Doing Business In Poland 2022

Introduction

This guide was created to provide foreign investors with basic information on the
possibilities of doing business in Poland. In addition to general information about
the Polish economy, the guide also includes information on legal bases,
regulatory issues and forms of conducting business in Poland, as well as
information on taxes, accounting and labor law relevant to the company’s
establishment in Poland. All information contained in this guide has been
prepared in accordance with the best knowledge of the authors and is valid as of
the date of its publication, January 24, 2022. Nevertheless, due to the possibility of
changes in legal regulations, including in the laws governing business activity, this
guide should be considered for information purposes only. This guide takes into
account the amendments made by the act of 29 October 2021 amending the
personal income tax act, the corporate income tax act and certain other acts,
commonly referred to as the ‘Polish Deal’, which introduces significant changes in
taxation and accounting. However, it should be pointed out that the changes
introduced from January 1, 2022 go far beyond this guide.

Investing In Poland

For over 30 years, Poland has remained one of the most attractive directions
for the inflow of foreign investments.
It has a stable economy with an established macroeconomic position and
unique conditions for running and opening a business, which is confirmed by
economic data.
The dominant part of foreign direct investment (FDI) is reinvested earnings,
which proves the loyalty of investors towards the Polish market.
According to NBP statistics on the balance of payments, which show that after
three quarters of 2021, nearly EUR 19 billion in the form of Foreign Direct
Investments (FDI) was transferred to Poland, which means an increase of 60%.
year to year.
Only within the Polish Investment Zone (PSI), from the beginning of January to
the end of November 2021, 470 support decisions were issued with a total
value of PLN 20 billion.
From January to the end of November 2021, foreign companies declared the
implementation of investments worth over PLN 11.1 billion and the creation of
6,350 new jobs.

Polish membership in international organizations (EU, NATO, UN, OECD) gives
foreign investors wide opportunities for cooperation and affects the security and
stability of investments. It also makes Poland a reliable business partner for foreign
investors.

From a logistical point of view, Poland’s great asset is its location in the center of
Europe, at the intersection of the main communication routes. This allows investors
easy access to the markets of the European Union and Eastern European countries.

Poland has a stable economy with an established macroeconomic position.
Polish economy is developing at a fast, short-term economic prospects are
optimistic, the fiscal policy framework is strong, measures taken to increase tax
revenues are effective and the situation on the labor market is the best in recent
Polish history.

The asset of Poland is also highly qualified employees. Every year, the number of
well-educated university graduates grows in Poland. Due to their knowledge and
skills, they are valued employees, mainly in the high-tech sector.

Poland has a large and absorbent internal market with over 38 million
consumers, which is seen not only as a place of production but also as a target
market.

Rules For Conducting Activities By Foreigner:

A foreigner who fulfills the following conditions may register and run a business under the same conditions as a Polish citizen.

  • Citizen of a Member State of the European Union or of the European Economic Area,
  • Citizen of other state holding one of following:
  • permanent residence permit;
  • residence permit for a long-term resident of the European Union;
  • temporary residence permit granted in connection with a family with legally residing in Poland, studying at university;
  • refugee status;
  • subsidiary protection;
  • a consent to stay for humanitarian reasons or a tolerated stay permit;
  • a temporary residence permit and is married to a Polish citizen residing on the territory of Poland;
  • a temporary residence permit for the purpose of carrying out a business activity, granted due to the continuation of an already
  • established business activity on the basis of an entry in the Central Register and Information on Economic Activity;
  • temporary protection in Poland;
  • a valid Polish Card.

A foreigner who does not meet the above conditions may conduct a business activity in Poland only in the form of:

  • limited partnership,
  • limited joint-stock partnership,
  • limited liability,
  • joint stock,
  • simple joint stock,
  • as well as to join such companies and take or acquire their shares.

Forms Of Doing Business In Poland

Sole Proprietorship

Overview

  • A sole proprietorship is an individual who conducts business activity in his/her own name and on his/her own behalf (in short: an individual act as an entrepreneur);
  • Sole proprietorship is usually a small business and there are no legal requirements regarding the amount of initial capital;
  • It is worth noting that the sole proprietorship may be transformed into sole limited liability company or a joint-stock company;
  • Low costs for opening and running the business and the easiness of its establishing and dissolving.

Registration

  • A sole entrepreneur may take up economic activity on the date of filing an application for an entry in the Central Economic Activity
  • Register and Information (the CEIDG);
  • The CEIDG is kept in an IT system by the competent minister in charge of economy;
  • Person taking up the business activity is not subject to compulsory social insurance for a period of 6 months from the date of starting a
  • business.

Liability

  • The sole proprietor is liable for the debts of his/her sole proprietorship with all his/her assets including personal assets non-intended to be used for pursuing business activity.

