A Polish limited liability company (LLC) is easy to set up, requires no additional shareholders, keeps costs manageable, and almost completely excludes personal liability for debts. Below you'll find a practical breakdown of how liability works for shareholders and board members, when social security contributions apply, how taxation is structured, and what you can do to avoid double taxation.
Despite some stereotypes, more and more entrepreneurs — including foreign investors — choose a Polish LLC. The main reason: limited liability. This limitation works on two levels:
Shareholders' liability is limited solely to the contribution they made to the company. The contribution becomes company property (e.g. money or assets contributed in kind). If the company goes bankrupt, a shareholder will not get their contributions back — but will not be held responsible for company debts, failed investments, or other obligations.
This makes an LLC an excellent choice for investments, including starting a business in Poland.
Jan and Paweł set up XYZ LLC and each contributes 20,000 PLN. Jan also contributes a computer; Paweł contributes a printer. The company accumulates 200,000 PLN in debt. Creditors enforce against the company's assets and recover 40,000 PLN total.
Result:
Their liability is limited solely to what they contributed to the company.
The liability of management board members is higher in theory, but in practice it is still low.
General rule (Article 299 of the Commercial Companies Code): if enforcement against the company proves unsuccessful, members of the management board are jointly and severally liable for the company's obligations — with all their personal assets.
In the example above: if Jan and Paweł were also board members of XYZ LLC, each of them would be liable for the full 160,000 PLN.
Under Article 299(2) of the Commercial Companies Code, a board member can be fully exempted from liability by proving at least one of the following:
Only one condition needs to be met. If the management board duly supervises company's affairs, exemption from liability — for example by filing a bankruptcy motion on time — remains in the board's hands.
This matters especially when establishing companies as part of an investment in Poland. These rules allow you to hire professional board members (or have investor's representatives fill those positions) without worrying about their personal liability.
If you want to learn more about conducting business in Poland and liability — contact us.
Two rules determine whether social security contributions apply:
Because a shareholder of an LLC is not liable for its debts, it is worth considering adding a second shareholder — a spouse, sibling, or parent (unless you already have natural candidates). This allows the main shareholder who actually runs the business to avoid the obligation to pay social contributions.
If another company (e.g. a foreign entity) is a shareholder of the LLC, social security contributions are not due either.
The main disadvantage of an LLC is double taxation. First, the company pays income tax (CIT). Then, if it distributes profits to shareholders, they also pay tax (PIT).
In both cases, the 19% rate applies in the year of the transformation or contribution, as well as in the following year.
If a company in Poland is set up by a foreign entity as a subsidiary, taxes between these companies may be settled in a different, more beneficial way. Read more in our article on Taxes in Poland.
There are several legal ways to reduce or eliminate double taxation — especially useful for small companies. The principle: make sure the company has no taxable income by recognizing legitimate costs.
Each of these actions generates tax-deductible costs for the company, reducing the income on which CIT is paid. However, none of them can be applied discretionally — each requires meeting specific legal requirements.
These methods work best for small companies, though some also help optimize international holding structures. For example, subsidiaries may conclude IP or franchise agreements between each other. Every case requires careful legal analysis.
If you have been considering how to set up an LLC in Poland, contact us.
An LLC is an advantageous form of conducting business in Poland. It involves more formalities and slightly higher operating costs than simpler forms — but the benefits outweigh the drawbacks:
Overall, establishing an LLC is beneficial for both domestic and foreign entrepreneurs.
Check our posts on general information about a Polish LLC and how to set up an LLC.
Need help handling an LLC? Contact us — we'll be glad to assist.
Am I personally liable for a Polish LLC's debts as a shareholder or board member? As a shareholder, your liability is limited solely to the contribution you made to the company — creditors cannot go after your private assets, no matter the size of the debt. As a management board member, the situation is different: if enforcement against the company proves unsuccessful, you can be held jointly and severally liable for the company's obligations with all your personal assets under Article 299 of the Commercial Companies Code. In practice, board member liability can be fully excluded if you manage the company's affairs properly and act on time.
How can a management board member avoid personal liability for a Polish LLC's debts? A board member can be fully exempted from liability by proving at least one of three grounds under Article 299(2) of the Commercial Companies Code: a bankruptcy motion was filed at the right time (or a restructuring ruling was issued), the failure to file was not through the board member's fault, or the creditor suffered no damage despite the lack of a filing. Only one condition needs to be met. This means timely monitoring of the company's financial situation and filing for bankruptcy or restructuring when required keeps personal liability entirely within the board's control.
Do shareholders in a Polish LLC have to pay social security contributions? If the LLC has at least two shareholders, neither of them pays social security contributions. The same applies when another company — for example a foreign entity — is a shareholder of the LLC. For a single-shareholder LLC, consider adding a second shareholder (a spouse, sibling, parent, or a corporate entity) specifically to avoid the obligation to pay social contributions.
How is a Polish LLC taxed, and when does the 9% CIT rate apply? A Polish LLC is subject to double taxation: the company pays corporate income tax (CIT) on its profits, and shareholders pay personal income tax (PIT) when those profits are distributed. The reduced 9% CIT rate is available to companies with annual revenue not exceeding the PLN equivalent of EUR 2,000,000, while the standard 19% CIT rate kicks in above that threshold. Companies formed by transformation from another business form or those that received an in-kind contribution of an enterprise worth over EUR 10,000 must apply the 19% rate in the year of that event and the following year, regardless of revenue.
What are the legal ways to reduce double taxation in a Polish LLC? The core principle is to ensure the company has no taxable income by recognizing legitimate, tax-deductible costs. Specific methods include paying board member remuneration by shareholder resolution (exempt from social security contributions), entering into a mandate contract or contract for specific work with the company, renting your own premises to the company, claiming business trip reimbursements, and receiving remuneration for non-monetary services under Article 176 of the Commercial Companies Code. Each method must meet specific legal requirements — none can be applied at will — so verify the conditions before implementation.
