Company incorporation in Poland

Poland, as the largest economy in Central and Eastern Europe, offers significant opportunities for foreign businesses looking to expand in the European market. With a stable economy, skilled labor force, and competitive tax rates, Poland has become an attractive destination for foreign direct investment (FDI).

Most Common Business Forms for Foreign Companies

The most common business structures for foreign companies in Poland are the Limited Liability Company (Sp. z o.o.) and the Joint-Stock Company (S.A.).

• Limited Liability Company (Sp. z o.o.): The Sp. z o.o. is the most popular and flexible form of company in Poland. It is suitable for small to medium-sized businesses and allows for limited liability, meaning the shareholders are only liable for the amount of capital they have invested. Foreigners can own 100% of the shares in a Sp. z o.o., and the minimum share capital requirement is relatively low, at PLN 5,000 (approximately USD 1,200).
• Joint-Stock Company (S.A.): The S.A. is typically used by larger companies, especially those looking to raise capital through public offerings or venture capital. The S.A. allows for the issuance of shares and has a minimum share capital requirement of PLN 100,000 (approximately USD 24,000). While it is less commonly used by foreign investors for small businesses, it is ideal for companies seeking to scale or go public.
• Foreign ownership is allowed up to 100% in most sectors in Poland, though certain industries like banking, defense, and media have restrictions requiring local partnerships.

For most foreign investors, the Sp. z o.o. is the preferred structure due to its lower capital requirements and limited liability protections, making it an excellent choice for small to medium-sized businesses.

Setting Up a Company in Poland

Setting up a business in Poland involves several steps. Here is an overview of the general process for incorporating a company:

1. Choose a company name and ensure it is unique by checking with the Polish National Court Register (KRS).
2. Prepare the Articles of Association (AoA) and have them notarized. The AoA should outline the company’s objectives, governance structure, and shareholding details.
3. Register the company with the National Court Register (KRS) to obtain legal recognition. This registration process typically takes a few days to a couple of weeks.
4. Open a business bank account in Poland and deposit the required capital. For a Sp. z o.o., the minimum capital requirement is PLN 5,000, while for an S.A., it is PLN 100,000.
5. Obtain a tax identification number (NIP) and a REGON number (statistical number) for the company from the Central Statistical Office (GUS).
6. Register for VAT, if applicable, with the local tax office. This is necessary for businesses that engage in taxable activities above certain thresholds.
7. Obtain any necessary licenses or permits, depending on the nature of the business. Some sectors, such as finance, healthcare, and education, require additional licenses.

The incorporation process typically takes between a few weeks and a month, depending on the complexity of the business. It is recommended to consult with legal and accounting experts in Poland to ensure compliance with local laws and regulations.

Taxation and Withholding Taxes

Poland has a favorable tax system for businesses, with relatively low corporate tax rates and various incentives for foreign investors. Key tax aspects to consider include:

• The corporate income tax rate in Poland is 19% on profits. However, small businesses with annual revenues below PLN 2 million (approximately USD 480,000) can benefit from a reduced rate of 9%.
• Poland also has a 23% Value Added Tax (VAT), which applies to most goods and services. Businesses with annual turnover exceeding PLN 200,000 (approximately USD 48,000) must register for VAT.
• Dividends paid to foreign shareholders are subject to a 19% withholding tax. However, this rate may be reduced under Poland’s network of double taxation treaties (DTA) with other countries.
• Poland has a wide network of DTAs, which help reduce or eliminate double taxation on income such as dividends, royalties, and interest paid to foreign companies.

Service Providers for Company Incorporation

• TPA Poland
• PwC Poland
• Deloitte Poland
• BDO Poland
• Grant Thornton Poland

These service providers specialize in company formation, legal advisory, tax compliance, and regulatory guidance in Poland. They can assist with all stages of the incorporation process, ensuring that foreign businesses meet local legal and financial requirements.