Doing business in Poland
How quickly can I set up a business?
Business activity in Poland may be conducted in forms similar to those found in other European countries. Available types of business activity include:
1. sole trader (self-employment)
2. civil law partnership
3. commercial companies
• capital companies (limited liability company (sp. z o. o.) and joint-stock company (S.A.).
• partnerships (registered partnership(spółka jawna), professional partnership (spółka partnerska), limited partnership (spółka komandytowa), limited joint-stock partnership (spółka komandytowo-akcyjna).
• from 01/07/2021 it will be possible to set up also a simple joint-stock company (prosta spółka akcyjna PSA).
4. a branch or a representative office in Poland.
The date of commencement of activity in Poland depends on the legal form in which we wish to operate. This period varies from 1-2 days (sole proprietorship) to 2 months (capital companies).
What is the minimum investment needed?
The amount of investment depends on the form of the activity. Operating in the form of a sole proprietorship does not require any capital, but the most popular form of business activity in Poland today is a limited liability company, in which the minimum share capital is PLN 5,000 (ap. 1120 euro).
However, it is worth mentioning that from 01/07/2021 in Poland it will be possible to set up a simple joint-stock company (prosta spółka akcyjna PSA) with a minimum share capital of PLN 1.
The company is meant to be a means of investing in innovative activities and new technologies, ensuring the flexibility necessary to use electronic and other means of communication. It is predicted that its main goal will be to facilitate the development of startups.
How can I raise finance?
Possibilities to raise finance by:
• Banking sector
• Mother company loan
• Business Angels…
What are the legal requirements for setting up my business?
As mentioned above, there are many types of business forms in Poland in which you can operate and the requirements for setting up specific businesses are different.
The simplest form is a sole proprietorship – it is registered in the Central Register and Information on Economic Activity (CEIDG), and it can be done online (electronic signature is required).
All commercial law companies (capital and partnerships) are subject to entry in the National Court Register. Articles of Association of capital companies and certain partnerships should be concluded in the form of a notarial deed. There is also an option to start a company online, but it is necessary to have a qualified electronic signature by the founders of the company.
The limited liability company- as the most popular commercial company in Poland, may be established by one or more shareholders, but it may not be established solely by another single person limited-liability company. Its founders may be either natural persons or legal persons, regardless of their nationality or place of establishment. In order to be established, a capital of at least PLN 5,000 is required.
As mentioned above, from 01/07/2021 in Poland it will be possible to set up a simple joint-stock company (prosta spółka akcyjna PSA) with a minimum share capital of PLN 1.
What structure should I consider?
One-man economic activity (individual business activity = a sole proprietorship) is the simplest form. Since its registration and operation are not complicated, it is the most suitable form of activity for those who carry out small scale activity.
A registered partnership is suitable for partners in one industry, for example, who carry out small or medium scale activity with a low degree of risk. The advantages of a registered partnership include lower costs than in the case of more complicated forms of activity, the possibility of simple accounting.
The limited liability company is the most popular commercial company in Poland. It is an appropriate form of activity, e.g. for shareholders who want to maintain direct supervision over the company’s affairs and limit the risk only to their contribution (no liability with personal assets).
A joint-stock company is a form of activity suitable for large enterprises, companies planning to enter the stock market. It is a compulsory form of activity for certain activities (banks, insurance companies).
Some activities require registration in a specific legal form or reserve the form to persons with specific competences.
An example is a professional partnership, where only members of the so-called liberal professions may be partners: advocate, pharmacist, architect etc.
Restrictions may also result from the scope of activity carried out. For some types of activities, the law does not provide for registration with the CEIDG – the entrepreneur must register the company in the National Court Register. Examples include the cultivation of certain plants and animals, insurance and reinsurance, fire protection, trade unions and sports clubs.
What advice can you give me in regards to payroll and taxation requirements?
The employer is required to report the employee’s employment to the regional office of the Social Security Institution (ZUS) within 7 days after the commencement of work.
The contributions shall be payable on the 15th of each month for the previous month.
The statutory working time is 40 hours/week. There is a tax on wages for financing the National Disabled Persons Rehabilitation Fund (PFRON). This tax applies to companies with 25 or more full-time employees. It is possible to reduce this tax by employing disabled persons or by using the services of external companies employing disabled persons. The amount of this tax varies and is calculated as follows: the number of disabled people which as a rule should be employed *average monthly salary in the company* 40.65%.
Personal income tax PIT
All Polish resident individuals are subject to this tax on their entire income derived from Polish sources.
This tax is deducted at source on a monthly basis, and it is progressive.
(*) Limit updated every year for 2021: PLN 157,770
(**) Rate revised annually in April. The rate valid for the period 04.2020-03.2021 is of 1.67%.
Corporate income tax CIT
• The base rate 19%,
• The reduced rate 9%
The reduced rate of 9% can be applied by companies:
1) being small taxpayers within the meaning of the CIT law, i.e. having an annual gross income for the previous year (2020) of a maximum of EUR 2 million, which is the equivalent of 9,031 K PLN according to the average exchange rate of the Polish National Bank (NBP) of October 1, 2020 and new companies;
2) having an annual net income for the given year (2021) of at most 2 M EUR, which is the equivalent of PLN 9,097 thousand according to the average exchange rate of the Polish National Bank (NBP) of January 4, 2021.
The reduced rate of 9% applies only to operating income, for capital transactions the base rate applies.
The instalment payments are made every 20th of the following month (or the 20th day of the given quarter in case of quarterly regime possible for small taxpayers and new businesses).
CIT is declared annually until the end of the third month after the end of the financial year.
Value Added Tax (VAT):
• The base rate is 23%,
• Reduced rates are: 8%, 5% and 0%
• VAT is payable every 25th of the following month
• Each quarter, for small taxpayers there is a possibility to choose between a quarterly or monthly VAT regime subject to certain criteria. The small taxpayer within the meaning of the VAT law is a taxpayer with an annual gross income for the previous year (2020) of a maximum of EUR 1.2 million, which is the equivalent of PLN 5,418 thousand depending on the rate exchange rate of the Polish National Bank (NBP) of October 1, 2020.
Interest 19% (20% for non-residents)
Regional property taxes
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