Poland is constantly adapting its laws and procedures to the requirements of the EU. Despite the global economic crisis, Poland is one of the few countries in the European Union (EU) with recorded growth and continues to improve its position in international rankings.
In recent positioning:
- Poland obtained 2nd place in the European Attractiveness Survey (behind Germany);
- 6 place in the ranking of progress made over the past five years for Sustainable Economic Development Assessment;
- 20th place in the ranking of the Best Countries for Business 2013;
- 27th place in the ranking of the most globalized economies in the world in 2012;
- 41st place in the Global Competitiveness Report 2011-2012;
- 55th place in the ranking of Doing Business in 2013 (among 185 countries).
Polish GDP grew in 2012 by 2.0%, while the average level of GDP in the EU fell by 0.6%. Poland is one of only six EU countries, whose economies recorded growth in the last quarter of 2012.
EU and Swiss citizens running a business in the EU can be realized by:
- economic activity (conducted individually by a natural person);
- partnership (the company run by two or more individuals);
- a partnership (the partnership, limited partnership, limited partnership, limited joint-stock company);
- a limited liability company (limited liability company, joint stock company);
- European company (EU member states, governed by European law).
People from outside the EU can do business only in the form of a limited liability company, limited partnership, limited joint-stock and limited company. They can be shareholders of companies and acquire existing companies.
Setting up a business in Poland
The most popular among foreign investors is a limited liability company (Ltd), which guarantees a legal umbrella and the ability to raise additional funds with little capital.
- sp z.o.o. (LTD company) can be created even by a single shareholder (Cannot be used in conjunction with any other one-person limited liability company);
- Minimum share capital amounts to PLN 5,000;
- Share capital must be fully paid in cash (or through a cash order through the company account) or in similar accepted cash crediting methods;
- The sp z.o.o. (LTD company) has its management appointed the general meeting of shareholders;
- Creation of the supervisory board and auditing is voluntary, unless the company has more than 25 shareholders and share capital in excess of PLN 500,000.
Registration of an sp z.o.o. (LTD company) requires its entry in the National Court Register (KRS). Fulfilling this criteria requires:
- Signing articles of association in the presence of notary;
- Funding the share capital of the company;
- Appointment of the Board.
The registration process takes approximately 6-8 weeks. However if you need to start your business immediately we recommend that you purchase a ready-made company, which reduces waiting time to a few days.
Corporate income tax (CIT)
Sp. z.o.o. (Ltd) is required to pay corporate income tax (CIT):
- The tax rate is 19%;
- Mandatory withholding tax is payable on a monthly basis within 20 day of the closing month;
- Annual tax returns must be submitted by the end of the third month following the tax year.
Personal income tax (PIT)
Tax on your net income: income tax (PIT):
- The basic tax rate is 18%;
- 32% tax rate applies to taxable persons whose annual income exceeded PLN 85,528;
- Tax-free earnings amounts to PLN 3,091;
- Income tax is payable on a monthly basis within 20 day of the closing month;
- An employer is required to provide annual statements to the employee by the end of February of the following fiscal year;
- Individuals are obliged to submit an annual declaration by April 30th of the following year.
In Poland there is a tax on goods and services (VAT):
- The basic VAT rate is 23%;
- Certain products and services have applied rates of 8%, 5% and 0%;
- Certain activities are exempt from VAT (e.g. certain educational services);
- Enterprises whose sales during the fiscal year do not exceed PLN 150,000, may be exempt from value added tax (exemption may be waived);
- Tax returns are usually submitted on a monthly basis on the 25th day of the following the closing month;
- Reduced level taxpayers (those that realize sales below the level of 1.2 million Euros per year) may submit tax returns quarterly on the 25th day of the month following the closing quarter;
- The trader may deduct VAT on purchases relating to their business;
- Standard tax returns must be made within 60 days of the submission of the tax return (in some cases this period may be shortened to 25 days or extended to 180 days subjectively).
Companies that sell products and services to individuals, should have fiscal cash register(with exceptions).
Other taxes that a business may incur include:
- Customs and Excise Tax (for e.g. alcohol, cigarettes and cars);
- Civil law activities tax (for e.g. purchase agreements and contracts of incorporation);
- Property tax (for land and buildings);
- Transport Tax (for vehicles with a mass exceeding 3.5 M/T).
National Insurance (In Poland : ZUS)
Businesses must pay for an employees social security and national insurance contributions (ZUS):
- The amount of the insurance premium is subjective to the employee’s salary;
- Part payment is deducted from the employee’s salary and part is paid by the employer;
- Businesses pay Social Security and submit employee accounts up to the 15th following the close of the previous month;
- In some cases, you can avoid paying contributions – for example, when the company will commission a specific order to an individual on the basis of civil law agreement (contract work).
Any commercial company (including an S.p. z.o.o – (LTD company) is required to:
- Keep account records in Polish and in the PLN currency;
- Have an accounting policy;
- Keep documentation in Poland.
Accounting policies should have, in particular:
- The fiscal year and reporting period;
- Method of calculating financial result (including assets and liabilities);
- Method of bookkeeping;
- System of data protection and Report filing (accounts and other documents).
At the end of each financial year the S.p. z.o.o (LTD company) must:
- Convene a shareholders’ meeting;
- Prepare financial statement and report on the activities of the business;
- Adopt a resolution on distribution of profit or covering of loss;
- Submit to the tax authorities, financial statements and reports on the activities of the company along with the resolutions of the general meeting in approval of the report;
- Submission to the National Court an application for the inclusion of the reports, along with the resolutions of the general meeting.
The financial statements must be prepared in Polish and describe financial transactions in PLN.
Furthermore, an S.p z.o.o. (LTD Company) is required to submit financial statements audited by an auditor, if they fall within these three criteria:
- Employment during the fiscal year amounted to an average of at least 50 FTEs;
- Total assets at the end of the financial year were equivalent to at least 2.5 million Euros;
- Net revenues from sales of goods and services and financial operations for the fiscal year were equivalent to 5 000 000 Euro
For further information please contact us on