The choice of the aforesaid legal forms depends mostly on the investor’s needs and expectations. For many practical reasons (low cost, few formalities and flexibility), the limited liability company (LLC) is the most popular legal form for newly established entities with foreign capital. The LLC in Poland is roughly the equivalent of a private limited company in the UK or a GmbH in Germany.
However, foreign entities are allowed to do business in Poland under laws provided for investors who may also choose from different legal forms such as:
- Joint-stock companies
- Limited joint-stock partnership
- Registered partnership
Additionally, foreign investors may operate in Poland by means of a representative office. However, the scope of the activity of such offices is limited to representative and marketing functions only.
How long does it take to establish a legal entity in Poland?
It takes on average between 3 and 6 weeks to establish any type of partnership or company and prepare it for commencing operations.
For individuals / businesses wishing to start operations immediately, we have an offer a range of ‘shelf companies’ – fully registered and ready to be sold.
Tax registration in Poland
What are the tax filing requirements in Poland?
The Polish tax system includes the following taxes:
- Corporate income tax (CIT)
- Personal income tax (PIT)
- ‘Tax on goods and services’ (Value-Added Tax, VAT)
- Excise tax
- Tax on civil law transactions
- Local taxes and levies
- Taxes applicable to specific businesses (e.g. tax on mineral extraction, tax on certain financial institutions)
Entities subject to corporate income tax include: commercial companies, groups of companies recognised for tax purposes and organisational units not having a legal personality, with the exception of commercial partnerships. Limited joint-stock partnerships as well as taxable persons in respect of corporate taxation. The provisions of the Corporate Income Tax Act apply accordingly to undertakings who do not have a legal identity whose management or registered office is established in a different state and if they are recognised as legal entities under the tax laws of the state of registration.
Corporate income tax rate is 19%. However, in some cases, the ‘small taxpayers’ and taxpayers starting their business activities may benefit from the reduced 9% tax rate.
Personal income tax applies accordingly to revenues earned by the persons from economic activities carried out in the form of partnerships (in the role of partners).
As a rule, income from economic activities is taxed according to tax scale. However, the taxable person may also choose to be taxed at a flat rate.
VAT taxable entities are corporate bodies and individuals carrying out business activities. They are obliged to register for VAT purposes with the competent tax office. In addition, an obligation to appoint a tax representative arises in case of taxable entities having their registered office outside the EU, if they are obligated to register for VAT purposes in Poland.
Registered VAT taxable entities must file tax returns for monthly periods before the deadline, i.e. the
25th day of the month following the month concerned. There is an option to settle the respective accounts and file the return for quarterly periods.
Moreover, VAT taxable entities are obligated to submit to their VAT registers electronically in the form of the Standard Audit File for Tax (on a monthly basis) to the tax authorities.
Starting from April 2020, large enterprises will not be obliged to submit monthly VAT returns. All required information will be delivered to the tax authorities by submitting Standard Audit File (medium, small and micro enterprises will fall within this regulation as of July 2020).
All excise goods are enumerated on a list enclosed to the Excise Tax Act as an Annex. The following shall be deemed crucial excise goods:
- Energy-based products
- Alcoholic beverages
- Tobacco products and dried tobacco
- Passenger cars
Entities which excise tax applies to is a corporate or individual entity, which undertakes activities subject to excise tax, or otherwise incurred liability to excise tax.
Tax on civil law transactions
The following transactions may be enumerated among the most important transactions subject to tax on civil law transactions:
- Loan agreements
- Establishment or an increase of equities in partnerships / companies
- Additional payments to equities in partnerships / companies
- Sale agreements (unless they are subject to VAT).
What is the tax authority in Poland?
Tax administration in Poland lies in the hands of two types of authorities:
- Governmental bodies (corporate income tax (CIT), personal income tax (PIT), value added tax (VAT), excise duty, civil transactions tax)
- Local governmental bodies (property tax, tax on means of transport).
The tax authorities also include:
- The Head of the National Revenue Administration whose competences include matters related to tax avoidance, including advance safeguarding tax rulings, and the conclusion of advance pricing agreements
- The Director of the National Revenue Information System responsible for issuing individual advance tax rulings
- The Minister of Finance responsible for issuing general advance tax rulings.
What is the process of applying for a tax identification number in Poland and what is it called?
As of 1 September 2011, Poland issues TINs (NIP number) to other entities, which are subject to registration (i.e. individuals, legal persons, individuals not having legal personality and other entities) provided that, according to the Polish legislation, they are defined as taxpayers or payers of social security or health insurance contributions.
The procedure consists in submitting an identification application using the NIP-7 form at the Tax Office. Applicants are required to confirm their personal data by presenting their passport or ID card. The Tax Office will grant the applicant a NIP number within 3 days of receiving a correctly filled identification application. No fee is required.
Are there any other registrations required in Poland?
Every entity that must observe the provisions of the Commercial Companies Code under obligation to register with the national registry of entities, i.e. the National Court Register.
The company should be registered with several other institutions (e.g. the Tax Office for income tax or VAT purposes, or ZUS for social security purposes).