Open Limited Liability Company (LLC) in Poland (sp z o.o.)
A limited liability company (LLC), in Polish “Spółka z ograniczoną odpowiedzialnością” (Sp. z o.o.) is the second most popular type of business opened in Poland. In the second quarter of 2023 as many as 13.65% of newly opened companies in Poland were limited liability companies. Limited liability company is one of the eight types of company that can be opened in Poland.
Any Pole or foreigner is able to open a limited liability company. The process of opening Polish spółka z o.o. is simple and takes from 1 day to a maximum of 7 days, if all required documents are submitted correctly. The documents required for starting a LLC include company agreement, declaration of payment of share capital, and an entry to the National Court Register.
The cost of opening a limited liability company depends on the amount of the initial capital and the method of its registration. The total cost starts from PLN 5,290 (€1137 or $1214), and is a sum of the minimal share capital plus required court fees.
Choosing a limited liability company over other forms of business brings a number of benefits, including limited financial liability and low minimum initial capital.
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What is an LLC in Poland?
A limited liability company (LLC), in Polish “Spółka z ograniczoną odpowiedzialnością” (Sp. z o.o.) is a capital company established by one or several partners. A partner in a limited liability company may be an individual or a legal person, which in practice means that even another company may be the founder of a limited liability company.
There are no restrictions on the citizenship or residence of the company owner. Company formation of a limited liability company in Poland can be performed by a Polish citizen, a citizen of other European Union member states, European Economic Area countries, the USA and the Swiss Confederation.
To open a limited liability company, it is necessary to pay an initial capital of at least PLN 5,000 (€1075 or $1148). You must also complete the necessary formalities, including signing the company agreement, register it with the authorities and pay the share capital.
How to open an LLC in Poland?
To open a limited liability company in Poland, follow the 8 steps listed below.
- Determine partners
- Choose a company name
- Define the address
- Prepare a partnership agreement
- Open a bank account
- Deposit the share capital
- Submit an application to the National Tax Register
- Register the company with the Tax Office
1. Determine partners
In the event of resigning from running a one person LLC in Poland, the first step is specifying the number and identity of partners should be determined. Preliminary negotiations should be conducted with the selected partners and their opinion should be taken into account when making decisions.
2. Choose a company name
The company name should be memorable, unique, and cannot be misleading. This means that you cannot call, for example, “a bank” a business related to the sale of shoes. Once you have chosen a name, you should check whether it is not already taken or reserved for another activity.
3. Define the address
The place of business for a Polish LLC depends on the place of residence of one or more partners. However, the registration of a company is also possible in a completely different place, which the partners will only visit from time to time. You are allowed to run your business in your own or rented premises.
The subject of the business should be clearly defined and assigned to the appropriate PKD number (Polish Classification of Activities or Polska Klasyfikacja Działalności), which will need to be selected when registering the company.
4. Prepare a partnership agreement
Prepare the company agreement for a limited liability company in Poland and legalize it with a notary deed, or use the contract template available on the S24 Portal. Signing the contract via this portal involves automatically sending the application to the National Court Register.
A partnership agreement for Spółka z ograniczoną odpowiedzialnością in Poland should include the name of the company, place of business, subject of activity, but also the amount of share capital and details of partners.
5. Open a bank account
Open a bank account for a Polish limited liability company by comparing banks’ offers and choosing the most beneficial one. It is worth checking whether the bank where you want to open a company account has a branch in the area, because some matters cannot be handled online, e.g. larger cash withdrawals.
You will need a bank account to report to the Tax Office and to pay the share capital.
6. Deposit the share capital
Deposit the share capital by transfer to the bank account you opened for your limited liability company Poland. Capital also includes non-monetary assets, such as real estate. In such a case, transferring it to the company assets requires preparing a notarial deed.
The minimum share capital for a limited liability company is PLN 5,000, which is an equivalent of €1,080, or $1,155 and is paid in equal parts by the partners. The share capital of a Polish LLC may also be divided in different parts. The method of division should be included in the company agreement.
The declaration on covering the initial capital must be submitted to the district court within 7 days of the company’s registration. The cost of submitting the declaration is PLN 40 (€8, or $9).
7. Submit an application to the National Court Register
Submit an application to the National Court Register via the Court Register Portal. The generator guides you through the entire application and asks you to enter the required data. Submitting an application involves a fee of PLN 500 (€108, or $115).
This step can be omitted if the contract is signed via the S24 portal, as it automatically forwards the application for entry to the National Court Register.
8. Register the company with the Tax Office
Register the company with the Tax Office within 21 days of submitting the application to the National Court Register.
For registration, prepare the Polish limited liability company’s bank account number and submit the NIP-8 form. After completing these activities, the Office will assign the company a NIP and REGON number.
What documents are required to open an LLC in Poland?
To open a limited liability company (LLC) in Poland, you must have the following documents.
