The principal act governing business activity in Poland, namely, the Business Activity Law of 19 November 1999, gives to the Polish and foreign entities equal rights to take up and conduct business activities in Poland. Foreign entrepreneurs may, subject to the principles of reciprocity, take up and conduct business on the basis of the same principles as those applicable to entrepreneurs having permanent residency or a registered office in Poland, unless international agreements ratified by Poland provide otherwise. In case of lack of the principles of reciprocity, foreign entrepreneurs may conduct a business activity on the territory of the Republic of Poland only in the form of a limited partnership, limited liability company or a joint stock company. They can also join such partnerships or companies, and hold or purchase their shares.
There are several legal forms of conducting business in Poland: The most popular ones in Poland are:
- Branch office
- Joint Stock Company
- Limited Liability Company
- Representative office
- Civil partnership
A. Branch office:
Foreign entrepreneurs may set up branch offices in the territory of Poland for the purpose of carrying out business activity on this territory. The rights of foreign entrepreneurs depend on whether Polish entrepreneurs abroad enjoy equivalent rights under international agreements (the principle of reciprocity), and whether any international agreements ratified by Poland do not provide otherwise.
In compliance with the standards of the European Agreement, Poland is making efforts to align its business laws with the legislation of the European Community, in order to facilitate the taking up of business activity on its territory by businesses and citizens of the European Community.
- Objects of business activity
The business activity of a branch office must overlap with that of the foreign entrepreneur. However, its objects do not have to be as extensive as those of the foreign entrepreneur's business activity carried out abroad. In other words, the business pursued by a branch office may constitute only a part of the entire business operations of the foreign entrepreneur.
- Entry in the Register of Entrepreneurs
A branch office may engage in business activity following its entry into the Register of Entrepreneurs. The principles of registration are laid down in the Law of 20 August 1997 in the National Court Register (Journal of Laws, No 121, item 769 as amended). Apart from complying with the requirements of the above-mentioned law, the foreign entrepreneur must meet the following formal requirements in order to obtain an entry in the Register of Entrepreneurs:
- disclose the first name, surname and address in Poland of a person authorised to represent the foreign entrepreneur in the branch office,
- attach sample signature, certified by a notary, of a person authorised to represent the foreign entrepreneur in the branch office,
- attach a certificate issued by the appropriate Polish representation abroad, attesting that in accordance with the principle of reciprocity, Polish entrepreneurs are permitted to operate in the country in which the foreigner has permanent residency or a registered office on the same terms and conditions as are provided for entrepreneurs having permanent residency or a registered office in that country; such certificate is not required if an agreement providing for the principle of reciprocity is in place between Poland and the relevant country or if international agreements ratified by Poland provide otherwise,
- if he or she operates pursuant to a founding deed, the articles of association or the statutes place such instrument in the registration files of a branch office together with a sworn translation into Polish;
- if the foreign entrepreneur sets up more than one branch office in Poland, such instrument may be placed in the registration files of only one branch office, provided that a reference is made in the registration files of other branch offices together with the identification of the Court in which such files are kept and the number of the Registry division,
- if he or she exists or operates pursuant to the entry in the Register - place an excerpt of such Register together with its sworn translation into Polish in the registration files of a branch office,
- if he or she operates in the form of a company not governed by the laws of any of the EU Member States - provide a statement in which he or she indicates to what extent the share capital has been financed by contributions, provided that the laws of the country in the territory of which the company has a registered office allow for a partial contribution towards the share capital
- Obligations of a branch office
A branch office is obliged to:
- use the name of the foreign entrepreneur in the language of the country in the territory of which his/ her registered office is located, together with the Polish translation of the entrepreneur's legal form of operating and with the phrase "oddzial w Polsce",
- keep separate books in Polish in accordance with the provisions of laws on accountancy,
- notify the Minister of the Economy of any factual and legal changes, such as the winding-up of the foreign operator establishing the branch office or forfeiture of his right to conduct business activity or possess property, no later than within 14 days following the occurrence of such changes.
The obligations referred to above are the same as for Polish businesses.
Accounts may be kept in accordance with requirements applicable in the entrepreneur's country of residence. Polish law requires, however, a branch office to maintain separate accounts in accordance with the provisions of Accountancy Law of 29 September 1994.
- Ban on the activities of a branch office.
