Poland Inc Prime - Company Formation
Poland allows starting various business structures, including sole proprietorships, partnerships, limited liability companies (LLCs), and joint-stock companies. To start a business in Poland, you need to register it with the authorities, obtain permits and licenses, and adhere to the country’s legal requirements.
Poland has a growing startup ecosystem, and entrepreneurs are able to explore various sources of funding, including government grants, venture capital, and angel investors.
Poland has a corporate income tax rate, value-added tax (VAT), and personal income tax. Understanding and complying with the tax regulations is essential for running a business in the country. Poland has a skilled and competitive labor force, making it an attractive destination for businesses. Employers should be aware of labor laws, including employment contracts and social security contributions. Poland’s strategic location within the European Union provides businesses with access to a vast market. Leveraging this advantage helps companies expand their reach.
Understanding the Polish language and culture is beneficial for effective communication and building relationships with local partners and customers. Poland offers well-developed infrastructure and logistics networks, making it easier to transport goods within the country and across Europe. Staying compliant with environmental, health and safety regulations is essential for long-term business success in Poland.
How to Start a Company in Poland?
To start a company in Poland, whether you are Polish resident or a foreigner, you need to follow the 6 steps mentioned below for a successful company formation process.
- Define the Type of Company (LLC, JSC, Partnership, Sole Proprietorship, Branch, Shelf Company)
- Prepare the Necessary Documents
- Verify and Register the Company
- Tax Registration
- Register as an Employer
- Obtain Any Required Permits
Is it possible to start an LLC in Poland?
Yes, it is possible to start a Limited Liability Company (LLC) in Poland. A Limited Liability Company in Poland is called “Spółka z ograniczoną odpowiedzialnością” (abbreviated as “Sp. z o.o.”). This business entity provides limited liability to its shareholders, meaning their personal assets are protected from the company’s debts and liabilities.
An LLC in Poland can be started by individuals, legal entities, or a single person (single-member LLC). The minimum share capital required to establish an LLC is PLN 5,000 (approximately $1,147). The company must have a registered office in Poland, which serves as its official address.
Starting an LLC in Poland is suitable for various business ventures, including small to medium-sized enterprises and startups. It’s an ideal choice when you want to limit personal liability while having flexibility in managing the company. Common purposes include establishing trading companies, service providers, or even technology startups. It’s particularly advantageous for foreign entrepreneurs looking to operate in the European market due to Poland’s strategic location within the European Union. An LLC structure provides a professional and credible image, which is beneficial when dealing with clients, customers, and partners.
Is it possible to open a Branch Company in Poland?
Yes, it is possible to open a Branch Company in Poland. A Branch Company in Poland is called “Oddział” or “Oddział Zagraniczny.” The term “Oddział Zagraniczny” means “Foreign Branch” in Polish. It refers to an extension of a foreign company operating within the territory of Poland.
A Branch Company in Poland can be established by a foreign company that already exists in another country. The foreign company must meet the legal requirements of its home country and provide documentation confirming its existence. It must appoint a representative authorized to act on behalf of the branch in Poland.
Opening a Branch Company is suitable for foreign companies looking to expand their operations into the Polish market while maintaining a direct link to their parent company. It is advantageous for companies engaged in international trade, manufacturing, or service industries. It allows the foreign parent company to establish a physical presence in Poland, access local markets, and serve local clients or customers. A Branch Company also facilitates easier collaboration with Polish partners, suppliers, or customers. It’s particularly beneficial when the foreign company wants to benefit from Poland’s strategic location within the European Union, as Poland offers access to the EU’s single market.
Is it possible to set up a shelf company in Poland?
Yes, it is possible to set up a shelf company in Poland. A shelf company in Poland is referred to as “Spółka z o.o. na Półce” or simply “Spółka na Półce.” The term “Spółka z o.o.” stands for a Limited Liability Company, and “na Półce” translates to “on the shelf.” It means a pre-registered and inactive LLC that is ready for immediate use.
