What are the most common types of businesses that can be established in Poland?
The most common types of business activity in Poland are:
• Limited liability companies,
• Limited partnerships,
• Branch offices of foreign entrepreneurs.
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
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 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, tax on retail sales in B2C scheme)
Entities subject to corporate income tax include commercial companies, or groups of companies recognised for tax purposes; organisational units not having a legal personality, with the exception of some commercial partnerships. Limited joint-stock partnerships and limited partnerships are also taxable persons in respect of corporate taxation, while registered partnerships may become taxable persons under some conditions. The provisions of the Corporate Income Tax Act apply accordingly to undertakings not having 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 obliged to register for VAT purposes in Poland. This requirement does not apply to entities from the United Kingdom and Norway.
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). As of October 2020, declarations are submitted in the form of ‘new’ Standard Audit File for Tax. The split payment mechanism (separate transfer of VAT amount) is applicable to specific transactions that may also require opening a bank account in Poland. Such a bank account is also necessary for VAT refunds to registered entities.
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 to which excise tax applies are corporate or individual entities, which undertake 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 and tax on means of transport)
As of 1 January 2021, the businesses operating in Poland with the revenue exceeding EUR 50 million per year are in the jurisdiction of the First Mazovian Tax Office in Warsaw, whereas jurisdiction over smaller taxpayers, i.e. those with the revenue exceeding EUR 3m, has been granted to nineteen specialised tax offices operating at Voivodeship level.
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 in 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 is 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).
Bartosz MIŁASZEWSKI, Managing Partner
Bartosz graduated from the Poznań University of Economics specialisation: corporate accounting and finance. He is a qualified tax advisor (ref. 11251).
With RSM Poland since 2001, Bartosz has been the President of the Management Board since 2002. He transformed the company from a minor entity employing only a few people initially providing tax and legal services, to a company hiring hundreds of staff and offering a wide range of auditing and advisory services. Bartosz is active in the RSM International network, he also participates and manages the work of the Central and Eastern Europe groups. Since 2018, he has been a member of the European Leadership Team, supporting the operations of RSM companies in Europe.
Bartosz’s area of expertise encompasses M&A and transaction advisory, both for domestic and foreign transactions. He manages projects as a key advisor, usually representing the buy-side. Bartosz supports clients in negotiations and structuring transactions and is an experienced manager and advisor in the field of M&A, company valuation and due diligence projects. Bartosz is in charge of the Transaction Advisory Department of RSM Poland and he is a fluent speaker of English.
Bartosz is married with four sons and is also a passionate gardener, who loves to take care of his garden and constantly replans it. If he is not into some creative process, it means that some big project is on the way, either in business or in the garden. Change and transformation are his natural environments. He is an avid fan of Ryszard Kapuściński since he first discovered his works when he was a teenager, and he is still struck by the writer’s multi-layered observations of the world. He tries to perceive the reality in the same way. Bartosz plans on pursuing sailing and pilot’s licences.