After consulting the Minister responsible for the subject area pertaining to the foreign entrepreneur's business activity, the Minister of the Economy may issue a decision banning the activities of a branch office on the following grounds:
- a branch office has committed a gross violation of Polish law or has failed to notify the Minister of the Economy of any factual or legal changes referred to in point 2,
- winding-up proceedings have been instigated against the foreign operator establishing the branch office or the right to conduct business activity or possess property has been forfeited by that entrepreneur,
- activities of the foreign entrepreneur or of his branch office pose a threat to national security and defence or a State secret or to any other important public interest.
B. Joint Stock Company:
This form of activity is usually established for the purpose of operating business on a large scale. Capital may be obtained through issuance of shares. The founders can be established by one or more legal or physical persons. However, it may not be established solely by a single-member limited liability company. The initial capital of the company must be not less than 500.000 PLN. The Company is liable for its debts and obligations with its whole property. Shareholders are not liable for the company's debts and obligations. There are no special requirements for foreign investors.
Company SA a legal entity must act under Corporate Income Tax regulations. It is very similar to Joint Stock Company but there are no shareholders but Partners and the minimum initial capital must be not less than 50.000 PLN. It may be established by any foreign natural person or legal entity.
C. Limited Liability Company:
It is a very popular way of conducting business in Poland among medium and large companies hence the detailed description how to set it up in Poland.
- The Articles of Association or the Founding Deed (for a single- member company)must be executed in a notarized form before a notary in Poland.
A notary charges a notarial fee, the tax on civil legal acts and the tax on goods and services. (notarial fee is calculated as a percentage of the share capital, but may not exceed PLN 5,000; the tax on civil legal acts is also calculated as a percentage of the share capital, 22% rate of tax on goods and services).
The Articles of Association or the Founding Deed should stipulate:
- the business name and registered address of the company,
- the objects of the company, as specified in Polish Classification of Activities (PKD),
- the life of the company, if established for a definite time period,
- the amount of the share capital,
- the capacity (or lack thereof) for a partner to hold more than one share,
- the number and nominal value of shares subscribed for by individual partners.
The next step is the making of contributions to the company's share capital and the appointment of the management board.
- Entry in the Court Register (registration fee amounts to PLN 1,000)
The application for entry in the Court Register should be filed by the management board. The application must be signed by all members of the management board. A limited liability company is entered into the Register of Entrepreneurs in the National Court Register.
For addresses of the Commercial Departments of the National Court Register and information on their territorial jurisdiction please consult the Ministry of Justice website at http://www.ms.gov.pl/
The application for registration should be filed on the KRS- W3 form. The application should contain:
the business name, registered office and address of the company.
The company's business name may be chosen freely, however, it must include the wording "spolka z ograniczona odpowiedzialnoscia".
- The partners are free to chose any name for the company as long as it is sufficiently distinct from the names of companies operated by other entrepreneurs in the same territory in which the company intends to operate,
- the objects of the company (e.g. trade in metal articles) (Annexe KRS- WM); must come within the Polish Classification of Activities (PKD), as the relevant PKD code must be provided in the annexe,
- the amount of share capital (minimum PLN 50,000),
- information as to the capacity (or lack thereof) of a partner to hold more than one share,
- the first names and surnames and addresses of the management board members and the manner of representation of the company (Annexe KRS- WK),
- the particulars of the partners of the company to be entered into the Register (Annexe KRS- WE),
- the first names and surnames of the members of the supervisory board or the audit commission if such individuals are to be appointed pursuant to the law or the Articles of Association,
- information on in- kind contributions made by partners, in the event that such are made,
- the life of the company, if established for a definite period,
- the name of the gazette selected for publication of company announcements if specified by the Articles of Association, other than Monitor Sadowy i Gospodarczy.
- The application for registration of a single- member company should contain the first name and family name, or the business name, and registered office and address of the sole partner, as well as information that he or she is the sole partner of the company.
- The application should be filed jointly with:
the Articles of Association,
- a representation of all members of the management board that the contributions of all partners to the share capital have been paid up in full,
- if the notarial deed which includes the Articles of Association does not provide for the appointment of the members of the company's governing bodies, proof of their appointment with details of their membership must be provided,
- a list of all partners signed by all members of the management board, including the first name and family name or the business names and the number and the nominal value of the shares of each partner, as well as sample signatures of members of the management board placed before the Court or certified by a public notary,
- a document confirming the possession of a title to the premises in which the company intends to operate (e.g. lease contract),
- evidence of payment of fees for court registration and publication in the Court and Business Gazette (Monitor S?adowy i Gospodarczy).