Shelf companies are established by entrepreneurs, business consultants, or companies specializing in providing pre-registered entities. Shelf companies are registered with the National Court Register (KRS) but have no prior business activity. Shelf companies must have a share capital already deposited, which varies but is often at least PLN 5,000 (approximately $1,147). The buyer can be an individual or another company, and they acquire the existing shares of the shelf company.
Shelf companies are commonly used when individuals or entities want to bypass the time-consuming process of incorporating a new company from scratch. They are beneficial for those seeking to start operations in Poland quickly, especially when there are time-sensitive business opportunities. Entrepreneurs use shelf companies to enter the Polish market, access local contracts, or participate in public tenders more swiftly. It also serves as a way to establish a company with a history, which is advantageous in certain business negotiations. Shelf companies are allowed to be rebranded and adapted to various business activities, making them versatile for different industries.
Is it possible to start a JSC in Poland?
Yes, it is possible to start a Joint-Stock Company (JSC) in Poland. A Joint-Stock Company in Poland is called “Spółka Akcyjna” (abbreviated as “S.A.”). It is a type of business entity where ownership is determined by the ownership of shares, and shareholders have limited liability for the company’s debts.
A Joint-Stock Company can be initiated by individuals, legal entities, or a single person (single-member JSC). The minimum share capital required to establish a JSC is PLN 100,000 (approximately $22,949). This capital must be fully paid up before registration. The company must have a registered office in Poland, which serves as its official address. The Articles of Association must be drafted, and a management board appointed to run the company.
Starting a JSC is suitable for larger businesses, those seeking substantial capital from shareholders or the public, and entities planning to trade shares on the stock exchange. It’s a preferred choice for companies looking to raise capital through public offerings or attract a diverse group of investors. JSCs are suitable for companies with complex ownership structures and significant financial resources. They are often used in industries such as finance, manufacturing, and telecommunications, where substantial capital is required for expansion and growth. A JSC is advantageous when a company intends to go public and list its shares on the Warsaw Stock Exchange (GPW) or other stock markets.
How to Operate a Business in Poland?
To operate a business in Poland it’s important to comply with tax and legal obligations, and employment laws.
The standard Corporate Income Tax (CIT) rate in Poland is 19%. However, small companies with annual revenues below PLN 1.2 million ($276,418) benefit from a reduced CIT rate of 9%. VAT in Poland is 23%, but reduced rates of 8% and 5% apply to specific goods and services like food products and real estate.
Polish labor law requires written employment contracts for all employees, specifying terms, conditions, and responsibilities. Employers operating a business in Poland as well as their employees contribute to the Social Insurance Institution (ZUS), with rates averaging around 19.52% for pensions and 8% for health insurance. The minimum gross monthly wage in Poland is PLN 3,600 (approximately $829). The standard workweek is 40 hours, with overtime rates typically set at 150% of the regular hourly wage.
Comply with environmental laws, especially if your business involves manufacturing or activities that impact the environment. Ensure compliance with consumer protection regulations, such as warranty and return policies. Comply with the General Data Protection Regulation (GDPR) for handling personal data. Failure to comply with GDPR results in fines of up to €20 million or 4% of global annual turnover, whichever is higher.
What are the tax rates for businesses in Poland?
Tax rates for businesses in Poland include the Corporate Income Tax (CIT) which has a standard rate of 19% or a reduced CIT rate of 9% for small companies with annual revenues below PLN 1.2 million ($276,418). For example, if a business has a net profit of PLN 100,000 (approximately $22,949), the CIT payable would be PLN 19,000 ($4,376) at the standard rate or PLN 9,000 ($2,073) at the reduced rate for small companies. Personal Income Tax (PIT) rates for individuals range from 17% to 32% as 17% applies to income up to PLN 85,528 (approximately $19,701) and 32% applies to income exceeding that limit.