Limited Liability Company

Overview:

  • A limited liability company is the most popular form of conducting business activity in Poland and may be established for any purpose allowed by law, including non-profit.
  • It may be established by one or more natural or legal persons (as long as it is not incorporated solely by another sole shareholder limited liability company).
  • The minimum share capital amounts to PLN 5,000.
  • The nominal value of one share may not be less than PLN 50.
  • As of July, 2021, a limited liability company can only be registered electronically.
  • A limited liability company inorganization may undertake business activities before being entered in the register of entrepreneurs in the National Court Register.

Liability:

  • The company is liable for its debts and obligations with its whole property without any limitations.
  • Members of the management board may be as well liable for the company’s obligations when the enforcement proceeding against the company has proved ineffective.
  • Business Judgement Rule i.e. acting within the limits of reasonable economic risk.

Liquidation:

  • The liquidation process will be simplified and shorter.
  • There will be also a possibility of simplified liquidation, by taking over the company’s obligations by one of the shareholder.

Joint-Stock Company

Overview:

  • A joint-stock company may be established for the purpose of operating business under its own business name on a large scale.
  • The minimum nominal capital amounts only PLN 100.000.
  • The nominal value of a share may not be less than PLN 0.01.
  • A joint-stock companies are require to have their own websites and to post on this websites, in places set aside for communication with
  • shareholders, announcements from the companies required by law or their articles of association.
  • A joint-stock company can only be registered electronically.

Liability:

  • The company is liable for its debts and obligations with the whole property without any limitation.
  • The shareholders are not liable for the company’s obligations, they incur risk up to the value of shares taken up.
  • Member of the management board are liable for the obligation of the company only when the company is unable to pay its and they did
  • not take any action like filing for bankruptcy or restructuring, but only when they already been in the management board.

Limited Partnership

Overview:

  • This partnership may be established by at least two natural or legal persons or organizational units without legal personality to which legal capacity based on a separate act was granted.
  • The limited partnership has no legal personality. Nevertheless, it has a legal capacity and may in its own name acquire rights, incur liabilities, sue or be sued.
  • There is no requirement as to the minimum amount of the nominal capital.
  • As of July, 2021, a limited partnership can only be registered electronically.

Liability:

  • In a limited partnership, at least one partner (general partner) should bear unlimited liability towards the creditors for obligations of the partnership, and at least one partner (limited partner) shall bear limited liability.
  • A limited partner is liable for the obligations of the partnership towards its creditors only up to the limited liability amount.
  • Any person who joins the partnership as a limited partner is liable for the partnership’s obligations existing at the time when he was entered in the register.

Representation:

  • The limited partnership is represented by the general partners who were not deprived of the right to represent the partnership under a
  • memorandum of association or by a valid court decision.
  • A limited partner may represent the partnership only as a plenipotentiary.
  • The limited partnership may be also represented by a holder of commercial power of attorney.

Branch Office

Overview:

  • A branch is a separate and organizationally independent part of the economic activity of the entrepreneur performing outside the entrepreneur’s premises or outside the main place of performing the activity.
  • Within a branch, a foreign entrepreneur may perform business activities only to the extent to which he conducts this activity abroad.
  • A foreign entrepreneur who creates a branch is obliged to establish a person authorized to represent a foreign entrepreneur.
  • A foreign entrepreneur may start operations within the branch after obtaining the branch’s entry in the Register of
  • Entrepreneurs of the National Court Register.
  • Depending on the type of business, a foreign entrepreneur is obliged to submit appropriate copies (founding act / contract / registration or entry in the register) to the branch’s registration files together with their certified translation into Polish.
  • The foreign entrepreneur is obliged to keep the separate accountancy in the Polish language in accordance with the accounting regulations.
  • The branch name must consist of: the original name of the foreign enterprise + the legal form of the entrepreneur + the word “branch in Poland” translated into Polish.

Representative Office

Overview:

  • The representative office is a subordinated organizational entity functioning for the purpose of advertising and promoting business activity of a foreign entrepreneur.
  • Name of the representative office should consist of the name of the foreign entrepreneur, together with the Polish translation of the entrepreneur’s legal form of operation and with the phrase “przedstawicielstwo w Polsce” [trans.representative office in Poland].
  • The representative office should be register in Register of Foreign Entrepreneurs’ Agencies kept by the minister in charge of economy.
  • The representative office should keep separate accounting books in the Polish language in accordance with the provisions of Polish accountancy laws;

Taxation

Taxation: CIT- Corporate Income Tax:

Limited liability companies, joint–stock companies, limited partnership and limited joint-stock partnership are obligated to pay corporate income tax (CIT).