It should be kept in mind that if the formation of the company is not reported to the Registry Court within six months of the date of execution of the Articles of Association, the Articles of Association will be deemed null and void.
- Registration with the Statistical Office
Entrepreneurs are required to hold the REGON statistical number. Steps that must be taken in order to obtain the REGON number. Registration with the Statistical Office should take place no later than 14 days following receipt of a certificate of entry in the Court Register.
To obtain the REGON number, the entrepreneur should visit, in person or by proxy, the Statistical Office applicable to his or her place of residence. The Statistical Offices provide application forms and accept applications for registration from entrepreneurs having their registered office or permanent residence in the territory of the voivodship in which the office has jurisdiction. Forms are provided free of charge and no fee is charged for the filing of applications.
Registration is effected on the basis of an application filed by the entrepreneur on the RG- 1 form "Application for entry in the National Official Register of Entrepreneurs or change of registered data". This form is uniform for all of Poland.
The following documents should be attached to the application: a copy or excerpt from the Register or a certificate of formation of or conducting of business activity by the entrepreneur. The Statistical Offices provide the registered entrepreneurs and their local units with certificates of the REGON statistical numbers. Certificates are issued free of charge and usually on the spot.
A limited liability company should file the following documents in order to obtain a REGON number:- excerpt, copy or certificate of entry in the National Court Register, including the full address of the company's registered office, completed RG- 1 form.
- Opening of a bank account
The entrepreneurs who pursuant to the Business Activity Law are required to carry out transactions in a non-cash form, must open a bank account.
Article 13 of the Law provides that the entrepreneur should:
- make or accept payments via his or her bank account in each case where the other party to a transaction is another entrepreneur and the once-
- off value of receivables or payables exceeds the PLN equivalent of EUR 3,000 or, if total receivables or payables in the preceding month exceeded the PLN equivalent of EUR 10,000, calculated at the average exchange rate published by the National Bank of Poland on the last day of the month preceding the month in which the transactions are effected.
- give notice of the fact of holding a bank account for business purposes to the applicable Revenue Office collecting income tax from the entrepreneur. If the entrepreneur holds more than one bank account, he or she should choose one of them as the principal account and communicate his choice to the bank in which that account is held and the competent Revenue Office.
- The name and address of the bank and the number of the bank account or the principal account should be disclosed to the Revenue Office.
- notify the competent Revenue Office and the bank in which the principal business account is held of any other accounts held in other banks, giving the names and addresses of such banks and the account numbers.
- notify the banks in which the entrepreneur holds other accounts of the name and address of the bank in which he or she holds the principal account related to his or her business activity.
Steps for the opening of a bank account :
In order to open a bank account, the entrepreneur must enter into an agreement with the bank. The banks usually require the submission of originals and copies of all documents obtained in the course of company registration.
The agreement should be read carefully. If it includes references to any other instruments, such as the regulations, general terms or resolutions of bank authorities, the entrepreneur should demand to see such documents and revise them carefully. If in doubt, the operator should ask a bank officer for additional explanations and where explanations provided are inadequate, consult a legal advisor.
The bank account agreement is accompanied by an annexe containing sample signatures of persons authorised to use the account, as well as the company's official stamp. The authorised persons place their signatures in the presence of a bank officer.
The banks may charge fees for:
- the opening of an account,
- issuance of a chequebook,
- the keeping of an account,
- transfers,
- cash payments,and other services.
Money deposited on the company's account may accrue interest, although in some banks deposits are interest- free. The solvency of the bank should be taken into account when selecting a bank.
A holder of bank account may obtain a credit or overdraft facilities under a separate agreement.
- Registration with the Revenue Office. Taxpayer's Identification Number (NIP)
Taxpaying entrepreneurs are required to register with tax authorities, whereupon they obtain a Taxpayer's Identification Number (NIP). Taxpayers have to register within 14 days following registration of the company effected in compliance with the requirements of the law.
A taxpayer registers only once regardless of the number and types of taxes paid, form of taxation or types and number of businesses run by a taxpayer.
