Poland ranks 23rd worldwide in terms of GDP (nominal) and 40th in the 2020 Ease of Doing Business Index. It brings in new investors and benefits them with a stable and growing economy. For various reasons, foreign companies find setting up their business in Poland attractive due to its stable economic growth, locality to major European markets, improved infrastructure, and easy access to highly experienced employees.
Setting up a subsidiary is one of Poland’s easiest and most practical business entities. Companies can establish a subsidiary in Poland in a few steps, requiring less paper. They need to comply with fewer Polish laws and can enjoy tax incentives.
The following guide discusses everything you must know about setting up a subsidiary in Poland.
What are the Types of Subsidiaries in Poland?
Here are the details of various types of subsidiaries that can help you set up a subsidiary system in Poland.
1 Limited Liability Company (LLC)
- It is the most widely used business form in Poland. It is suitable for both small-sized and medium-sized companies.
- To establish an LLC, two or more individuals are required, and they must provide a charter capital split into shares.
- The founders benefit from the limited liability for the business’s obligations and debt.
- It needs a minimum share capital of 5,000 PLN that is turned into non-transferable shares. The share’s nominal value should be at least 50 PLN.
- The capital can be shared into equal or unequal nominal shares.
- A LLC should pay VAT and corporate income tax in Poland.
- The shareholders are not liable for the company’s obligations, and they can be natural or legal persons or organizational units without legal personality. The management board members can be liable to the company’s creditors.
- The limited liability company’s name should be unique and followed by “spolka z o.o” (or abbreviated as Sp. Z.O.O.).
- Board of Managers manages the LLC. The general meeting of the shareholders or the Supervisory Board selects its members.
2. Joint Stock Company
- Two or more founders can set up a joint stock company. They must provide a share capital distributed into shares entitled in the company charter.
- It needs a minimum share capital of 100,000 PLN. The minimum value of one share can’t be less than 0.01 PLN.
- The shareholders are not accountable for the company’s obligations. They can be individuals, legal entities, or organizational units without a legal identity.
- It should pay VAT and corporate income tax.
- It is suitable for large-scale business operations.
- It can be listed on the Stock Exchange.
3. General Partnership
- It is an entity set up by two or more members.
- It is suitable for smaller businesses wherein each partner owns the same level of liability and the business profits.
- Unlike corporations, it doesn’t have a legal identity.
- It must be legally registered with the Court Register.
4. Limited Partnership
- This type of subsidiary business in Poland doesn’t have minimum capital requirements.
- Only one of the partners is completely liable in this type of subsidiary.
- At least two partners are needed to set up a limited partnership. They must have shared business objectives.
5. Private limited company
- A minimum share capital of 5,000 PLN is required before registering as a private limited company.
How to Set Up Subsidiaries in Poland?
The process of establishing a subsidiary in Poland can vary based on the company’s type of business. The steps for registering a subsidiary company in Poland are discussed below.
Step 1: Company name
- Make sure the company name is not identical or resembles the existing one.
- The company should prepare multiple names if the first suggested name is unavailable for registration.
Step 2: Preparing documents
- The foreign company should provide their local authorized agent with powers of attorney (POAs) to register the entity
- Although POA regulations vary based on where they are signed, notarization and apostille certificates are adequate in most cases.
- Prepare articles of association that mention the following details:
- Subsidiary’s name and address
- Company objectives
- Internal regulations
- Name of the beneficiaries and shareholders
- Shareholders’ contribution to the capital, and information about the shares and their relevant rights
Step 3: Appointing directors and capital
- After signing the POA, the company must appoint directors, prepare for a lease and a bank account, compensate the initial capital, file for registration, and sign corporate documents.
- Typically, a subsidiary business in Poland must be registered within 7 days.
Step 4: Register for VAT
- File a VAT registration by submitting the VAT-R form to Poland’s revenue office.
Step 5: Company registration
- Register with the Central Register for Information on Business Activity (CEIDG) and the National Court Register (KRS).
Step 6: Business bank account
- Register with the National Statistics Agency (GUS), which allows acquiring the 13-digit REGON number required for opening a business bank account.
Step 7: Register for NIP
- Register with the Corporate Registry for a Tax Identification Number (NIP).
Step 8: Employer registration
- Prepare for employer registrations within 7 days of hiring the first employee.
Step 9: Conducting general meetings
- Establish a board of directors selected by general meetings of the shareholders or the supervisory board.
Benefits of Setting Up a Poland Subsidiary
Setting up a subsidiary company in Poland presents various key benefits, which are discussed below:
- One of the most notable benefits of a subsidiary company in Poland is that after its formation, you can begin onboarding employees, operating wages, and formulating a pay and benefits plan.
- A limited liability subsidiary has an independent legal identity operating under Poland’s Company Law. It is accountable for its own liabilities and debts.
- Acquiring regulatory approvals, finance, and loans and signing contracts with other Polish and European Union firms is straightforward.
- The subsidiary business in Poland benefits suppliers and clients with higher permanency than branches.
