 1, 2022 Poland has introduced the National e-Invoice System that allows for issuing and receiving e-Invoices. The mandatory National e-Invoice System scheduled for July 1, 2024 has been postponed. The Polish Ministry of Finance announced that the mandatory e-invoicing will not be introduced in 2024. As of January 1, 2023 the taxpayers – under certain conditions – are able to form a VAT group.

Transfer Tax (PCC)

The transfer tax is levied for example on:

• sales agreements,

• loan agreements,

• donation agreements,

• company deeds (Articles of Association).

The transfer tax rates depend on the type of transaction – for example:

• in case of sale of immovable property – the tax rate is 2%,

• in case of company deeds – the tax rate is 0,5%.

Local Taxes (e.g. Real Estate Tax)

VAT exemption may be applied at a very low turnover (up to 200,000 PLN).

VAT taxpayers are required to apply for a VAT-Identification-number in Poland.

Non-resident taxation

Other charges and duties

• Certain transactions may benefit from the tax exemption, for example loans granted to capital company by its shareholder.

Local taxes include:

• real estate tax,

• road vehicle tax (generally imposed on trucks and buses),

• agricultural tax,

• forestry tax,

• inheritance and donations tax.

Local communities are entitled to establish rates and/or exemptions for the above taxes within the limits set by Parliament (except for the inheritance and donations tax).

Non-residents (companies, individuals) are considered to have a limited tax liability in Poland. They are subject to the income taxation in Poland on the Polish-sourced income only.

As of January 1, 2024 Poland implemented new obligations and charges related to single-use plastic packaging of beverages or food offered to endusers.

This guide has been prepared by TIAS, an independent member of Antea

TIAS

Aleja Hallera 78/4, 53-324 Wrocław, Poland

Tel.: +48 71 737 29 00 office@tias.pl www.tias.pl

SETTING UP BUSINESS IN POLAND

Antea members in Poland:

BIELSKO-BIAŁA

Contact partner: Maksymilian Dudek

Tel.: + 48 33 811 11 24

Mail: maksymilian.dudek@kancelaria-dudek.pl

Web: www.kancelaria-dudek.pl

WROCLAW

Contact partner: Dariusz Obrocki

Tel.: +48 71 737 29 00

Mail: dariusz.obrocki@tias.pl

Web: www.tias.pl

WARSAW:

Contact partner: Dariusz Obrocki

Tel.: +48 22 100 53 04

Mail: dariusz.obrocki@tias.pl

Web: www.tias.pl

Mallorca, 260 àtic

08008 – Barcelona

Tel.: + 34 93 215 59 89

Fax: + 34 93 487 28 76

Email: info@antea-int.com www.antea-int.com

This publication is intended as general guide only. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied on as a substitute for such an advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, not Antea Alliance of Independent Firms neither its members accepts no responsibility for any errors or omission it may contain whether caused by negligence or otherwise, or forany losses, however caused, sustained by any person that relies upon it. © 2024 ANTEA