The application for registration of natural persons should include the first name and family name of the applicant, the first names of parents, date and place of birth, sex, nationality/nationalities, address of permanent or temporary residence, type and number of a document proving identity , and a PESEL identification number.
The application for registration of legal entities should include, in particular, the full and abbreviated business name, legal or organisational form, address of the registered office, REGON identification number, the registration authority and the number issued by it, a list of bank accounts, the place of keeping account records, and the objects of business activities compliant with classification standards.
The requirement to submit the bank account agreement may be met only after such agreement has been concluded with the bank. However, the bank requires that the decision on granting NIP be submitted prior to the conclusion of the agreement. As a result, the entrepreneurs wishing to comply with all formalities are faced with conflicting requirements. Presumably, the requirement of the Revenue Office to submit the bank account agreement concerns only the already established entrepreneurs, and not those who are just starting up business operations. The imposition of such requirement at the stages of taxpayer registration is unjustified in the light of the law, which explicitly links the obligation of holding a bank account to a set amount of turnover. For as long as an operator does not commence business activities , his turnover (sales, purchases) equals zero zlotys, therefore he is under no obligation to hold a bank account and the Revenue Office has no grounds for imposing additional obligations not based on law. Stamp duty on the confirmation of registration of a taxpayer that is, the goods and services tax (VAT) is PLN 152.
Taxpayers of goods and services tax (VAT) or excise duty are required to register prior to performing the first taxable operation.
Taxpayers of corporate income tax are required to register no later than on the day of filing the first tax return concerning CIT advance payment.
Organisational entities without legal personality not being CIT taxpayers which: have employees - are required to register no later than upon filing the first (from the date of coming into force of the law) tax return concerning PIT advance payment; do not have employees - are required to register no later than one month after their entry in the Record of Entrepreneurs or other relevant registers.
Taxpayers liable solely for taxes which constitute the proceeds of the communes (gmina) are required to register no later than: upon the filing of the first tax return concerning agricultural, forest or real estate tax.
- Registration with the Social Security Office
Apart from registering with the Revenue Office, a taxpayer commencing business activity is required to register with the Social Security Office (Zaklad Ubezpiecze?n Spolecznych). All persons required to pay social security contributions register with the Social Security Institution Office.
A payer of social security contributions is required to register no later than 7 day following:
- he or she has employed the first natural person or entered into legal relations whereby the other party has acquired the right to be covered by the retirement and pension schemes,
- the obligation to pay contributions to the retirement and pension schemes arises for the insured that are required to pay their own social security contributions or the social security contributions of their associates.
D. Representative office
A foreign entrepreneur may set up representative offices in the territory of Poland. A representative office operates for and on behalf of the business of the foreign entrepreneur within the territory of Poland and is a part of the organizational and functional structure of his or her business. Therefore, the entrepreneur conducting the business activity is considered to be the foreign investor him or herself.
In legal terms, a representative office set up by a foreign entrepreneur is a subordinated organisational entity functioning with the purpose of advertising and promoting the business of the foreign entrepreneur. Advertising and promotion are the constituent elements of the foreign entrepreneur's business activity.
In addition, a representative office is not a self-balancing unit. Any division of property by the entrepreneur, if effected, is of a purely technical and organisational nature.
The objects of the representative office are not necessarily coherent with the objects of the business activity because the representative office functions with the purpose of advertising and promoting the business of the entrepreneur.
A representative office must be entered in the Register of Representative Offices of Foreign Entrepreneurs, kept by the Minister of the Economy.
The application for registration should be made in Polish and specify:
- the name, registered office and legal status of the foreign entrepreneur setting up a representative office,
- the amount of capital or other funds of the foreign entrepreneur setting up a representative office,
- the objects of business activity of the foreign entrepreneur setting up a representative office,
- the first name, surname and address in Poland of a person authorised to represent the foreign entrepreneur in a representative office,
- the address of a representative office in Poland.
The following documents should be attached to the application referred to above:
- the founding deed (articles of association, statutes) of the foreign entrepreneur,
- an excerpt from a Commercial Register or an equivalent thereof,
- a statement of the foreign entrepreneur concerning the establishment of a representative office in the territory of Poland,
- a statement of the foreign entrepreneur operating in the form of a company, concerning the extent to which the share capital has been financed by contributions, provided that the laws of the country in the territory of which the company has a registered office allow for a partial contribution towards the share capital.
