Dublin, Ireland, Apr 12, 2022, ZEXPRWIRE, Globalisation, new technologies and living in the time of a pandemic can both hinder and boost businesses. If you now find yourself considering what to do next and investing in Poland seems like an option, you should read the following article carefully. It is a round-up of things that are really good to know when starting your business in Poland.
1. Choose the legal form of your business in Poland
Before you register your company in Poland, you need to decide on the legal form of running your business. There are a couple of possibilities, so it is a good idea to get to know all of them in order to choose the best one. The Polish Commercial Companies Law provides for two types of companies: partnerships and capital companies. Partnerships include: general partnerships, partnerships, limited partnerships and limited joint stock partnerships. Capital companies include: limited liability companies, joint stock companies and simple joint stock companies. Apart from companies, foreign entrepreneurs can do business in Poland in the form of a branch of their foreign company.
Regardless of the legal form chosen – be it a company or a branch – the entrepreneur must have its registered seat and address in Poland. What should be mentioned here is that RSM Poland can offer its clients a service of making an address in Poland available for the purpose of registering their seat and correspondence.
According to the long-term experience of the RSM Poland Corporate Advisory Department, the most suitable option for foreign entrepreneurs is either establishing a limited liability company or a branch in Poland.
This decision, however, always depends on individual needs of a foreign investor and the type of business they intend to start. At this stage, it is a good idea to consult the options with an experienced advisor who will identify the needs, explain the differences between these available options, recommend the best one, and then present an action plan and offer support with the registration procedure. You need to remember that registering a company or a branch involves a series of accompanying activities, such as arranging a notarial transaction or getting necessary certified translations of documents.
Requirements of the Polish law tend to be complicated for foreigners; therefore, support from an experienced advisor at this stage seems a very good solution, as it guarantees that your company will be registered properly while you will not have to figure out all the regulations in force.
2. A company or a branch? What is the best form of running a business in Poland?
It is our experience that a limited liability company and a branch of a foreign company are the most popular forms of running business in Poland for foreign entrepreneurs. In both cases the registration time (from submitting the documents to the registration court to getting a final decision) is similar; it usually takes 4-8 weeks. Before you submit your application, you need to collect all the necessary documents and information about the company, have the documents translated by a certified translator and prepare any relevant registration documents to be signed.
What is important, a foreign entrepreneur is not obliged to come to Poland: you can establish a limited liability company or a branch through an attorney, and you do not have to be physically present at all. If you are a client of RSM Poland, you are in touch with an advisor at all times, and the advisor keeps you informed about any actions taken and the progress being made.
IMPORTANT: as of 1 July 2021, business registration applications can be filed online only via the Court Register Portal; unfortunately, it is currently available only in Polish. Application forms should be completed in Polish and sent to the district court competent for the seat of the applicant.
This is a great difficulty for foreigners. That is why the RSM Poland team performs the registration on behalf of the client through an attorney being a legal advisor, so you do not have to go to the online registration system yourself.
Let us now compare the formalities necessary to register the forms of business that are the most popular among foreign entrepreneurs.
2.1. Limited liability company in Poland – advantages and disadvantages
The most popular legal form of business activity in Poland is a limited liability company. This solution is good for shareholders who want to supervise the company’s affairs directly and limit the risk involved only to their contribution (their personal assets are thus protected).
Undeniable advantages of this legal form include: a relatively uncomplicated procedure of incorporation, low requirements as to the minimum initial capital (PLN 5,000), as well as freedom in trading shares and many possibilities of adjusting the company model to shareholders’ needs. With all this, a limited liability company is a flexible tool for running businesses of different sizes and in different industries. If the goal of your presence in Poland is to run a regular, long-term business on the domestic market, incorporating this type of company is probably the best choice you can make.
A limited liability company can be formed by one or more persons, both natural and legal, in principle, for any profit-making purpose permitted by law. However, it should be emphasised that it cannot be formed by another single-member limited liability company. This restriction applies only to the incorporation of a company. A single-member limited liability company may therefore acquire shares in an existing limited liability company.
