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Business in Poland


Poland is one of the most popular countries for the creation and development of business, as well as for investment. Having opened business in this country, you get access to the whole euromarket, which includes 28 countries and up to 500 million consumers. Most companies registered outside European jurisdiction choose Poland as the country for further business promotion in Europe.

Poland is also a member of the WTO and OECD, which confirms its strong international position. Favorable economic, political and social environment is the basis of the country's stable economy. It is worth noting that during the global crisis of 2007, Poland remained the only EU member state, which economy did not show a decline, and which banking sector was not affected.

At present, Poland demonstrates the leading indicators of bilateral trade in Central and Eastern Europe.

Legal system of Poland

Poland is a republic with a multi-party system of parliamentary offices. The head of the state is the President. The power is divided into three branches: the legislative power which belongs to the bicameral Parliament (the Lower Chamber - the Seim, the Higher Chamber - the Senate), the judiciary (courts and tribunals) and the executive (the Cabinet of Ministers, the President).
The structure of Poland also assumes the decentralization of public power: a certain part of it belongs to local self-governing societies.

Advantages of Poland

Poland has one of the most optimal taxation systems in the EU. The fixed rate of income tax is 19%. For comparison, in Germany - 30%, in Estonia - 21%, in Hungary - 20.6%.
Poland is the sixth largest market in the EU and 33 in the world (38.5 million people). The total area of ​​the country is 312,679 km², that is more than the UK (242,900 km²) and Italy (301,336 km²).
It requires a relatively low authorized capital (about € 1200) to open a company in Poland, which it is not necessary deposit to a corporate account when registering, but it is enough only to declare.
Poland is located at the intersection of several major transit routes. Due to the transit location between the countries of Western Europe and the CIS, most of the freight traffic between them goes through Poland. The country has access to the Baltic Sea (ties with Scandinavian countries) and an extended border with the largest economic center of the EU - Germany.
There are minimum requirements in Poland for the licensing of economic activities and there are no requirements for making investments and buying real estate. • The developed infrastructure allows you to organize a business quickly and optimally. • The Polish authorities encourage foreign investment in the economy - tax incentives, special economic zones, grants - both from the state budget and from the EU.

Companies in Poland

Limited Liability Company (Sp. z o. o.)
Joint Stock Company (SA):
Representation
Limited Liability Company (Sp. z o. o.)

• The Company is subject to VAT / CIT (income tax from legal entities). • The Company is responsible for the obligations with all its property without restrictions. The co-owners are not responsible for the obligations of the company, their liability is limited to the amount of the contributions made to the company. • Every foreigner who is legally staying in Poland can establish and operate a limited liability company. • The minimum authorized capital of the LLC in Poland is PLN 5,000.00. • Term of registration - up to one month and a half.
The advantages of this organizational and legal form are the relatively low cost of establishing a company, the possibility to start business immediately after the short registration procedure, limited liability and low minimum share capital, low maintenance costs and compliance with the requirements of the Polish law.
Joint Stock Company (SA):

• The Company is subject to VAT / CIT (income tax from legal entities). In order to ensure the solvency of the company, 8% of the annual income (after taxation) is transferred to the reserve fund until its amount reaches at least a third of the nominal value of all issued shares. • The company is responsible for the obligations with all its property without restrictions. Shareholders are not responsible for the obligations of the company with their own property, their liability is limited by the amount of the capital contributed to the company. • Every foreigner who is legally staying in Poland can establish a joint-stock company.
• The minimum authorized capital of the JSC in Poland is PLN 100,000.00. • Term of registration - up to one and a half months. The joint-stock company is intended for the management of large and medium-sized enterprises. It cannot be founded solely by a limited liability company. The mandatory bodies of the joint-stock company are the shareholders' meeting, the board of directors and the supervisory board (audit commission).
Representation