The documents in foreign languages should be submitted together with their sworn translation into Polish. This requirement arises from Art. 46 Paragraph 3 of the Business Activity Law and Article 27 of the Constitution of the Republic of Poland which provides that Polish is the official language in Poland.
The requirement to disclose the amount of capital and other funds of the foreign entrepreneur setting up a representative office is aimed at determining the credibility the entrepreneur. This is a method by which the security of legal trading is ensured.
In turn, the requirement to disclose information on the objects of business activity helps determine whether the advertising and promotional activities that a representative office intends to carry out indeed correspond to the foreign operator's business activity. Although the law does not specify how detailed the description of the objects of business activity ought to be, the assumption is that enough detail must be provided in order to allow the registration authorities to duly perform their obligations set out by provisions concerning the refusal to grant a decision on entry in the Register, or ban on the conducting of activities by a representative office.
As regards documents attached to the application, particular attention should be paid to the foreign entrepreneur's founding deed. This is an instrument of constitution, formation or appointment of the entrepreneur. Its character may vary from one legal system to another. The differences concern mainly the legal and organisational forms in which entrepreneur may take up and conduct business activity. This is of key importance to commercial companies.
The setting up of a representative office requires entry in the Register of the Representative Office of Foreign Entrepreneur , which is kept by the Minister of the Economy. An entry is made by the Minister pursuant to the submitted application and in accordance with its contents, following consultation with the Minister responsible for the subject area pertaining to the foreign entrepreneur's business activity.
A certificate of registration entry is issued. It should contain data from the application, as well as the entry number and date. If a certificate has defects in its form or contents or does not include information present in the entry, the foreign entrepreneur may apply for correction of the certificate.
After consulting the Minister responsible for the subject area pertaining to the foreign entrepreneur's business activity, the Minister of the Economy may issue a decision whereby the application for entry in the Register is rejected on the following grounds:
- the existence of a representative office would pose a threat to national security and defence or to a State secret or to any other important public interest.
- the application for registration concerns activities which surpass advertising and promotion of the foreign entrepreneur , or has defects that have not been remedied within the set time limit, or lacks the required documentation.
Taking up of other activities apart from advertising and promotion constitutes a breach of the permitted scope of operations of a representative office. Such breach occurs, for instance, when a representative office engages in business activity or operates in violation of law.
A representative office is obliged to:
- use the name of the foreign entrepreneur in the language of the country in which his or her registered office is located, together with a Polish translation of the name of the economic entrepreneur's legal form and the phrase "przedstawicielstwo w Polsce";
- keep separate books in accordance with the provisions of laws on accountancy;
- notify the Minister of the Economy of any factual and legal changes concerning data included in the application and in the statement of the foreign entrepreneur concerning the extent to which the share capital has been financed by contributions, as well as of the commencement and termination of any proceedings conducted to wind-up the business of the foreign entrepreneur and of the forfeiture of his right to conduct business activity or possess property, no later than 14 days from the time upon which such events take place.
Civil partnership:
It is usually established for the purpose of cunducting business on a smaller scale (a larger scale enterprise is a partnership with net sales of goods or services amounting to the Polish currency equivalent of at least EUR 400,000 in two consecutive financial years. A civil partnership conducting business on a larger scale becomes a registered partnership upon its entry in the National Court Register). It must be established by at least two persons. No minimal initial capital is hereby required. Here each partner is liable for the debts and obligations of the partnership without limitation to the extent of his or her entire property. Personal Income Tax regulations are hereby in force. To establish this kind of activity, in order to be effective, a deed of partnership must be executed in writing; each partner is obliged to register the partnership in Business Activity Register (ewidencja dzia»lalnoNsci gospodarczej) as an entrepreneur carrying out a business activity in the form of civil partnership (on official forms of the National Court Register). As for additional requirements for foreign investors international agreements on reciprocity should be in place. Otherwise, a foreign investor is required to present a certificate issued by the competent Polish representation abroad, stating that, in accordance with the principle of reciprocity, Polish entrepreneurs are permitted to conduct business activity in the country in which the investor has permanent residency or a registered office.
WARNING: The following is article
discussing legal issues. It is not intended to be a substitute
for legal advice. We recommend that you get competent legal
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from our office, call (415) 777-4445 or (916) 349-2900 or
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