A limited liability company is a legal entity and its minimum share capital, which must be paid at the start of operations, amounts to PLN 5,000. The minimum nominal value of share must not be lower than PLN 50. The governing bodies of a limited liability company are: the general meeting of shareholders, the management board (which runs and represents the company), and sometimes also a supervisory body, namely a supervisory board and/or audit committee (or both); however, this obligation applies only to companies with more than 25 shareholders and with share capital exceeding PLN 50,000.
Incorporating a limited liability company shall take the form of a notarial deed; if there is only one founder, it is a memorandum of association, whereas if there are many: articles of association. The document should specify, among others, the company (its business name and seat), its business objective identified on the basis of the codes of the Polish Classification of Activities chosen by the investor according to an official list, the amount of share capital, the number and nominal value of shares taken up by particular shareholders and the term of the company (if specified).
If a foreign entrepreneur is to be a shareholder of a newly incorporated limited liability company, what is required for a notary action is a certificate of entry of the foreign entrepreneur in the business register, notarised, with an apostille clause and a certified translation into Polish and, if the client is not present in person, an appropriate power of attorney drawn up abroad in the form of a notarial deed, with an apostille clause and translated into Polish. Upon conclusion of articles of association or a memorandum of association of a new limited liability company, a limited liability company in organisation is established and it remains as such until it is entered into the registry of the National Court Register. In the time between concluding the articles of association and entering the company to the registry, the company in organisation has every right to operate, e.g. by concluding agreements with its contractors.
Moreover, it is necessary for shareholders to make contributions to cover the entire share capital. The contribution to the company can be made in two ways: in cash or in kind. Regardless of the form, the contribution must be made to the limited liability company before submitting a registration request to the National Court Register, and the management board should make a statement about the actual contribution.
It is also necessary to appoint a management board consisting of one or more persons. The rules of representation shall be defined in the articles of association. What is important, there is no reason why the management board of a limited liability company cannot be composed exclusively of foreigners. For a limited liability company to be incorporated, it must be entered to the National Court Register.
In order to register the company in the register of entrepreneurs of the National Court Register, you need to prepare registration documents. These include, among others: a list of shareholders, the aforementioned statement of the management board on capital contribution, a management board members’ consent to perform their function and their addresses for service in the European Union. If the address for service of these persons, as well as persons authorised to appoint the management board (shareholders) is outside the European Union, a proxy for service in Poland must be appointed. In such a case, you may rely on the service of an attorney for service provided by RSM Poland.
The fee for registration of a limited liability company is PLN 600 (PLN 500 as a court fee and PLN 100 for the announcement of the entry in the Court and Commercial Gazette). If the application is submitted to the registration court by an attorney, an additional stamp duty in the amount of PLN 17 shall be charged. Upon registration of a limited liability company by the registration court, the company is assigned KRS, NIP and REGON numbers.
2.2. Polish branch of a foreign company
Starting a limited liability company in Poland is, however, not always advisable. . If a foreign entrepreneur wants to carry out a temporary project or would like to emphasise their presence on the Polish market, they may consider an alternative to establishing a company, and go for creating a branch.
Foreign entrepreneurs from the EU Member States may freely create branches seated in Poland in order to carry on their business. Other entrepreneurs may do so on the basis of reciprocity, unless ratified international agreements provide otherwise. Just as with a limited liability company, a foreign entrepreneur can start doing business in the form of a branch after it has been entered to the register of entrepreneurs of the National Court Register.
A branch is an independent organisational unit of the foreign entrepreneur. It does not have any legal personality. What it means is that any and all rights and obligations arising from the operation of the branch shall be binding upon the foreign entrepreneur. The scope of operation of a foreign entrepreneur’s branch must overlap with the scope of their business abroad. In order to designate a branch in Poland, the original name of the foreign entrepreneur should be used, together with the name of the legal form of their business translated into Polish followed by the words “oddział w Polsce” (“branch in Poland”). Importantly, however, a branch of a foreign company must keep their separate accounts in Polish.
