Poland is one of the EU countries with the largest economies there are many advantages for investors who are looking towards opening a business in Poland. The country is one of the most attractive investment locations in the center of Europe and it is also one of the few countries that has retained its stability throughout the economic crisis.
Poland offers a great geographical location, good workforce, a wide range of business incentives and numerous opportunities for investments. The most important government aids are granted to foreign investors who concentrate their activities in the research and development field, environmental protection, renewable energy, renewable energy. Training, logistics and other business sectors. Tax exemptions are granted for companies based in the Special Economic Zones.
Attractive business opportunities in Poland
Many international companies have already opened branches in Poland and many foreign investors are considering developing a new business in the country. Some of the Polish business sectors that enjoy favorable development include:
the automotive and aviation sectors;
the electronics sector;
the energy sector;
the food industry
the IT sector;
the research and development sector.
Poland’s location in Europe is one of the country’s greatest advantages. Investors have easy access to the European market and the country has maintained long-lasting business relationships with some of the most important countries in the EU, like France or the UK.
Many companies engage in import and export activities because of the country’s favourable geographical location. Alternatively, those who want to invest in the food sector can purchase agricultural land in Poland.
Types of companies in Poland
A number of types of companiescan be incorporated in Poland. Investors can choose between them based on the type of business they wish to engage in and the future development planned for the company. Investors can choose between:
the limited liability company and the joint-stock company: these are the corporations and the Sp.z.o.o., the private limited liability company is one of the most popular business forms.
various types of partnerships: investors can choose a business partner and form a partnership where one or both of them will be liable for the business.
branches or representative offices for foreign companies: foreign companies can open a branch or a representative office, two manners to establish their presence on the market.
sole proprietorships: the simplest business form, suited to investors who wish to run their own business and who will bear liability.
A minimum share capital is mandatory for certain types of businesses but investors can also set up companies that require lower start-up costs. The rules for foreigners interested in engaging in economic activities in Poland are simple and straightforward. In general, they are required to observe the same ones for registering the activity as well as running the business as local investors. They will also need to obtain the mandatory licenses as per the business activity and acquire a permit if they wish to purchase a property.
The private limited liability company or the Sp.z.o.o. is the preferred business form because it offers limited liability (up to the amount of the invested capital) and has lower requirements compared to the joint stock company. In it incorporated by at least two partners by means of a notarial deed. It has a minimum share capital of 5,000 PLN and the share value is at least 50 PLN. The limited liability company is subject to the corporate income tax and other taxes for companies, such as the dividend tax. One of our lawyers in Poland can give you more details about the requirements for this business form as well as the applicable accounting principles.
Our Polish law firm offers company incorporation services and our attorneys can help you choose the right type of company, according to your business goals. A minimum share capital is mandatory for certain types of businesses but investors can also set up companies that require lower start-up costs.
Holding companies in Poland can benefit from certain incentives and tax reductions. The same is applicable for branches and subsidiaries of EU companies that benefit from the provisions of the Parent-Subsidiary Directive.
The company registration process in Poland is straightforward. Each company will need to be registered and obtain a special REGON and NIP identification number as well as register for VAT, depending on the business activities it performs.
Below, our lawyers lists the main steps for starting a business in Poland:
Choose the company type: as highlighted above, investors can choose between several business forms and this will influence the general company formation process.
Decide when the business will start: the company registration application will include a date on which the business starts; make sure that the funds are sufficient to begin the activity.
Choose a company name: each business must have a unique name that should be suitable for marketing purposes as well as complies with the local requirements; the name must be unique.
Choose the PKD codes: these are the codes that will indicate the type of business activity that will be performed by the new legal entity.
Prepare for registration: one of our lawyers in Poland can help you gather and prepare all of the documents needed for company registration.
Open a bank account: in some cases, investors can open a bank account before the registration of the company; in other cases, the business must be registered before this step.
Apply for VAT and social insurance registration: these are two of the main steps that need to be handled once the business is registered; the company is automatically reported after registration to the Social Insurance Institution.
