Starting a company or a branch in Poland after Brexit: major changes

Patrycja SZYMAŃSKA
Corporate Advisory Senior at RSM Poland

The transition period for the exit of the United Kingdom from the European Union ended on 31 December 2020. Brexit has impacted businesses in many ways, including the way British citizens as well as British companies establish commercial law companies and branches of British companies in Poland. What should be emphasized here is that British citizens and entities still have the right to do so; however, the rules in place have changed quite a bit.

United Kingdom as a third country

Since 1 January 2021, the United Kingdom officially has a status of a third country, i.e. it is a non-EU country. This has been regulated in the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part concluded on 30 December 2020 between the United Kingdom and the European Union. As a consequence, British citizens and British companies wishing to start a commercial law company or establish a branch of a British company in Poland must now follow rules different from those that were in place before Brexit. After Brexit, the registration of such entities is regulated by the legislation of a given EU Member State.

Brexit and trading in Poland

Under the Polish law, the provisions of the Act of 6 March 2018 on the Rules for the Participation of Foreign Entrepreneurs and Other Foreign Persons in Economic Trade in the Territory of the Republic of Poland (Journal of Laws of 2020, item 1252, hereinafter: the Act) shall apply. Pursuant to Article 4 sec. 1 of the Act, foreign persons (i.e. natural persons who do not have Polish citizenship, legal persons seated abroad and organisational units seated abroad which are not legal persons and have legal capacity) from the Member States of the European Union may undertake and pursue business activity on the territory of the Republic of Poland on exactly the same terms as Polish citizens. Different regulations, however, apply to natural persons and companies that are not from the European Union, which means that as of 1 January 2021 they apply to the UK, as well.

As of 1 January 2021, British citizens and companies may start their business in Poland only in the forms listed in Article 4 sec. 3 of the Act, i.e. as limited partnerships, limited joint-stock partnerships, limited liability companies and joint-stock companies, and may join such companies and take up or acquire their shares or stocks, unless otherwise provided for in international agreements. Polish branches of companies registered in the UK, on the other hand, can only be established on the basis of reciprocity, i.e. provided that under the British law a branch of a Polish company can be opened in the UK.

What to remember about after Brexit

What should be noted here is that pursuant to Article 19 a sec. 5 sentence one and 5a of the Act of 20 August 1997 on the National Court Register (i.e. Journal of Laws of 2019, item 1500, as amended), a company, in which a member of the management board, a liquidator or a proxy is a person who does not have an address for correspondence on the territory of the Republic of Poland or the European Union, shall provide the details of a process agent of such person in the Republic of Poland to the court of registration.

The above is just a fragment of the post-Brexit legal situation that affects doing business in Poland with the participation of British citizens. In this respect alone, it is clear that the UK’s exit from the EU has had a great impact on the terms and conditions of cross-border business activity. Thus, entrepreneurs should be aware that when planning their business in Poland they must analyse each and every case in terms of any extra requirements or limitations. In the case of any doubt, they may rely on expert support, and have a professional advisor help them navigate through the labyrinth of the regulations in place, as they are much different from the pre-Brexit ones.