A branch of a foreign entrepreneur is entered to the National Court Register on the basis of an application, and the procedure here is shorter than in the case of incorporating a limited liability company. There is no notary action required here and hence no associated costs. However, notarised documents with an apostille clause and a certified translation into Polish must be submitted to the register. These documents usually include: a certificate of entry of the foreign entrepreneur in the business register, articles of association (or an agreement or a charter) of the foreign entrepreneur, as well as a resolution of the foreign entrepreneur on the establishment of a branch taken in accordance with the law applicable to the foreign company.
The registration application should include the law of the country applicable to the foreign entrepreneur, the name of the registry, identify the registry authority keeping the records of the foreign entrepreneur, the number in the registry and its seat and address. More information to be reported include the body representing the foreign entrepreneur, rules of its representation and persons appointed to this body.
What is important, a foreign entrepreneur is obliged to appoint a person authorised to represent them in the branch, and this person has to submit a statement of consent to perform such a function. The appointed natural person can either be a Polish citizen or a foreigner. They are the head of the branch in Poland and their name is revealed in the National Court Register. A branch does not need to have its own capital, shareholders or a management board. Considering all the duties imposed on limited liability companies, the costs and formal requirements involved in incorporating and operating a branch are lower.
The court fee for registration is PLN 600 (PLN 500 as a court fee and PLN 100 for the announcement of the entry in the Court and Commercial Gazette). As in the case of a company, if the application is submitted to the court register by an attorney, an additional stamp duty in the amount of PLN 17 shall be charged. Upon registration of a branch by the registration court, the branch is assigned KRS and REGON numbers.
3. Obligatory notification to the Polish Tax Office
Apart from registering a company or a branch of a foreign entrepreneur in the National Court Register, you need to remember that there is an obligation to provide some necessary data to the tax office. These include, for example, your bank account number and information about the prospective number of employees, your place of business and contact details.
Notification to the Tax Office shall be made on an appropriate form to be submitted within 21 days from the date of registration in the National Court Register or within 7 days if the new entity is to employ staff. In both cases, the newly formed entity may register as a VAT payer.
4. How to apply for PESEL number in Poland (optional)
If you decide to get a PESEL number, you should apply for it when you start establishing your limited liability company.
The PESEL (Universal Electronic System for Registration of the Population) is a number that identifies a natural person in Poland. Management board members of a Polish limited liability company who are foreigners can be assigned this number, as well. The PESEL number is issued free of charge and it offers certain benefits; however, if you do not have it, it will not prevent you from being appointed to the management board or taking up shares in a Polish company.
If you decide to have your PESEL number issued, the entire procedure tends to take up to a few weeks and involves furnishing certain documents concerning the person for whom the number is being issued, namely: birth certificate, marriage certificate and passport. These documents should be notarised and have an apostille clause, and be translated into Polish by a sworn translator. The next step is to sign a PESEL application in Polish and submit it to the competent District Office of the City of Warsaw in Warsaw and wait for this number to be assigned by the state authority, which has a deadline of 30 days to issue a relevant decision.
The advantage of having a PESEL number is the option of coupling it with a qualified electronic signature, which is going to be discussed in the next section. With a PESEL number, it is easier and less expensive to renew your electronic signature for the following years. Moreover, the PESEL number enables a foreigner to submit financial documents (annual financial statements and accompanying obligatory documents) in the Polish system without the necessity to pay the court fee and rely on an attorney.
5. Electronic signature regulations
In Poland, a qualified electronic signature has the value of a handwritten signature. In practice, it is created for the members of the management board of a Polish limited liability company. This signature may also be obtained for a person representing the foreign entrepreneur in the branch. If foreign members of the management board of a limited liability company have an electronic signature, they can meet their statutory obligations such as signing financial statements electronically, registering the beneficial owner in the Central Register of Beneficial Owners and signing attached documents being submitted to the registration court.