- Company agreement
- Confirmation of entry in the register of entrepreneurs of the National Court Register
- Proof of registration at the Tax Office
- Evidence of payment of share capital
The company agreement is concluded as a notary deed, or using the template available on the S24 Portal. Signing a contract using the portal costs PLN 250 (€54, or $58), it also requires an entry in the National Court Register. To prepare the contract, data such as the company’s name, registered office, subject of activity, share capital and details of partners are necessary. When signing a contract with a notary, the minimum fee is PLN 160 (€35, or $37).
Confirmation of the entry in the register of entrepreneurs of the National Court Register is obtained automatically within 24 hours when registering the company on the S24 Portal. If the contract is signed at a notary, an application for entry in the National Court Register must be submitted using the Court Registers Portal.
The proof of registration of your “Spółka z ograniczoną odpowiedzialnością” at the Tax Office is a confirmation that the Tax Office has assigned the company a NIP and REGON number. These are the data required to open a limited liability company. Registration with the Office must be made within 21 days from the date of registration of the company in the National Court Register.
Proofs of payment of share capital are confirmations of transfer or acceptance of a cash payment in the amount of the agreed capital deposits by a specific partner. In the case of several partners, a separate payment receipt should be created for each payment.
Collecting all these documents and registering the company involves costs, the amount of which depends on the way matters are handled at the office and the value of the contributed capital.
How much does it cost to start an LLC in Poland?
Establishing a limited liability company (LLC) in Poland costs PLN 5,290, which is an equivalent of €1,140, or $1,220 after registering it on the S24 portal template and paying the minimum share capital, which is PLN 5,000 (€1,080, or $1,155). If you choose a different form of registration, the amount increases by PLN 250 (€55, or $60), and if the share capital is increased, the amount to be paid to the notary also increases by several hundred zlotys.
From July 1, 2021, a limited liability company can only be registered online. The fee for registration in the National Court Register is PLN 500 (€110, or $120) in the case of electronic registration of the company via the Court Registers Portal and PLN 250 (€55, or $60) in the case of submitting an application using the contract template available on the S24 Portal.
The minimum initial capital in a limited liability company is PLN 5,000, (€1,080, or $1,155) and is contributed by one partner or in parts by several partners if the company was founded by several people.
Additionally, after submitting the initial capital, a declaration of capital payment must be submitted to the district court; the cost of submitting the declaration is PLN 40 (€8, or $9).
The last cost of opening a company is the preparation of the company agreement by a notary. Depending on the value of the share capital, the notary charges a fee of up to PLN 160, (€35, or $37), for a minimum contribution, and as much as PLN 310 (€70, or $74) in the case of an initial capital of PLN 10,000.
A limited liability company is a frequently chosen form of business due to the low costs mentioned, but also the fact that a limited liability company can be opened by a citizen of any country, and the process of opening a company takes a relatively short time.
How long does it take to open an LLC in Poland?
Opening a limited liability company in Poland (sp. z o.o.) takes from one day to 30 days. The entire process depends on the choice of the form of signing the partnership agreement. Signing the contract and registering the company on the S24 Portal takes up to 24 hours. Such a company is then entered into the National Court Register and is already open. After this activity, remember to submit additional data to the Tax Office on the NIP-8 form within 21 days of registration in the National Court Register.
Opening a company takes longer in the case of registration via the Court Register Portal. There is a deadline of 7 days to consider the application. In the event of errors, the deadline is extended by another 7 days from the date of submitting the corrections. To submit an application, you must have a company agreement prepared and signed.
Who can open an LLC in Poland?
A limited liability company in Poland can be opened by any individual or legal person, regardless of citizenship and place of residence. Citizens of the European Union, the European Economic Area, the USA and the Swiss Confederation can set up a limited liability company in Poland without any additional formalities.
Citizens of other countries must additionally have a permanent or temporary permit for legal residence in Poland to start a Polish company as a foreigner. A temporary residence permit is issued for a period of 3 months to 3 years, and submitting an application costs PLN 440 ($102, or €95). The application is submitted to the Department of Foreigners’ Affairs in Warsaw, and the decision takes up to 60 days. A permanent residence permit is obtained upon an application submitted to the voivode competent for the place of residence. The cost of issuing the permanent residence permit is PLN 100 ($23, or €22), and the application processing time is a maximum of six months.
What are the benefits of opening an LLC in Poland?
The benefits of opening a limited liability company (LLC), in Poland include limited responsibility with personal assets, possibility of establishing a one person ownership, and a simple registration method.
Limited liability of the company means that the partners in the company are liable only to the amount of the capital contributed, not with their assets. This is a big advantage, especially when running a business involving high investment risk.
The possibility of establishing a sole proprietorship company is an advantage that is combined with the previous one, and indicates that there is no need for many partners in the company, only one person. This is superior to a sole proprietorship in terms of liability. Someone who wants to open a company personally, but is afraid of the risk of being liable with their own assets, should decide to open a limited liability company.