General tax rate is 19%
Lower tax rate of 9% is available for companies if:

  • from non-capital revenues;
  • revenues generated in the tax year did not exceed the amount expressed in PLN equivalent to the equivalent of EUR 2.000.000
  • converted according to the average euro exchange rate announced by the National Bank of Poland.
  • “Estonian CIT” :
  • income tax payable only upon distribution of profits
  • the shareholders must be natural persons only and the company itself cannot be a shareholder in other companies
  • less than 50 percent of the revenue is passive income (e.g. interest, royalties, guarantees)
  • the requirements concerning the number of employees must be met (as a rule, at least 3 persons on an employment contract or a
  • contract of mandate).

Estonian CIT

  • Income tax payable only upon distribution of profits
  • the shareholders must be natural persons only and the company itself cannot be a shareholder in other companies
  • less than 50 percent of the revenue is passive income (e.g. interest, royalties, guarantees)
  • the requirements concerning the number of employees must be met (as a rule, at least 3 persons on an employment contract or a contract of mandate).

Taxation of Dividends

  • Rate of 19%

Taxation: VAT

VAT- Value Added Tax

The Polish VAT is harmonized with the common VAT system binding in the Member States of the European Community since May 1, 2004.

There are four tax rates:

  • 23% rate is a basic rate; it applies to the majority of goods and services,
  • 8% rate applies to specific goods and services (e.g. goods related to health protection, groceries and hotel services),
  • 5% rate applies to the supply of some farm produce,
  • 0% rate is a special rate; it applies mainly to export, intra-Community supply of goods and international transport services.

Exemption from Vat tax of so-called “small entrepreneur”:

  • When sales value did not exceed PLN 200,000 in total in the previous tax year. The amount of tax is not included in the sales value. If the
  • value of the tax exempt sale exceeds the amount of PLN 200,000, the exemption loses its value starting from the activity that was
  • exceeded.
  • Sales made by a taxpayer starting business activity during the tax year, if the value of sales he anticipates does not exceed, in proportion
  • to the period of business activity in the tax year PLN 200,000.

The exemption does not apply to sale if:

  • Goods made of precious metals or with the participation of these metals,
  • Goods subject to excise tax (except for electricity, tobacco products and passenger cars, other than new means of transport, counted by
  • the taxpayer, based on income tax regulations, to fixed assets subject to depreciation),
  • Construction sites,
  • New means of transport,
  • Legal services,
  • Consultancy services.

VAT for E-Commerce:

  • The limit for distance selling of goods will be 10,000 euros per year; once exceeded, the supply of goods will be subject to VAT in the
  • country of consumption;
  • Possibility to settle VAT under the VAT-OSS system (One Stop Shop);

Taxation: PIT

PIT- Personal Income Tax

Every natural person receiving income is obliged to pay PIT tax. The amount of income tax depends on your earnings and on what tax deductions you will apply. Under PIT, it is possible to choose the form of taxation:

  • General rules – tax scale 17 and 32% (after exceeding PLN 120 000)
  • Flat rate tax- 19%
  • A lump sum on registered income
  • Tax card
  • Solidarity surchage – 4% – in the case of the surplus PLN 1,000,000 of the sum of income subject to taxation

Taxation: Real Estate Company

A real estate company is a company:

  • which at least 50% of the balance sheet value of assets on the last day of the year preceding the tax year consisted of real estate located in Poland or rights to such real estate; and
  • balance sheet value of such estate exceeds PLN 10,000,000; and
  • derives at least 60% of its tax revenue from real estate leases and contracts of a similar nature.

Foreign real estate companies are obliged to appoint a tax representative in Poland.

A real estate company is subject to special tax obligations, among other things:

  • the real estate company, whose shares are subject to transfer, is obliged to pay an advance tax on the transferor’s income if the transferor is a non-resident (including a natural person) and the subject of the transaction is a shareholding of at least 5% in the real estate company.
  • real estate companies and their shareholders holding a share of at least 5% (directly or indirectly), being taxpayers, are also obliged to submit to the tax authorities information on shareholders.
  • companies without a registered office or management board in Poland, but meeting the definition of a real estate company, were also required to appoint a tax representative.

Tax Reliefs

Innovation Box

Tax relief – INNOVATION BOX – provides application of a preferential tax rate of 5% (previously 19%) on income derived from qualified
intellectual property rights, created, developed or improved as a result of a research and development activity conducted by the taxpayer.

R&D Reliefe

Tax relief – R&D RELIEFE – allows additional deduction from the tax base
so-called eligible costs obtained from revenues incurred, i.e. a part of tax deductible costs incurred for research and development activities.

People Up To 26 Years

Tax relief – Tax exemption for young people up to 26 years old – A person who is under 26 years of age is exempt from PIT if their income
does not exceed PLN 85, 528 a year. The exemption does not apply to income from self-employment or contract for a specific work.

Contributing Advisors