• Coordination Office: It is organized to monitor the performance of the contracts between the foreign and Polish counterparts (for example, to monitor and coordinate the implementation of the construction project or installation of capital equipment).
• Technical and information representation: The function of such a representation is informational activity in the field of servicing and use of the products of its parent enterprise. It is not allowed to engage in advertising and marketing. The technical and information office has no right to sign contracts and it is not a subject to the Polish tax legislation.
An important obligation of the representation is that it should apply the name of the parent company in the language of the country of its registration, and also indicate its legal entity in Polish and with the addition of the words: "representation in Poland". The foreign investors can organize representative offices to supervise the execution of the contracts between the foreign and Polish counterparts, etc. The form of the representation is intended primarily for the situations when the activities of a foreign entity in Poland should be conducted directly on its behalf and in its favor. The representation is not an independent unit in terms of property. The subject of activity of the representation does not coincide in principle with the economic activities of the enterprise, as it serves to promote and advertise the activities of the last one.
International agreements of Poland in tax sphere
The agreements on avoidance of double taxation are signed with such countries:
Australia Austria Azerbaijan Albania Algeria Armenia Bangladesh
Belarus Belgium Bulgaria Bosnia and Herzegovina (agreement with Yugoslavia) United Kingdom Hungary
Vietnam Germany Greece Georgia Denmark Jersey Egypt
Zambia Zimbabwe Israel India Indonesia Jordan Iran
Ireland Iceland Spain Italy Kazakhstan Canada Qatar
Cyprus Kyrgyzstan China Kuwait Latvia Lebanon Lithuania
Luxembourg Macedonia Malaysia Malta Morocco Mexico Moldova
Mongolia Nigeria The Netherlands New Zealand Norway (replaced by the Convention on 09.09.2009) United Arab Emirates
Isle of Man Pakistan Portugal Russia Romania Singapore
Serbia (agreement with Yugoslavia) Syria Slovakia Slovenia United States Tajikistan Thailand
Tunisia Turkey Uzbekistan Ukraine Uruguay Philippines Finland
France Croatia Montenegro (agreement with Yugoslavia) Czech Republic Chile Switzerland
Sweden Sri Lanka Estonia South Africa South Korea Japan
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Taxation in Poland


In addition to a strong international position and stable economic environment, Poland attracts attention of foreign entrepreneurs with its loyal taxation system, which is one of the most optimal in the European Union.

The fixed income tax rate for legal entities here is 15% (for comparison, in Germany - 30%, in Estonia - 21%, in Hungary - 20.6%). As for the value-added tax, reduced rates are applied to certain categories of goods and services.

The tax system in Poland is not a tool for suppressing entrepreneurs. In the local legislation, regulating the mechanisms of application of the TP, the principle of reasonableness and expediency is applied, and the burden of proof lies with the tax authority.