With a qualified electronic signature, it is much easier and faster to handle administrative matters, and there are many of such in Poland. The whole procedure of getting an electronic signature usually takes about 2-3 weeks; it is carried out before registering either a company or a branch and depends on the cooperation with a given client.
NOTE: the qualified electronic signature should be created before registering a limited liability company in the court register. If the electronic signature is to be coupled with the PESEL number, the PESEL number shall be obtained first, and then the electronic signature.
6. Registration in the Polish Ultimate Beneficial Owner (UBO) Register – the CRBO
The Central Register of Beneficial Owners (CRBO) is kept online and used for collecting information about beneficial owners of companies and their managers. Every company registered in Poland, including limited liability companies, must be entered into the CRBO, and this entry must be updated. A CRBO entry is not required if you are setting up a branch of a foreign company in Poland.
A beneficial owner is any natural person who either directly or indirectly controls a company as a result of legal or factual circumstances enabling the exercise of decisive influence on actions or activities taken up by this entity.
In each case, the client is obliged to report the beneficial owner(s) to the CRBO and identify the nature of their rights. An application to the CRBO can only be filed by the person authorised to represent the company, in accordance with the rules of company representation (it cannot be made by a proxy). Either a qualified electronic signature or an ePUAP trusted profile of the said person must be provided.
In the case of a management board composed of foreigners, using the qualified electronic signature is a must. If joint representation is required (i.e. by more than one person), the application must be signed by all the required persons. Notifications are made via the ICT system available on podatki.gov.pl at crbr.podatki.gov.pl. Any information should be submitted to the CRBO no later than within 7 business days from the date of entry of the newly established entity to the National Court Register, and in the case of updates of the information submitted to the register it should be done within 7 business days from the change (in order to meet this deadline, it is recommended to obtain the electronic signature earlier).
What is important to bear in mind is that making any false statements in the application is a criminal offence. Please note that if you fail to comply with the statutory obligation within the prescribed deadline, you will be subject to a fine in the amount of up to PLN 1,000,000.
The RSM Poland Corporate Advisory Team supports their clients at every single step of the company registration process in Poland, not only as a proxy, but also as an advisor suggesting the best solutions for the newly established company. What is more, your cooperation with us does not have to end at the stage of setting up your company or branch: we offer a wide range of services to support your business operations in Poland.
Apart from the aforementioned services, RSM Corporate Advisory Team provides some other services necessary for the foreign entrepreneur’s business to operate properly and in accordance with the legislation in force. These include, among others, preparing and submitting requests to change information included in the National Court Register (e.g. registration of changes concerning the entrepreneur in the National Court Register preceded by preparing resolutions appointing or dismissing members of the management board, supervisory board and proxies, or resolutions on changing the company address/seat, business objectives, financial year, etc.), preparing minutes from ordinary and extraordinary meetings of shareholders, as well as support in submitting financial statements by a professional attorney.
It is good to know to that the annual financial statements of the company or the branch must be submitted to the designated online register kept in Polish. Therefore, to make life easier for foreign clients, RSM Poland offers submitting their financial statements on their behalf, on the basis of the power of attorney granted to our legal counsel. On top of that, we offer support in handling corporate governance, namely providing opinions on contracts and articles of association, analysing potential amendments and their legal consequences, organising an increase or decrease of the company’s share capital, share redemption or organising the sale of shares as well as removing or adding shareholders to the company.
We specialise in mergers and acquisitions, as well. If you decide to liquidate your company/branch, we offer professional support in conducting the liquidation proceedings before the registration court.
Upon your request, we prepare documents in Polish and English or in Polish and German versions.
7. RSM Poland’s support in other business areas
Foreign entrepreneurs doing business in Poland increasingly tend to focus on their core business objectives. Understanding this approach, RSM Poland teams offer a wide range of services that support running a business in Poland: outsourced accounting, HR consulting, tax advisory and auditing.