Value Added Tax (VAT) has a standard rate of 23% with a reduced VAT rate of 8% which is applicable to various goods and services, including most food products, books and newspapers, accommodation services, pharmaceuticals, and cultural/entertainment services. There is a 5% super-reduced VAT rate which applies to a limited number of items, including specific basic food products, children’s car seats, textbooks and educational materials, and certain medical prosthetic devices.
Withholding Tax is 19% for dividends, 20% for interest, and 20% on royalties. For example, if a foreign entity receives PLN 10,000 (approximately $2,303) in interest income from a Polish company, the withholding tax would be PLN 2,000 ($460).
Is it necessary to have an accountant to file business taxes in Poland?
No, it is not necessary to have an accountant to file business taxes in Poland. Many businesses choose to hire accountants or tax professionals for their expertise and to ensure compliance with complex tax regulations. It is also possible to file taxes yourself as a business owner or with the assistance of accounting software.
What does the employment process require in Poland?
The employment process in Poland requires an employment contract and registering these employees’ contracts with ZUS. Employers must withhold and remit taxes from employee salaries and as well are obligated to provide a safe working environment for their employees. Adherence to labor laws and regulations is essential throughout the employment process. This includes compliance with minimum wage laws, working hour restrictions, and regulations related to employment termination.
Is it difficult to find skilled employees in Poland?
No, it is not difficult to find skilled employees in Poland. Poland has a well-educated workforce with a strong emphasis on higher education and vocational training. Many Polish professionals and workers possess the skills and qualifications needed in various industries.
Poland has a robust education system that produces a substantial number of graduates in various fields, including science, engineering, IT, business, and healthcare. Polish universities are recognized for their quality and produce skilled graduates. Poland has a diverse labor force with a wide range of skills and expertise. This includes professionals in information technology, engineering, healthcare, finance, manufacturing, and more. Many Poles are proficient in foreign languages, particularly English, which makes them attractive candidates for companies with international operations.
What are the business laws in Poland?
The five main laws and regulations in Poland include the commercial companies code (Kodeks Spółek Handlowych) which governs the formation, operation, and dissolution of business entities in Poland, including limited liability companies (LLCs), joint-stock companies (JSCs), and partnerships.
The law connected to Value Added Tax Act (Ustawa o podatku od towarów i usług – VAT) regulates the collection and payment of value-added tax and specifies VAT rates, exemptions, and reporting requirements for businesses engaged in the sale of goods and services.
The labor code (Kodeks Pracy) sets forth the legal framework for employment relationships in Poland. It covers matters such as employment contracts, working hours, wages, leave entitlements, and termination procedures.
Personal Data Protection Act (Ustawa o ochronie danych osobowych) implements the General Data Protection Regulation (GDPR) within Poland. It governs the collection, processing, and protection of personal data, both for employees and customers.
As for the Corporate Income Tax Act (Ustawa o podatku dochodowym od osób prawnych – CIT), it regulates corporate income taxation in Poland. It also specifies the rules for calculating and reporting corporate income tax, including allowable deductions, tax credits, and transfer pricing regulations.
Do Polish regulations require a lot of paperwork to run a business?
Yes, running a business in Poland does require a significant amount of paperwork and administrative tasks. To establish a business entity in Poland, such as an LLC or JSC, you need to prepare and submit various documents, including articles of association, registration forms, and tax-related documents. This process involves completing paperwork for the National Court Register (KRS) and tax authorities.
Businesses in Poland must maintain thorough records of financial transactions, expenses, and income. They need to file regular tax returns, including corporate income tax (CIT), value-added tax (VAT), and employee-related taxes, all of which require detailed paperwork. Hiring employees involves extensive paperwork, including drafting employment contracts, registering employees with the Social Insurance Institution (ZUS), and managing payroll records. Compliance with labor laws requires proper documentation of working hours, leave entitlements, and employee benefits.