Personal Income Tax (PIT)
Personal income tax is paid by everyone who receives wages (on the basis of employment contracts and civil law contracts) or income from entrepreneurial activity.
An exception is income that is free of taxation. As of 2017, the personal income tax rate is 32%.
Corporate Income Tax (CIT)
The tax refers to the total income received in Poland by legal entities that have a board or legal address here. This is a single tax, and it is 15%.
Value added tax, VAT
This is the tax when buying food, clothes, services. This tax is usually included in the price of the product or service (it is about the gross price). If the price is in net - this means that you need to add VAT. Nevertheless, the prices already include a tax in the shops and at consumer services enterprises. In Poland, there are different VAT rates: 23%, 8%, 5%, 0% - depending on the type of goods and services:
23% — basic tax rate; 8% — passenger transfer, hotel service, medicines, etc.;
5% — опрcertain food products, etc.; 0% — products of export, socially important services (banking, medical, postal), etc.
Rules of TP in Poland
• It should be noted that there is no codified legislative act in the tax sphere in Poland, and the issues of the TP are regulated by two normative acts: the 1992 law on income tax of legal entities and the 1991 law on the income tax of natural persons. The procedure for taxation of natural persons, regulated by the last law, is justified by the fact that the country provides for the forms of societies that have the right to carry out economic activities without creating a legal entity. Another normative act regulating various aspects of the TP is the 2009 order "On the method of determining the income of legal entities by valuation and on the manner and procedure for eliminating double taxation in case of correction of income of related persons". It should be noted that the main subjects of application of TP are national and foreign related persons in the event of the use of economic operations between them. The difference between the Polish regulation in the sphere of transfer pricing is that relatively recently, the legislator has envisaged a provision by which the economic transactions comprise the contracts for the establishment of a company without the right of a legal entity, agreements on joint activities and contracts for structural subdivisions located both in Poland and abroad. The nature of dependency of related persons determines: participation in capital of at least 5%, both direct and indirect; participation or influence on management, when, for example, without 5% in the capital, you can have a significant impact on making certain decisions; related relations up to the second degree and labor relations, as well as property dependence, for example, general activities, common property, dependence on the use of property, etc. In general, the Polish legislation regulating the use of TP applies the principle of reasonableness and expediency, and the burden of proof lies with the tax authority. In addition, the legislator has provided for a number of exceptions for TP entities, even if the relationships of the related persons are traced, namely, if the related persons are part of the same tax capital group. Exceptions are also provided for the agricultural sector, when the operations between the group and its members relate to the sale of products produced by the members of the group.
The cost criteria of economic operations are determined, the excess of which requires the preparation of tax documentation on the justification of transfer prices. In particular, the documentation is necessary if the transaction cost during the tax year exceeds 100 thousand euros (when the cost of the operation does not exceed 20% of the authorized capital), 30 thousand euros - in the case of provision of services, sale or transfer to use intangible assets; 20 thousand euros - in the calculation with the persons located in offshore zones; 50 thousand euros - in other cases. At the same time, it is not necessary to notify the tax inspectorate of the transactions by the related persons. However, the participants of the TP are obliged to submit the tax documentation to the tax authority, which justifies the nature of the transfer prices, within seven days from the receipt of its demand. Since the deadline for submitting the documents is short, they should be prepared in advance (for example, at the time of the business transaction or immediately after its completion). As a rule, this block of services for the application of the TP and preparation of the relevant documentation is ordered in the companies that are engaged in consulting and auditing. This operating time is enough for two years, as generally the operations are conducted with the same related persons and are identical. In Poland, the activities of the tax authority are not a tool for suppressing entrepreneurs. In principle, well-prepared documentation can become a sufficient argument for the supervisory authority. The content of the documentation is traditional, it has standard parameters stipulated in the laws. At the same time, in the absence of documentation, the person bears tax and criminal responsibility. So, in the absence of documentation, the penalty rate of the tax on additional income is applied - 50% plus interest for delay. In addition, criminal liability is possible in the form of a fine in the amount of 4 million Polish zlotys in the absence of such documentation or if it contains false information.
CFC (Controlled Foreign Companies) Rules in Poland
Since January 2015, Poland has introduced the rules of a controlled foreign company (CEC), according to which the Polish tax residents are taxed at 19% on the income received by their CEC.
The CIC term includes legal entities, such as limited liability companies, as well as transparent non-tax structures, such as transparent partnerships without tax.
These rules apply if one of the following conditions is met: 1. A registered office or place of effective management of a foreign company is in the jurisdiction included by Poland in the black list. 2. A registered office or place of effective management of a foreign company is in a jurisdiction that has not entered into an agreement with Poland or the EU on the exchange of tax information. 3. A registered office or place of effective management of a foreign company is in any other jurisdiction and all the following conditions are met: • at least 50% of its income falls on passive income; • at least one of the types of passive income is taxed in another jurisdiction at the rate that is at least 25% lower than the income tax rate in Poland (which currently is 19%, so the threshold is 14,25%); • Polish tax resident owns directly or indirectly at least 25% of its authorized capital, voting rights or rights to participate in its profits for a continuous period of at least 30 days.
The provisions of the CEC are not applied in the following cases: 1. The income of a foreign company in a tax year is less than 250,000 euros. 2. A foreign company carries out genuine entrepreneurial activities in the EU or in the European Economic Area and it is taxed on all incomes. 3. A foreign company carries out genuine business activities in the country that is not in the EU or EEA and it is taxed on all of its revenues provided that: • the income is no more than 10% of the revenue as a result of genuine entrepreneurial activity; • there is a mechanism for exchanging information between Poland and another country.
  1. Main page
  2. #Poland

Business in Poland


Poland is one of the most popular countries for the creation and development of business, as well as for investment. Having opened business in this country, you get access to the whole euromarket, which includes 28 countries and up to 500 million consumers. Most companies registered outside European jurisdiction choose Poland as the country for further business promotion in Europe.

Poland is also a member of the WTO and OECD, which confirms its strong international position. Favorable economic, political and social environment is the basis of the country's stable economy. It is worth noting that during the global crisis of 2007, Poland remained the only EU member state, which economy did not show a decline, and which banking sector was not affected.

At present, Poland demonstrates the leading indicators of bilateral trade in Central and Eastern Europe.

Legal system of Poland

Poland is a republic with a multi-party system of parliamentary offices. The head of the state is the President. The power is divided into three branches: the legislative power which belongs to the bicameral Parliament (the Lower Chamber - the Seim, the Higher Chamber - the Senate), the judiciary (courts and tribunals) and the executive (the Cabinet of Ministers, the President).
The structure of Poland also assumes the decentralization of public power: a certain part of it belongs to local self-governing societies.