Obtain business licenses: this is a step that is required only in some cases, for those businesses that operate based on special permits and licenses, for example, those that sell alcoholic beverages.
Not all businesses need to be registered. Small businesses that have an annual revenue which does not exceed a certain amount (usually half of the annual minimum wage), can run their activities as non-registered businesses that do not have to be reported. We do advise business owners that the non-registered business regime is only applicable in some cases and that they can consult with one of our attorneys in Poland for detailed information about the need to register the company. Also, trading businesses will need to obtain the EORI number in Poland and our lawyers can assist businessmen in this matter.
The fees for registration with the National Court Register will depend on the chosen business type as well as whether or not the application for registration is submitted by post or electronically. The application for entering a limited liability company in the National Court Register starts with submitting the official form for this type of legal entity as well as attaching the supporting documentation. Some of these additional documents include the Articles of Association, the list of business partners, the statement regarding the contribution to the company capital, the names, and addresses of the individuals on the Management Board and others. In general, there are two fees that should be taken into consideration, the court fee for entry of approximately 500 PLN and the fee for announcing the registration in the Court and Economic Monitor of 100 PLN. This means that the fees for company registration (only the actual registration step with the National Court Register) amount to 600 PLN or approximately 140 euros.
We invite you to watch a video about opening a business in the country:
Running a business in Poland
After the business registration process is complete and the company can perform economic activities, investors can consider hiring personnel in Poland. Entrepreneurs have various options when recruiting suitable candidates: they can request the specialized services of a recruitment agency or simply publish a job vacancy announcement on a dedicated website.
Individuals will require a work permit in Poland and the employer will need to make sure that the company observes the requirements for minimum wages and also the employee’s rights for leave, holidays and special benefits. Our law firm in Poland can offer you specific details about the employment law in the country.
As far as taxation is concerned, opening a business in Poland also presents a number of advantages in this respect because of the relatively low corporate income tax in the country, compared to the one applicable in other EU countries. Some of the main facts about taxation are highlighted below by the tax experts at our law firm in Poland:
The default corporate income tax rate for companies in Poland is 19% and a lower, 9% rate is applicable to income other than capital gains for companies that qualify for this reduction (small companies and companies that are just starting out and have a revenue under 1.2 million EUR on the year – however, this is subject to certain exceptions).
The withholding tax in Poland applies for companies and individuals in case of dividends, interest and royalties payments. For companies, the general rate for resident corporations is 0% or 19%. The standard 19% rate can be reduced in case of dividends paid by a Polish resident company to a nonresident company or individual when a double taxation treaty applies or when the said dividend payment is treated under the EU parent-subsidiary directive.
The Polish value-added tax has a standard value of 23% and lower rates of 0%, 5% and 8% apply in case of certain types of goods and services. Some types can be zero-rated, such as exports. Companies are expected to register for VAT purposes when their annual turnover exceeds 200,000 PLN, unless that company engages in an activity that is not subject to value-added tax. Non-resident companies are also generally subject to registration for VAT purposes if they make taxable supplies of goods or services. VAT returns are filed electronically in Poland and they are submitted and paid in the month following the one for which the VAT obligation applied. As far as other tax compliance is concerned, taxpayers are subject to a self-assessment scheme and they make advance payments of the income tax during the year. A simplified tax assessment method can apply and it is based on the tax results recorded for previous years. Companies that fail to observe the tax requirements are subject to penalties and penalty interest as determined by the National Bank of Poland (and in this case the lowest penalty rate is 8%).
Understanding the taxation requirements is an important part for running a business in the country and our tax experts in Poland can give you more details, as needed.
Why choose Poland for starting a business
Poland invested the funds it received from the European Union in its roads and highways and this investment proved to be a decisive move: the country now has a good infrastructure that allows for efficient and affordable transportation services.
The workforce in Poland is yet another strong asset the country has: well-educated workers are remunerated at roughly one third of what Western European countries pay for similar services. This is the reason why important multi-national companies have chosen to set up offices here and hire Polish employees. Amazon and Procter & Gamble are just two companies that opened new logistics centres in Poland.
