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Doing Business in Poland

Finding the Right Law Firm

The Republic of Poland (Rzeczpospolita Polska) is one of the largest countries in Central Europe. Its northern frontier on the Baltic Sea gives it easy access to Scandinavian and North Sea ports. The capital of Poland, Warsaw, is situated in the centre of the country. Poland ranks eighth in Europe in terms of size with a surface area of 312,677 sq. km, which constitutes about 3% of the continent's surface.

Legal System

Poland is a republic formed on the democratic basis. The Republic of Poland is based on Montesquie's separation of powers principle. The legislative power is vested in the Parliament consisting of the lower house - Sejm and the upper house - Senat. The executive power is vested in the President of Poland and the Council of Ministers, and the judicial power is vested in courts and tribunals.

The Polish legal system is based on the continental legal system (civil law tradition).

During two decades encompassing three epochal events - the collapse of communism in 1989, NATO membership in 1999, and accession of Poland to the European Union on 1st May 2004 - the Polish legal system has emerged with remarkable maturity and stability.

Foreign Business and Investment

The Polish Agency for Foreign Investment was established by the Polish government in order to actively promote Poland's investment opportunities and encourage foreign companies to choose Poland as their investment location. It has three major objectives: to help foreign companies to invest in Poland; to promote Poland as an attractive place for investment; and to advise Polish authorities on how to improve laws relating to foreign investment.

There is tremendous demand for various goods in Poland, which creates great opportunities for a broad range of exports, including medium-sized and small foreign producers. However, more and more companies start up new manufacturing operations each year and foreign exporters face strong and constantly increasing competition. More than a decade of economic transformation has created a large number of modern and innovative enterprises ready to expand into foreign markets. These companies offer a wide range of high quality products, often at very competitive prices.

considering Poland's geographic location, its trade agreements and readiness to develop economic co-operation with foreign partners, the latter are expected to be flexible. Foreign companies may discover that in many cases it is more profitable to waive short-term profits for long-term gains and to invest in establishing more advanced forms of co-operation, including setting-up production facilities in Poland - the opportunities are plentiful.

All business entities in Poland, including companies with foreign capital, have equal access to foreign trade operations. Generally all goods and services can be traded without restrictions. There are, however, some usual exceptions.

Following EU regulations, special treatment is granted to small and medium-size enterprises. This applies in particular to public aid measures.

Poland enjoys the attention of foreign investors for various reasons. The features that particularly appeal to foreign entrepreneurs is for example: stable and fast economic growth, easy to entry and of doing business, the big size of Polish market.

Business associations

It needs to be stressed that investors from EU-countries and EFTA- members may conduct economic activity in Poland on the same terms as Polish citizens.

The main legal forms of companies available for doing business in Poland are:

  • limited liability company (spólka z ograniczona odpowiedzialnoscia - sp. z o.o.);
  • joint-stock company (spólka akcyjna - S.A.);
  • limited joint-stock partnership (spólka komandytowo-akcyjna - S.K.A.);
  • registered partnership (spólka jawna - sp. j.);
  • limited partnership (spólka komandytowa - sp. k.);
  • professional partnership (spólka partnerska - sp. p.);
  • sole proprietorship;
  • civil law partnership (spólka cywilna - s.c.)

Limited liability company

A limited liability company may have a single shareholder. It can not be formed solely by another limited company with one shareholder. Registration of the company is performed by the registry court.

The minimum share capital of a limited liability company is 50,000 PLN.

The formal bodies of a limited liability company are the Shareholders' Meeting and the Management Board. A Supervisory Board or Audit Commission is optional, unless the limited company has a share capital exceeding PLN 500,000 and there are more than 25 shareholders. In limited liability company each shareholder has the right of inspection.

Members of Management Board are jointly and severally liable for the company's liabilities towards company's creditors if enforcement against the company proves ineffective, unless a member of the board shows that bankruptcy was declared or arrangement proceedings were initiated in due time or that the lack of such declaration or arrangement proceedings was not his fault, or if he indicates that creditor incurred no damage.

Joint-stock company

Joint-stock company in Poland can be established by one or more persons.

A limited liability company with one shareholder can not be the sole founding member of a joint-stock company.

The formation of a joint-stock company involves the following:

  • execution of the Articles of Association by the founding members;
  • making the payments for shares in accordance with the law;
  • establishment of the Management Board and Supervisory Board;
  • entry of the company into the register.

The Articles of Association should be concluded in the form of a notarial deed and signed by the founding members.
Registration of the company is performed by the registry court.

The minimum share capital requirement is PLN 500,000.

A share must have a value of at least PLN 0,01. Shares acquired through a contribution in kind should be fully paid up not later than one year after the registration of the company. Shares acquired through a cash contribution should be paid up in 25% prior to the registration of the company. If the shares are acquired solely through a contribution in kind, or through a contribution in kind plus a cash contribution, 25% of the nominal share capital should be paid up prior to registration.

The formal bodies of a joint-stock company are the Shareholders's Meeting, the Management Board and the Supervisory Board.

The shareholders of a joint-stock company are not personally responsible for the obligations of the company.

The polish Code of Commercial Companies provides for the civil and criminal liability of the company founders, Management Board and Supervisory Board members and shareholders, for certain activities undertaken in violation of the law.

Limited joint-stock partnership

This partnership has no legal personality.