Advantages of Poland

Poland has one of the most optimal taxation systems in the EU. The fixed rate of income tax is 19%. For comparison, in Germany - 30%, in Estonia - 21%, in Hungary - 20.6%.
Poland is the sixth largest market in the EU and 33 in the world (38.5 million people). The total area of ​​the country is 312,679 km², that is more than the UK (242,900 km²) and Italy (301,336 km²).
It requires a relatively low authorized capital (about € 1200) to open a company in Poland, which it is not necessary deposit to a corporate account when registering, but it is enough only to declare.
Poland is located at the intersection of several major transit routes. Due to the transit location between the countries of Western Europe and the CIS, most of the freight traffic between them goes through Poland. The country has access to the Baltic Sea (ties with Scandinavian countries) and an extended border with the largest economic center of the EU - Germany.
There are minimum requirements in Poland for the licensing of economic activities and there are no requirements for making investments and buying real estate. • The developed infrastructure allows you to organize a business quickly and optimally. • The Polish authorities encourage foreign investment in the economy - tax incentives, special economic zones, grants - both from the state budget and from the EU.

Companies in Poland

Limited Liability Company (Sp. z o. o.)
Joint Stock Company (SA):
Representation
Limited Liability Company (Sp. z o. o.)

• The Company is subject to VAT / CIT (income tax from legal entities). • The Company is responsible for the obligations with all its property without restrictions. The co-owners are not responsible for the obligations of the company, their liability is limited to the amount of the contributions made to the company. • Every foreigner who is legally staying in Poland can establish and operate a limited liability company. • The minimum authorized capital of the LLC in Poland is PLN 5,000.00. • Term of registration - up to one month and a half.
The advantages of this organizational and legal form are the relatively low cost of establishing a company, the possibility to start business immediately after the short registration procedure, limited liability and low minimum share capital, low maintenance costs and compliance with the requirements of the Polish law.
Joint Stock Company (SA):

• The Company is subject to VAT / CIT (income tax from legal entities). In order to ensure the solvency of the company, 8% of the annual income (after taxation) is transferred to the reserve fund until its amount reaches at least a third of the nominal value of all issued shares. • The company is responsible for the obligations with all its property without restrictions. Shareholders are not responsible for the obligations of the company with their own property, their liability is limited by the amount of the capital contributed to the company. • Every foreigner who is legally staying in Poland can establish a joint-stock company.
• The minimum authorized capital of the JSC in Poland is PLN 100,000.00. • Term of registration - up to one and a half months. The joint-stock company is intended for the management of large and medium-sized enterprises. It cannot be founded solely by a limited liability company. The mandatory bodies of the joint-stock company are the shareholders' meeting, the board of directors and the supervisory board (audit commission).
Representation

• Coordination Office: It is organized to monitor the performance of the contracts between the foreign and Polish counterparts (for example, to monitor and coordinate the implementation of the construction project or installation of capital equipment).
• Technical and information representation: The function of such a representation is informational activity in the field of servicing and use of the products of its parent enterprise. It is not allowed to engage in advertising and marketing. The technical and information office has no right to sign contracts and it is not a subject to the Polish tax legislation.
An important obligation of the representation is that it should apply the name of the parent company in the language of the country of its registration, and also indicate its legal entity in Polish and with the addition of the words: "representation in Poland". The foreign investors can organize representative offices to supervise the execution of the contracts between the foreign and Polish counterparts, etc. The form of the representation is intended primarily for the situations when the activities of a foreign entity in Poland should be conducted directly on its behalf and in its favor. The representation is not an independent unit in terms of property. The subject of activity of the representation does not coincide in principle with the economic activities of the enterprise, as it serves to promote and advertise the activities of the last one.
International agreements of Poland in tax sphere
The agreements on avoidance of double taxation are signed with such countries:
Australia Austria Azerbaijan Albania Algeria Armenia Bangladesh
Belarus Belgium Bulgaria Bosnia and Herzegovina (agreement with Yugoslavia) United Kingdom Hungary
Vietnam Germany Greece Georgia Denmark Jersey Egypt
Zambia Zimbabwe Israel India Indonesia Jordan Iran
Ireland Iceland Spain Italy Kazakhstan Canada Qatar
Cyprus Kyrgyzstan China Kuwait Latvia Lebanon Lithuania
Luxembourg Macedonia Malaysia Malta Morocco Mexico Moldova
Mongolia Nigeria The Netherlands New Zealand Norway (replaced by the Convention on 09.09.2009) United Arab Emirates
Isle of Man Pakistan Portugal Russia Romania Singapore
Serbia (agreement with Yugoslavia) Syria Slovakia Slovenia United States Tajikistan Thailand
Tunisia Turkey Uzbekistan Ukraine Uruguay Philippines Finland
France Croatia Montenegro (agreement with Yugoslavia) Czech Republic Chile Switzerland
Sweden Sri Lanka Estonia South Africa South Korea Japan