Documents to Prepare When Opening a Subsidiary in Poland
The companies must keep the following documents ready while submitting their application for subsidiary incorporation:
- The subsidiary’s Articles of Association
- Memorandum of Association
- Identity document (for an individual indicating the interests of the company to set up a bank account)
- Notary Deed
- Partnership Agreement
- A certificate/copy of the certificate of state registration/other document certifying the legal entity’s registration
- Bank statements specifying the foreign investor’s financial feasibility
- Certificate of Incorporation
- Office location certificate
- Notarized identity cards/passport copies and the photos of the company’s director(s) with their curriculum vitae
- Supporting documents authorizing the entitlement to sign the aforementioned individuals
- The non-resident beneficiaries must submit their passport copies and certified translation into Polish.
- Share certificate
- A business plan that includes information such as the number of employees, business operations, estimated training for Poland employees, etc.
What Business Forms can Poland Subsidiaries Take?
The subsidiaries can choose from different legal business forms in Poland. The two most widespread forms of a subsidiary are:
Public Limited Company (PLC)
LLC (Limited Liability Company) (known as a Sp.z.o.o or Spolka.z.o.o.)
Depending on the business plan and requirements, the company can determine the most suitable subsidiary form.
Poland Subsidiary Laws
- The owners of the foreign business entity will be accountable only for the amount of equity capital they hold.
- To establish a subsidiary in Poland, the foreign business entity must invest at least 5,000 PLN in the minimum share capital for a limited liability company.
- Shareholders are only liable for the amount capitalized in the company’s share capital.
- A person appointed to represent the subsidiary and who is aware of the transaction that occurred but doesn’t inform the relevant authority on the same may be subjected to a financial penalty of up to:
- PLN 10,000,000: if companies are listed in the Regulation
- PLN 5,000,000: if entities are covered by the Amendment.
- (The particular person may be imprisoned for a duration ranging from 6 months – 5 years.)
- An entity or a single shareholder can establish a subsidiary. An entity can’t establish a subsidiary with only a single shareholder.
- A fine of up to PLN 1,000,000 is imposed if the names of all beneficiaries are not included in the register.
- Incorporate the name of a minimum of one shareholder with no limit. It is vital to create a subsidiary board if there are 25+ shareholders or the share capital surpasses PLN 500,000
The compliance checklist for the incorporation of foreign subsidiaries in Poland entails the following:
- Get the incorporation certificate that is released by the Registrar of companies.
- Get the unique company number (REGON)
- Submit all the critical details of the shareholders to the Registrar.
- Share the company share certificates with all the shareholders (if that subsidiary is a public company) after gaining the subscription money.
- Designate a first auditor for the company.
- Arrange meetings of the Board of Directors (BODs)
- Maintain balance sheets for a Private Limited Company (because it indicates an accurate and reliable viewpoint of its state of affairs.)
- Maintain statutory registers (covering the company’s name, registered office address, email ID, phone number, and website (if any))
Taxes on Subsidiaries in Poland
A subsidiary in Poland is subject to the following taxes:
Corporate income tax
19%: standard corporate income tax
9%: a lower corporate income tax applicable for small taxpayers for income except for capital gains (when the business’ income is less than 5.66 million PLN in the particular year);
19% (calculated on dividends)
23% (calculated on the import and export of goods and provision of goods and services)
0%, 5%, 8%: applied to companies that offer certain foods and services, like communal supplies and others.
Tax Incentives for Businesses Setting Up a Subsidiary in Poland
The incorporation of foreign subsidiaries in Poland considers tax incentives as one of the crucial components. The Poland government provides different tax incentives to convince foreign investors to invest in the country, which are as follows:
- The incentive amount is calculated the same as within the SEZ (Special Economic Zone) system. It depends on the following factors:
- The incurred eligible prices of the investment (includes investment capital expenses or two-year labor charges of the new employees)
- the enterprise’s size
- state contribution amount in a selected region
- A business entity can make the most from tax incentives if the entity acquires a permit from the Ministry of Economic Development to perform business activities in the country and fulfills other legal requirements.
Other Important Considerations
In addition to the discussed compliance checklist for the incorporation of foreign subsidiaries in Poland, you should focus on a few other important considerations. They are discussed below.
- To establish a subsidiary system in Poland, companies must consider residence permits, insurance, registration with the federal tax administration, and applying for any licenses (if needed).
- Companies should invest money and time in subsidiary company formation in Poland.
- Other sectors requiring licenses include health care, education, employment agencies, public transport, gambling, energy, etc.
- An audit is required when establishing a joint stock company.
- Local office premises are required before registering a subsidiary.
- The annual tax return should be submitted irrespective of the type of your subsidiary.
How Multiplier’s Employer of Record Helps You Hire & Expand in Poland
You must dedicate substantial time and capital to develop your business in a foreign country. Following a country’s labor rules and industry standards requires considerable effort and time. You can utilize services from a third-party service company like Multiplier to establish a subsidiary system in Poland.
Multiplier oversees all the official procedures, including payroll processing, determining taxes on subsidiaries, steps to set up subsidiaries, hiring talent, etc., while exploring a new market. It discards the need for establishing an entity. Moreover, Multiplier assists you with onboarding local and global talent while promising compliance with Poland’s regulations and labor laws.