There are two types of partners required to form this partnership:

  • a partner whose liability for all the obligations of the company is not limited,
  • a partner, who is not liable for the obligations of the partnership but is obliged to acquire and pay up the shares.

The minimum share capital of this partnership is PLN 50,000.

This company may form the following formal bodies:

  • Supervisory Board and
  • General Meeting.

Registered partnership

This company also does not have legal personality.

All participants are jointly and severally liable for the partnership's obligations, but creditors are obliged to seek payoffs in the assets of the partnership first. All partners are entitled to represent the partnership.

Limited partnership

This is also a company without legal personality.

In this company are two types of partners. The personal liability of certain partners is limited to a declared amount, which is registered in the Register of Entrepreneurs. Other partners are liable jointly and severally for all the obligations of the partnership with their personal assets. A contract of limited partnership must be prepared by a notary public in the form of a notarial deed.

Professional partnership

This is a company which is available for investors wishing to conduct economic activities defined as "free professions" (for example: attorneys at law, notaries public, dentists, architects, accountants). Partners in this partnership must be entitled to work in the profession concerned. They are liable for the partnership's obligations with all their personal assests.

Each partner is entitled to represent the partnership independently unless the contract states otherwise.

The contract of the partnership must be prepared by a notary public in the form of notarial deed.

Sole proprietorship

This form of business is used for small enterprises. Sole proprietorship is regulated in the Act on Freedom on Economic Activity. A person using this form of economic activity is liable for all obligations arising from it with all his/her assets.

Civil law partnership

Civil law partnership is regulated in the Polish Civil Code. Its participants may be registered as individuals pursuing economic activity jointly. It may be used for joint investment projects.

Labour and employment

Polish labour law issues are mainly regulated in the Labour Code and other acts, which must never worsen the situation of the employee as it stands under the Labour Code. The Labour Code regulate according to the law the rights and duties all employees but not apply to workers liable of civil law contracts. Polish Labour Code has got many special provisions of substantive law, for example: the minimum monthly remuneration for work which is regulation by the act on minimum remuneration and the Council of Ministers ordinance, working time may not exceed eight hours per day and average of forty hours per week in a five day week, employees have the right to freely join trade unions.

Foreign employees require work permits, which are granted only if an employer who want to employ a foreigner has got a work permit promise and the foreigner has obtained a visa or permit to live in Poland for a limited period. How the foreigner are treat in Poland in that matter depend on how a given EU country treats the employment of Polish citizens on its territory.


All taxes in Poland are approved by Parliament. The Polish taxation system has been undergoing substantial changes in recent years aimed at creating a more transparent system and at conforming to taxation standards existing in market economy countries. Although Polish tax legislation itself is relatively straightforward, its application in practice can be difficult. In particular the law leaves some areas open to interpretation and it may happen that officials within the same tax district will come to two different conclusions as to the tax consequences of a particular set of circumstances. Moreover, some areas of tax legislation refer to concepts, which either lack a legal definition or have a different meaning from that adopted in other legislation.

Taxpayers should note that all taxes are payable monthly on account and that interest penalties in excess of 40% per annum apply to the late payment of tax.

The main taxes in Poland are:

  • Corporate Income Tax (CIT)

With the exception of partnerships having no legal personality, all legal persons and organisational units having a legal personality are subject to corporate income tax. The base of taxation is profit taken as surplus of income over the cost of acquiring it

  • VAT (Tax on Goods and Services)

This tax was introduced in July 1993, replacing turnover tax. The basic rate amounts to 22%. Apart from the basic rate there is a preferential rate of 7% applicable to sales of certain agricultural means of production (fertilisers, pesticides, agricultural machinery), goods for children, goods connected with health protection, construction materials and services and some other services such as transport (except taxi cabs), etc.

There is also a zero rate applicable to exports. However, services ordered from abroad but performed in Poland are subject to 22% VAT. Only services performed abroad are treated as exports and thus are subject to 0% rate. Moreover, some basic food products and social and cultural services are VAT-exempt. Examples include milk, eggs, fish, groceries, education and health services as well as postal services.

VAT legislation causes the most problems to taxpayers particularly where goods and services are involved which are not adequately classified in the official register.

  • Local Taxes

Local authorities are empowered to set the level of rates and the scope of reliefs in local taxes. Their rates, however, cannot exceed the maximum levels determined by the Parliament. Local taxes and fees include: real estate tax, dog tax, and fair tax.

  • Real Estate Tax

All real estate is subject to real estate tax within the limits defined in the decree of the Minister of Finance published every year. As specified, annual tax rates are determined by resolutions of the local government of communal level (gmina) and may be different in each administrative area.

A number of local authorities (Gmina) apply lower rates to new investments. However, the tax rates applied by local authorities cannot be lower than 50% of the maximum rates. The Ministry of Finance plans to replace this tax, which is related to the size of property, with a cadaster tax, which will be related to the property's value.

Poland's taxation of an individual's income is progressive. In other words, the higher the income, the higher the rate of tax payable. The 2006 tax rate for an individual is between 19% - 40%. Individuals can choose, under certain conditions, paying a flat rate of 19% on business income. In Poland corporate tax in 2006 is 19%.

An individual pays tax on his income as a wage earner or as a self-employed person. The tax for an individual who meets the criteria of a "permanent resident" in Poland will be calculated on his income in Poland and abroad. A foreign resident who is employed in Poland pays tax only on his income earned in Poland.