Obtaining licenses or permits for certain business activities, such as manufacturing or food services, requires submitting applications, supporting documents, and fees to relevant authorities. If your business handles personal data, you must maintain extensive records of data processing activities, conduct data protection impact assessments, and have proper documentation in place to comply with data protection laws.
Is it possible to operate a Polish business remotely?
Yes, it is possible to operate a Polish business remotely. For businesses that primarily operate online or offer services that are delivered virtually, the remote operation is possible.
Online businesses and remote work practices have also found a welcoming environment in Poland, thanks to the country’s evolving internet infrastructure and tech-savvy population. Poland has made significant strides in recent years in terms of its internet connectivity, which has further facilitated the growth of online businesses and remote work. Poland has a high internet penetration rate, with approximately 72% of the population using the internet regularly. The average fixed broadband internet speed in Poland is around 87 Mbps, which is competitive compared to other European countries. Poland has a competitive market of internet service providers, including major companies like Orange, UPC, and Vectra, offering various broadband and fiber-optic packages.
E-commerce is on the rise in Poland, with the e-commerce market expected to reach significant figures. In 2023, the e-commerce market is valued at around PLN 63 billion ($14.5 billion). Polish consumers increasingly engage in online activities, including online shopping. In 2023, around 90% of Polish internet users shopped online. Poland has a growing tech industry and is considered one of the leading countries in Central and Eastern Europe for software development and IT services.
Is Poland a stable country for business?
Yes, Poland is a stable country for business. Poland is a Central European country located in the heart of Europe. Poland has a stable political environment, strong economy, and favorable conditions for business. Poland is a member of the European Union (EU) and the eurozone, further enhancing its stability and economic prospects.
Poland has a stable democratic government with a multi-party system. It operates under the framework of a parliamentary republic. The country has a history of peaceful political transitions and is committed to upholding the rule of law and democratic principles. Poland has one of the largest and most dynamic economies in Central and Eastern Europe. It boasts a diverse economy with strong manufacturing, services, and export sectors. The government has implemented business-friendly policies, and Poland is often cited as an attractive destination for foreign direct investment (FDI).
What is the type of government in Poland?
Poland has a parliamentary republic form of government. The parliamentary republic system in Poland means that the government is elected by the parliament (Sejm) and is responsible to it. The President is the head of state, while the Prime Minister is the head of government. The government operates within the framework of a democratic political system with multiple political parties and regular elections.
The parliamentary republic in Poland provides a stable political environment, which is favorable for businesses. It reduces the risk of abrupt policy changes and political instability that disrupt business operations. The government’s adherence to democratic principles, including the rule of law and respect for property rights, creates a predictable and fair business environment. It promotes transparency, accountability, and legal protections for businesses. The Polish government has implemented various business-friendly policies to attract foreign investment and promote economic growth. This includes offering tax incentives, simplifying regulatory processes, and supporting entrepreneurship.
The government’s economic policies, including budget management and monetary policies, influence the overall economic environment in Poland. A stable and well-managed economy contributes to a conducive environment for business growth and expansion. As a member of the European Union (EU), Poland adheres to EU regulations and benefits from access to the single European market. This membership provides Polish businesses with opportunities for trade, investment, and collaboration with other EU member states.
Does Poland have a growing economy?
Yes, Poland has a growing economy. Poland has consistently demonstrated robust economic growth over the past 2 decades. Poland’s GDP is estimated at over $748 billion, making the economy of Poland the 6th largest economy in Europe. Poland has recorded impressive annual GDP growth rates in 2022 of 4.9%, often exceeding the European Union average which is 1.65%. Inflation rates in Poland have remained stable hovering around 2% to 3% annually. Poland has attracted significant foreign direct investment due to its stable economy, skilled workforce, and strategic location within the European Union. Foreign Direct Investment (FDI) has played a vital role in driving economic growth and modernizing various industries.
