January 2023

Opening a business in Poland

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Poland is a very attractive place to open a business. Situated in the very heart of Europe, with a population of nearly 40 million, it is both a great market and an easy place from which to expand a business in any other direction.

With a well-developed economy and education facilities, Poland offers access to skilled workers, whether in the industrial sector, new technologies, medicine, management or law.

Poland is one of the most interesting locations for investments. All major global brands have their companies or representative offices here. Family-owned Polish companies are also growing rapidly, which makes them valuable partners for cooperation.

Opening a business in Poland ensures many advantages and constitutes a chance for development of every company.

Starting a business in Poland as a foreigner

Opening a business in Poland is very easy, also for foreigners. If you are a citizen of the European Union or European Economic Area, you may open a business in Poland on the same principles as applicable to Polish citizens.

You can open a business in Poland also if you have a permanent residence card, temporary residence card, refugee status or a valid Pole's card.

Opening a business in Poland for foreign companies is even easier.

Foreign companies may open branches or representative offices in Poland or establish subsidiaries. Nothing stands in the way of purchasing shares or stocks in Polish companies and thus becoming an investor or taking control over already existing entities.

All these activities are conducted according to the same principles as in the case of Polish companies and our law firm has conducted many processes involving establishment of new companies in Poland for foreigners or their investment in already existing Polish companies.

Forms of conducting business in Poland

The simplest form of business activity is the so-called sole proprietorship (one-man business). It consists of doing business personally by the entrepreneur and is used for small ventures where the risk is not too high.

Other forms of business are the so-called commercial companies, the most popular being the following:

  1. a limited liability company, whose principles of operation are very similar to limited liability companies known from Western European countries,
  2. a joint stock company, which is also a copy of companies functioning in other countries. This kind of company allows to enter the stock exchange within the framework of IPO.
  3. a simple joint stock company - this is a special form, established specifically to facilitate the operation of start-ups and technology companies. It is a combination of a limited liability company and a joint stock company, but its principles of operation are simple and highly deformalized. It is a new type of company, but it is already gaining popularity.

Assistance in establishing a company can be obtained from lawyers operating in Poland, including our law firm that is one of the law firms in Warsaw offering such services.

Opening a branch or representative office in Poland

Foreign entrepreneurs may open their branch or representative office in Poland.

A branch is an organizational unit of an entrepreneur that may conduct business activities in exactly the same scope as the entrepreneur's main establishment. Registration of a branch in Poland does not require the establishment of a separate company and is generally easy - all you have to do is to apply for an entry into the National Court Register (see below). Apart from that, a person managing the branch has to be appointed, registration documents of the main company have to be submitted to the National Court Register as well as confirmation of its registration in the country of origin, if applicable. The branch registration procedure is not particularly complicated or lengthy.

In addition, a foreign entrepreneur may establish a representative office in Poland. The representative office may not conduct business activity, but it is used only to advertise and promote the parent company or, for example, an institution.

The establishment of a representative office requires registration in a special register of representative offices. It is not difficult, however, nowadays it is almost unheard setting up representative offices alone.

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Establishing a subsidiary in Poland

If a foreign company or entrepreneur is planning to start a business in Poland, probably the best solution is to establish a subsidiary.

In this case, a completely new limited liability company or joint stock company is established, in which the shares or stocks are taken up by the foreign company.

The subsidiary of the foreign entrepreneur operates on exactly the same principles as any other Polish company. Since the foreign company becomes a shareholder of the company, it has the right to appoint the management board and other company bodies, as well as to manage its current operational activity and financial policy.

I write more about setting up a subsidiary in Poland in the post Setting up a subsidiary in Poland.

National Court Register

All companies in Poland are registered in the National Court Register. It is a very simple and useful system. The access it free, of course it is possible on-line. The National Court Register reveals, among others, data about the company's management board, supervisory board (if any) as well as shareholders. Moreover, once a year the company's financial statements have to be filed to the Register.

The National Court Register facilitates business transactions and gives certainty as to the company's representation and its financial condition.

The National Court Register also facilitates the purchase and sale of companies, allows one to easily find oneself in the capital structure of a company and thus make good investment decisions.

It is also compulsory to register on an ongoing basis all changes occurring in companies in the National Court Register , i.e. changes in the composition of the management board, changes of the articles of association or changes of the company's capital. Our law firm assists over 250 companies in their relations with the National Court Register and ensures that they meet all their registration obligations.

Employing workers in Poland

Having established a company in Poland, it is possible to legally run business activity, and thus, for example, employ workers.

The labour market in Poland is very rich. The incredible economic diversity means there are no problems finding employees with experience in various industries. Developing universities are educating excellent IT specialists, medics, analysts and many other professionals. In turn, the presence of large global corporations allows you to find people experienced in business, including managers or e-commerce lawyers.

It is compulsory for Poles to learn foreign languages in school, mainly English, which makes it easy for foreign entrepreneurs to build relationships or manage employees.

In addition, there are many job search portals, and universities run special implementation programs. There are also local and global recruitment companies present.

In Poland, there are several ways to employ workers. The basic form is the contract of employment, which gives extensive rights to employees, ensuring the state medical care and other benefits for them, such as minimum wage or mandatory holidays.

Employment based on so-called B2B contracts becomes also very popular. This type of employment provides for a smaller social security burden on both the employee and the employer, which allows to keep a larger part of the salary in the pocket of the employee.

This form of employment is most often chosen by professionals from such industries as IT, law, all office and corporate workers.

At our law firm, we advise on and plan employment structures in companies so as to optimize them for both employers and employees.

Taxes in Poland

Investing in Poland is also advantageous in terms of taxation. Poland has relatively low corporate income tax, which at best can be as low as 5%!

Additionally, Poland has a 19% tax on dividends paid out. However, depending on detailed provisions of agreements concluded between Poland and other countries, the tax in a holding company can be 0%. Thus, a foreign entrepreneur may avoid paying the tax on dividends in Poland, but will pay it only in his home country.

Products and services in Poland are also subject to VAT, however its payment is not obligatory for everyone. There are a number of exemptions which make it possible to avoid paying this tax, e.g. until the annual turnover exceeds PLN 200,000. Moreover, in certain situations VAT is not payable at all (as for example in case of export) or it is possible to obtain a refund.

Read more about taxation in Poland in our article, where we describe what taxes are obligatory in Poland.

 

Where is the best place to invest in Poland?

It depends on the type of business, but many companies choose to open their headquarters in Warsaw. Warsaw, the capital of Poland, is a metropolis of two million people and a business and financial centre for the whole Central and Eastern Europe.

Warsaw offers a wide range of office space and access to specialists of all kinds, including IT lawyers and start-up lawyers like our law firm.

If you want to learn more about business opportunities in Poland, please contact us.

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