Poland has been constantly progressing ever since the fall of the communist regime. The country successfully managed to catch up with other
competitive countries in the area and has now become a country preferred by foreign investors.
Investors who choose to open a business in Poland will also find that there are numerous investment support routes. These are primarily through national and international incentives but also from EU funds, as the country is an important beneficiary of EU fund for certain projects. Some of the main routes of support include the following:
Cash incentives: companies can receive cash support for various projects, for making new investment of for setting up employee training;
Tax exemptions: companies in research and development as well as those that make new investments can receive tax exemptions and deductions;
Loans: preferential loans can be accessed by companies engaged in environmental projects or small and medium enterprises involved in technological innovations (subject to certain requirements that can be detailed by our lawyers);
Equity: available to startups in Poland or for strategic projects; also subject to certain terms and conditions about which our attorneys in Poland can give you more details.
It is useful to remember that the main business sectors that are subject to targeted support include research and development, innovations, human resources and environment.
The Special Economic Zones in Poland are areas where companies can benefit from tax advantages. The level of the exemption can depend on the exact location of the investment as well as the size of the company and it can be between 10 and 50% for large companies, 20 to 60% for medium-sized companies and between 30 and 70% for small and micro companies. The corporate income tax exemption or the personal income tax exemption can be granted for certain pre-determined periods of time, such as 10, 12 or 15 years. If you need other types of servces, for example immigration assistance when moving to Denmark, we can put you in contact with our partners.
Business etiquette in Poland
Before starting a business in Poland, investors should know some basic things about the Polish business culture. Whenever addressing managers or executives, it is recommended to use their job title along with Mr and Mrs. Men in Poland are addresses as Pan (Mr) and women as Pani (Mrs).
Polish people are generally punctual, although small delays of up to five minutes are acceptable in some cases. The business dress code is classic: formal clothing for both men and women generally in dark colours. The dress code policy in Polish companies may allow casual Fridays. As first impressions are important in the business community, it is recommended to maintain formal attire.
Other useful tips for doing business in Poland include: giving an odd number of flowers, direct eye contact is highly valued and corporate gifts should be appropriate. Foreign investors in Poland may need to adjust to a different working pace in Poland and must become familiar with the hierarchical structure of the company.
4 Small Business Ideas in Poland
1. A food business
Fast food, restaurant or food truck, a good food business will need to literally bring something fresh to the average Polish customer. Foreign investors who are interested in starting a business in Poland as a restaurant can do so without restrictions but they will need to obtain special permits and licenses. Wroclaw is a good city to base a business in because it is the largest city in western Poland and it is also a touristic city. A food business here has the potential to attract both locals and tourists.
2. Consulting services
This can include a wide range of options and the start-up costs for a consulting business are lower than for other types of business ventures. Accountants in Poland can start their own business by opening a sole trader and providing their expertise in the field. Many business owners will try to keep their own books but will always prefer the help of an expert in taxation.
3. Fashion store
For a more creative entrepreneur, fashion and clothing can mean business. A small shop can offer handmade clothes and jewelry or casual dresses and personalized clothes, suited to the buyer’s taste. Accessories like handmade leather bags are also an option.
4. Online shop
Entrepreneurs interested in starting a business in Poland can also provide a wide range of products via an online shop. While this business can have lower costs, the entrepreneur will need to purchase a domain name in Poland and arrange for transportation services to its clients. Import activities will also need to be considered if the shop brings items from other countries into Poland.
Investors can help their business stand out from others on the market by registering a trademark. Our lawyers can assist during this process.
Poland foreign investment statistics
Narodowy Bank Polski (NBP), the central bank in the country, offers public information on the value of foreign direct investments. Our team of lawyers in Poland presents part of the statistics for the year 2019:
7,887.2 million EUR: the total FDI inflow countries in Europe that have invested in Poland;
595.3 million EUR: FDI inflow from the United States of America, out of which 588.7 million EUR were from North America;
5.4 million EUR: foreign direct investment inflow from Central America;
1,260.4 million EUR: FDI inflow in Poland from countries in Asia, with a significant percentage coming from Near and Middle East.