What is the GDP of Poland?
The Gross Domestic Product (GDP) of Poland is estimated to be over $748 billion vs $688 billion in 2022. Over the last five years, it grew by an average of 4 percent GDP annually. In terms of inflation, Poland has maintained a stable inflation rate, ranging from around 2% to 3% annually over the past 10 years till last year which jumped to 14.2% and dropped to 10.3% this year.
What is the Inflation Rate in Poland?
The inflation rate in Poland is 10.8% in 2023 dropping from 14.4% in 2022. Over the past 10 years, the inflation was approximately 2% to 3% annually. Inflation rates vary over time due to a range of economic factors, including changes in consumer demand, currency exchange rates, energy prices, and global economic conditions. It’s important to note that inflation rates are subject to change, and the most current figures are better to be obtained from official sources such as the Polish Central Statistical Office (GUS) or international organizations like the International Monetary Fund (IMF).
What is the population of Poland?
The population of Poland is approximately 40.9 million. Poland has a sizable and well-educated workforce making up 55.6% of the population, which makes it an attractive destination for businesses and investors. The cost of living in Poland is lower than in many Western European countries, making it an advantageous location for businesses seeking cost-effective labor.
What is the cost of living in Poland?
For a single person in Poland, the average cost of living varies depending on location. In larger cities like Warsaw, Krakow, or Wroclaw, where prices tend to be higher, you should expect to spend approximately 7,052 PLN ($1646) per month for a modest lifestyle. This includes rent, which is around 3,877 PLN ($905) for a one-bedroom apartment in the city center. However, if you opt to live outside the city center, you save up to 25% on rent.
Basic groceries like bread, milk, and vegetables are reasonably priced, with an average monthly expenditure of around 440 PLN ($102). Dining out occasionally at local restaurants will cost you about 600 PLN ($140) per month. Transportation costs for a monthly pass on public transit come in at approximately 100 PLN ($23).
The cost of living for a family in Poland depends on the size of the family and their location. On average, a family of four is expected to spend around 14,000 PLN ($3,269) per month to cover their basic expenses, including rent. Rent for a three-bedroom apartment in a city center ranges from 3,200 to 8,000 PLN ($747 to $1,868) per month.
Groceries for a family will require a budget of about 1,700 PLN ($396 USD) per month. Dining out occasionally will add an extra 2,400 PLN ($560 USD) to the monthly expenses. If the family owns a car, they should also consider fuel, insurance, and maintenance costs, which adds up to around 1,600 PLN ($373 USD) per month.
However, it’s important to keep in mind that salaries in Poland are lower than in Western Europe, which balances out the lower living costs. On average, Polish salaries are about 30-40% lower than those in Western European countries with a similar standard of living.
What is the average salary in Poland?
The average gross monthly salary in Poland is around 7,560 PLN. When converted to USD, it is roughly $1820 per month. The average gross annual salary would be approximately 90,800 PLN, which equates to approximately $21,840 per year. If you calculate it on an hourly basis (based on a standard 40-hour workweek), it would be around 47 PLN per hour, or approximately $11.3 per hour.
The median salary is a middle value in the range of salaries covering from the minimum to the maximum salary figures. The median salary in Poland is often lower than the average salary by around 1,000 PLN or $229. Ranging from an average minimum salary of 1,910 PLN to an average maximum salary of 33,800 PLN, therefore the median monthly salary is 6,510 PLN or $1,568.
There is a difference in salaries between Warsaw (the capital of Poland) and the rest of the country. Warsaw tends to have higher average salaries due to its status as the economic and financial hub of Poland. In Warsaw, the average salary is higher by about 15-20% compared to other regions.
Salaries vary significantly across different occupations. For example, IT specialists, medical professionals, and engineers often earn higher salaries compared to jobs in retail or customer service. The specific salary range within an occupation depends on factors such as experience, location, and industry.
Is Poland a part of Europe?
