Establishing your business in Poland

Why do business in Poland?

Since the fall of communism in Poland in 1989, the country has become an increasingly attractive destination for overseas investors. The GDP of Poland has climbed year-on-year since this year – something that no other country can claim – and the nation is considered one of the biggest and most promising emerging markets in the world.

This stable economy, alongside a great strategic location for trading with other European nations, a hard-working local labour force, an appealing corporate tax rate of 19% and minimal red tape when looking to open a new business venture, makes Poland hugely appealing.

Territory data 

How to set up payroll in Poland

It’s comparatively simple and straightforward to set up a new business in Poland. The first thing anybody should do is investigate which industry the proposed business falls into and source a work address in Poland. This address will be mandatory, so don’t bother registering a business until you have a location.

Once you have an address, you can follow these steps:

• Choose a business structure (options for this will be discussed in a moment)
• Choose a unique business name that does not infringe on an existing IP in Poland
• Prepare your articles of registration and file these with the voivodeship (province) that your business is based within
• Register your business with the Polish National Court Register (NCR), Zakład Ubezpieczeń Społecznych (ZUS), which is the Polish social security office, and the National Revenue Administration (NRA)

This whole process will take up to 12 weeks. 

When it comes to making hires, try to bring in people from the local market. The Labour Code of Poland will always try to give precedence to local employees, so it can be challenging to get a visa and work permit for a foreign national. 

Employees will also obviously be charged income tax. Income tax rates are extremely basic in Poland. Employees that earn 85,527 Polish Zloty (PLN) or less pay a flat rate of 17%. Employees that earn PLN 85,528 or more pay a flat tax rate of PLN 14,539.76, plus a rate of 32% on any surplus.

The Polish tax year follows the calendar year, and all payments must be filed with the NRA by March 31 of the following year.

Polish employment law and HR considerations

Employees in Poland are protected under the auspices of the nation’s Labour Code. There are many rules and regulations found in this doctrine, including limits on the number of working hours permitted in any single week (40, split over 5 days.) Above all, though, the Polish Labour Code dictates that a contract cannot be more advantageous to an employer than an employee.

In terms of mandatory benefits, Polish employees are entitled to the following.

• 20 days of personal holiday per year (26 after 10 years of consecutive service), and 13 public holiday days
• Up to 33 days of paid sick leave per year
• 20 weeks of paid maternity leave (funded by the state for businesses with fewer than 20 employees), 2 weeks of paternity leave (funded by the state), or 32 weeks of parental leave granted to either parent. This is funded by the state, at a rate of 100% for the first 26 weeks then 60% for the final 8
• Leave to attend to family matters (including weddings and compassionate leave)
• Donations to a state pension

Employers must also pay 35.85% of an employee’s salary in social security taxes. These are paid to the ZUS. The donations are paid to the Labour Fund and the Fund of Guaranteed Employee Benefits. 

These payments provide donations to a state pension and unemployment, health and accident at work insurance policies. Employers will be welcome to offer additional benefits, including private pension plans and insurance policies, as well as cash allowances in the event of inability to work.

Setting up a subsidiary entity in Poland

Businesses have two choices when choosing to trade in Poland. If you already have an overseas business, you can open a branch in Poland – but only if the parent business is based in the EU. 

This can be faster to get up and running than an independent business, and there is no minimum share capital requirement, but your parent business will be liable for any complications encountered in Poland.

If your business is based outside the EU, or you are looking to establish an independent legal identity from your parent business, you’ll need to open an independent subsidiary business. There are two choices here. The corporate tax rate remains the same in all instances – 19%.

A spółka z ograniczoną odpowiedzialnością (more commonly known as an Sp.z.o.o.) is a Polish limited liability company. This is the most common form of business structure for SMEs. This business type can be opened with just one director, but the minimum share capital requirement is PLN 5,000. 

An alternative approach is an Spółka Akcyjna (SA), or joint stock company. The minimum share capital soars to PLN 100,000 for this business structure, so ensure you have the means to operate in such a structure.

Naturally, you’ll also be welcome to act as a sole trading entrepreneur or partnership – assuming you hold the relevant visa documentation and work permits. Just be aware that such business structures will not offer legal separation from the individual.

Country nuances

One thing that is critical to note if you’re hoping to trade in Poland is that you’ll need a local address. Before commencing the process of registering your business, ensure you have a Polish trading address. Technically, a local bank account is optional. You’ll need this when filing your VAT returns though, so it’s highly advisable to prioritise this too. 

When it comes to business etiquette, Poland rarely differs from most of the west. Business environments tend to be very formal though, so always be solemn and professional – and never deviate from an established hierarchy. 

Always look to deal with direct counterparts and avoiding sending a subordinate to broker agreements with senior management of your partners. What’s more, address people by their title and surname unless explicitly invited otherwise. Leaping straight into the use of forenames is deemed a breach of protocol and will be considered disrespectful.

Polish business leaders are also not backward in coming forward, especially when discussing finance – your Polish counterparts will immediately reject a price that is deemed too high. Expect to hear a direct, “no” without any dancing around the subject, and there will be no masking of frustration or anger. In Poland, no news is often good news. If your associates are happy with your arrangement, they will not discuss it. Behave in a manner that displeases another business owner, however, and you will know exactly where you stand. 

Avoid the temptation to talk a good game and use buzzwords, too. For a start, the language barrier means that many of them will fall flat. Polish business executives like to see evidence of results, not promises or big ambitions. This reminds Poles of their days dominated by propaganda in the age of communism. On a similar note, never refer to Poland as being part of Eastern Europe. Instead, use the term Central Europe. References to the East are politically loaded, especially for older Poles that remember the country’s post-war history behind Russia’s iron curtain.