7.1. Outsourcing of accountancy in Poland
The RSM Bookkeeping Department provides bookkeeping supervision and formal accounting check-up of accounting documents to quickly handle any tax returns and financial statements. Thanks to many years of experience in verification and preparing tax returns and cooperation with companies from different industries, we offer effective, timely and fully customized support in bookkeeping.
Specialists in our accounting team are ready to: verify your accounting books, verify or prepare any required declarations and tax returns, prepare or verify your financial statements and offer their support during your financial or tax audits and tax inspections. Our employees also handle ongoing bookkeeping in accordance with the agreed standards, preparing VAT returns, keeping VAT purchase and sales registers, keeping records of fixed assets, equipment, intangible assets and preparing depreciation schedules, annual returns or calculating advance payments towards income tax in line with tax legislation.
What is more, our accountants prepare financial statements according to the agreed accounting standards and cooperate with an expert auditor who audits the client’s books. Every day, more than 100 people effectively support our clients in their accounting tasks.
7.2. HR and Payroll Department for your Polish company
All entities employing staff are required to keep employee records and periodically report to administrative bodies. For those unfamiliar with Polish regulations, this is a big challenge due to the complexity of the Polish law; for this reason, a vast majority of foreign companies rely on outsourced HR and payroll.
RSM Poland HR and Payroll Department offers a wide range of HR consulting services. We assist employers in introducing procedures conducive to the practical implementation of the labour law and legal regulations on human resources and payroll, and handle the social insurance of persons employed under employment relationships or any kinds of civil law contracts. Our employees are, among others, ready to draft, verify and implement employee documentation, prepare any HR documents related to recruitment of a new employee and support the process of terminating both employment relationships and contracts. They also provide payroll services: register the employer and employees in the social security system, calculate salaries for employees, prepare reports (payrolls, pay slips, statements for posting and others), as well as calculate social security contributions and advance payments towards income tax, prepare annual and monthly returns required under the regulations in force, or even administer the payment of salaries to employees or bank transfers to the Social Insurance Institution (ZUS), tax office or court enforcement officer on behalf of the employer.
This department also handles HR administration, including preparing all kinds of HR documents related to the employment, its changes and termination, keeping documentation related to the employment relationship (employee personal files), records of leaves, working time accounting, leave and absence administration and monitoring the expiration dates of medical examinations.
7.3. Polish Tax Advisory Department
The RSM Poland Tax Advisory Department provides comprehensive support for entrepreneurs, offering professional tax advice. Our tax advisors help minimise tax burdens and risks, ensuring the safety of the client’s business. The support we offer may be ongoing consultancy, detailed analyses, transfer pricing analysis, tax opinions, as well as tax audits. Employees of this Department also provide services of tax planning, corporate tax compliance and VAT compliance. They support clients in settling the work performed in Poland by foreigners. What is more, the Tax Advisory Department represents clients before administrative authorities and in judicial review of decisions.
7.4. Fulfilling audit requirements in Poland
For the majority of foreign companies starting their business in Poland as a limited liability company, no audit of financial statements by a certified auditor is legally required; however, some companies choose to have it done to be sure that everything is conducted in accordance with the legislation in force. Yet, a financial audit is obligatory in a couple of cases specified in the Accounting Act.
The RSM Poland Audit Department provides audit services, consisting in the verification of how reliable and correct your company’s financial statements are. Employees of this Department offer comprehensive, independent auditing services including but not limited to the audit and review of financial statements, examination of transformation plans, spin-offs, due diligence and external audits of EU projects.
Starting up company in Poland can be challenging
As you can see, Polish law does not make life any easier for entrepreneurs; keeping track of all the amendments requires more and more time, also for those who have known this system for a long time. That is why, before you enter the Polish market it is a good idea to ask yourself a question whether it is not easier to outsource this start to someone who knows the legal and tax challenges of Poland inside and out and feels comfortable handling them. If the answer is yes, feel free to contact our experts.
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