Yes, Poland is part of Europe. Poland is located in Central Europe, and it is situated approximately between 49.8°N and 54.8°N latitude and 14.1°E and 24.1°E longitude. Poland shares borders with several European countries, including Germany to the west, the Czech Republic and Slovakia to the south, Ukraine and Belarus to the east, and Lithuania and Russia’s Kaliningrad Oblast to the northeast. Additionally, to the north, Poland has a coastline along the Baltic Sea, providing access to maritime trade routes.
Is Poland considered Eastern Europe?
No, Poland is not considered an Eastern European country. Poland’s geographical and cultural characteristics place it in Central Europe. While it shares borders with Eastern European countries like Ukraine and Belarus, its position and historical ties align it more closely with Central Europe.
When did Poland join the European Union?
Poland joined the European Union (EU) on May 1, 2004 which is around 19 years ago. Poland’s accession to the EU was a result of its desire to strengthen political and economic ties with Western Europe and enhance its economic development.
The decision to join the EU was made through a national referendum held in Poland on June 7-8, 2003, where the majority of Polish citizens voted in favor of EU membership. The accession process involved aligning Poland’s laws, regulations, and institutions with EU standards and requirements, a process called “harmonization.” Joining the EU has had significant economic benefits for Poland, including access to the single European market, financial support for infrastructure development, and increased foreign investment, contributing to Poland’s economic growth and stability.
How does the European Union affect the Polish economy?
The European Union (EU) positively affects the Polish economy in several ways. Poland benefits from full access to the EU’s single market, which enables the free movement of goods, services, capital, and labor. This access provides Polish businesses with a larger customer base and export opportunities, contributing to economic growth. Poland receives substantial financial support from the EU, mainly through structural and cohesion funds. These funds are used for infrastructure development, regional development projects, and initiatives to improve competitiveness. EU funding has been crucial in modernizing Polish infrastructure and promoting economic development.
Poland’s commitment to adopting the euro in the future offers the potential for increased economic stability and trade within the eurozone. However, Poland has not yet adopted the euro as its official currency, and the Polish złoty (PLN) remains in use. Membership in the EU has made Poland an attractive destination for foreign direct investment (FDI). EU membership provides foreign investors with confidence in the stability of the Polish economy and legal framework, leading to increased FDI inflows. EU regulations and standards create a harmonized business environment in which Polish companies compete on a level playing field with their European counterparts. This contributes to improved quality standards and business practices. Poland’s GDP has shown consistent growth of around 4% annually since joining the EU. EU membership has facilitated access to foreign markets and increased trade, contributing to Poland’s economic expansion.
How does Europe affect businesses in Poland?
Europe positively affects businesses in Poland since the membership in the EU allows Polish businesses to benefit from trade agreements and partnerships negotiated by the EU with countries around the world. This facilitates international trade and opens up new markets for Polish exports. While Poland has not yet adopted the euro, being part of the EU helps maintain currency stability and reduces exchange rate risks for businesses engaged in trade with eurozone countries.
Polish businesses tap into EU funding programs aimed at supporting research and development, innovation, infrastructure projects, and regional development. These funds boost competitiveness and economic growth. EU membership enhances Poland’s attractiveness to foreign investors. Multinational corporations often choose Poland as a base for their operations in Eastern and Central Europe, leading to increased foreign direct investment (FDI).
EU structural and cohesion funds have played a crucial role in financing infrastructure projects in Poland. For example, the EU allocated over €82 billion to Poland for the 2014-2020 period, supporting projects such as the construction of the A1 highway, which improved transportation networks and reduced logistics costs for businesses. Foreign direct investment (FDI) inflows into Poland have been substantial due to EU membership. According to the National Bank of Poland, in 2020, the stock of foreign direct investment in Poland amounted to approximately €267 billion. More than 24,000 multinational companies with foreign income have established manufacturing facilities in Poland to take advantage of its EU market access.