The simple way of registering a limited liability company is mainly due to the need to register it online. Even without being in Poland, you are able to register a company and send the necessary documents by post. Registration also has no complicated procedures, which will be a big advantage for beginners.
Low minimum starting capital is a very important feature of a limited liability company (LLC), in Polish “Spółka z ograniczoną odpowiedzialnością” (Sp. z o.o.). The minimal share capital amounts to PLN 5,000 (€1,080, or $1,155), and it is 20 times lower than required capital for a joint-stock company in Poland.
Establishing a Polish limited liability company also involves responsibility and obligations, including paying CIT and VAT at specific rates.
What are the liabilities of a Polish LLC?
The obligations of the Polish limited liability company (sp. z o. o.) include regular payment of taxes, keeping full accounting, including the preparation of annual financial statements.
Regular payment of CIT and VAT is an obligation that the company owner must meet every month, by the 20th day of the month in the case of CIT and by the 25th of the month in the case of VAT.
Maintaining full accounting is an obligation of a LLC in Poland that involves keeping records of fixed assets, settlements, as well as preparing and submitting an annual financial report to the National Court Register. This obligation is performed independently or delegated to a subcontractor, or another company that runs an accounting office.
What are the tax rates for an LLC in Poland?
Tax rates for limited liability companies in Poland range from 0% for companies selling basic food products, to 23% for a standard VAT rate. Limited liability companies are obliged to pay CIT income tax and VAT tax.
The corporate income tax rate is 19% or 9% if a reduced corporate income tax rate is used. The reduced tax rate applies to newly established companies in the year of their opening and the following year, as well as to companies whose sales did not exceed €2,000,000 in the previous year.
In addition to CIT, a limited liability company also pays VAT on goods and services, the rates of which range from 0 to 23%. The VAT rate depends on what the sale concerns.
The 5% rate applies to agricultural products and books. The rate is 8% for construction and renovation works. And a 23% rate for most goods and services, including gas, fuel, and some food products.
In 2023, the tax rate on basic food products such as milk, flour and bread was reduced from 5% to 0%. Additionally, in 2023 and 2024, the tax is reduced from 23% to 8% for products used in the agricultural industry.
Is it difficult to operate an LLC in Poland?
It is not difficult to operate a limited liability company in Poland. Despite the fact that the company’s service binds a number of requirements, e.g. maintaining full monthly accounting or preparing annual financial statements, most tasks can be delegated.
In addition, many matters are done online, e.g. taking out a bank loan or settling taxes. Thanks to the large number of electronic services, you do not even need to know the exact method of completing documents, because generators guide you after completing the application, e.g. by settling social security and health insurance contributions via the PUE ZUS website. It is mandatory for entrepreneurs to create an account on this platform and use it.
Can an LLC inquire about a business loan in Poland?
Yes, a limited liability company can take a business loan in Poland. Obtaining a loan involves a number of formalities to complete. The bank requires loan security in the form of a bill of exchange, mortgage or surety. You must also submit to the bank a certificate of no arrears in the payment of ZUS contributions and tax in the Tax Office. It is also worth making sure that payments are made on time and that previously taken out loans are repaid. In the event of arrears, the bank will consider the company unreliable and insolvent and refuse to lend.
The bank also has access to the company’s financial statements and is able to check whether the company recorded a profit or loss in previous years. If a loss is recorded, obtaining a loan is problematic.
Do LLC companies require monthly accounting in Poland?
Yes, limited liability companies require monthly accounting in Poland. A Polish limited liability company is obliged to keep full accounting. For example, an LLC must settle all operations, keep accounting books, prepare financial statements once a year and keep records of fixed assets. Additionally, each month LLC must settle taxes and ZUS contributions and keep a VAT register.
The company is able to outsource accounting to an external company, which costs approximately PLN 500 (€108, or $115) per month. The owner of a larger company may also decide to create an accounting department in the company and employ an employee for the accounting position.
Thanks to full accounting, the company, when preparing financial statements each year, decides to cover the loss or divide the profit among the partners.
Is it necessary to show profits as an LLC in Poland?
Yes, showing profits as a limited liability company is necessary in Poland. This is due to the fact that each Polish LLC is obliged to submit annual financial statements within three months from the balance sheet date, i.e. most often from December 31. In the report, the company indicates whether there is a surplus of assets over liabilities; if so, a resolution on the distribution of profit should be adopted at the shareholders’ meeting. The profit is divided among the partners in parts depending on the shares in the company, or it is assumed that the profit will be allocated to the further development of the company. It is worth allocating the profit for the development of the company in case a loss is recorded in one of the following years. By having reserve capital from profits, the company will be able to cover losses in the event that there is an excess of liabilities over assets.