The amendments to the Polish Law on Gambling, adopted on November 19, 2009, entered into force in two parts in April and July, 2017. The changes imply new obligations for Internet providers and payment service operators with respect to online betting. According to the Amendments, as of April 1, 2017, the Ministry of Finance of Poland is obliged to create a special register of prohibited Internet domains, which includes the domains used for the unauthorized organization of gambling in the country. The register is available following this link: https://hazard.mf.gov.pl/
In accordance with the changes, since July 1, 2017, Internet service providers are required to block access to the websites using the domain names entered in the registry of prohibited domains. The Internet providers have to remove the domain names of unlicensed operators from IT systems within 48 hours after the appearance of the domain name in the registry. The amendments to the law also prohibit the operators of the payment systems to provide the services on the websites that use "prohibited" domains. In the case of providing payment services on such sites, the suppliers are obliged to cease the cooperation with them within 30 days after the introduction of the domain into the register. The new obligations provide the fines for the Internet providers and providers of the payment services in the amount of up to PLN 250,000 (about EUR 59,000) in case of their non-fulfillment. It is assumed that the innovations will enhance the control over gambling activities in Poland and reduce the shadow market, as well as increase of the tax revenues to the national budget.

Payment of taxes. Poland

The new amendment to the tax legislation, which introduced anti-avoidance applies to all types of taxes (excluding value added tax (VAT), which offers other provisions in order to prevent evasion of VAT). It prevents the taxpayer to obtain a tax benefit as a result of artificial transactions.

According to a draft legal transactions aimed at obtaining tax benefits, contrary to tax legislation should not result in a tax benefit.

The transaction is considered to be artificial if it is carried out by a taxpayer whose objectives are contrary to tax legislation. However, taxpayers have the right to use "fixing the opinion" to the Minister of Finance, which includes a description of the planned transactions and their economic objective in use. The Minister shall consider the application and decide whether the described transaction designed to evade tax.

The main objective of this innovation - is a multinational company which minimize their tax liability in Poland, through the application of measures of tax evasion.

Therefore, the Polish Government proposes duly documented business solutions and plan business considering the new amendments.

Author: Sergey Panov

managing partner Finance Business Service

Tax in Poland

The new government of Poland will require higher tax revenue for the planned economic reforms, said the Organization for Economic Cooperation and Development (OECD).

OECD Economic Survey of Poland said that the Polish authorities should remove the value added tax (VAT) exemptions and reduced rates that were more than 2.5% of gross domestic product (GDP). This should bring higher revenues than planned increase taxes on banks and retail and will simplify the tax system.

The report recommended an increase in property taxes to make them on the basis of market value.

Green taxes can also increase revenue, in particular, it is recommended to remove the exemption from taxes on fuel use, increase taxes on air and water pollution, as well as to increase the tax on emissions by vehicles. These measures could bring additional revenue equivalent to nearly 1.5% of GDP in 2025.

The report said that the government's plan to focus on improving tax compliance for the creation of additional income is appropriate.

VAT evasion has increased considerably over the past few years.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Poland University

The Polish Parliament adopted the bill introducing a new tax on financial institutions (called also a bank levy). The bill was passed for signature of the President. It entered into force from February 1, 2016.

Generally, the tax applies to banks, credit unions, lending institutions, as well as insurance/reinsurance companies.

The new tax applies also to Polish branches of foreign banks (credit institutions) and foreign insurance/reinsurance companies. The funds are out of scope.

According to the new law, the tax base is defined as the surplus of total assets disclosed in the financial institution’s accounting books exceeding certain amount calculated at the end of each month.

In the case of banks and credit unions, as a rule, the tax base will be decreased by the amount of their equity.


Author: Sergey Panov

managing partner Finance Business Service