The Polish law provides for the following forms of business activity:
- Sole tradership (one-man business)
- Civil code partnership – ideal for small-scale business activity; such a partnership has no legal personality, which means that the liability for obligations of the partnership is borne jointly and severally by the partners. There is no minimum initial capital required by law to form this kind of company;
- Registered partnership (Sp. j.) – this kind of partnership is intended for doing business on a larger scale than, e. g. a civil law partnership. A registered partnership has no legal personality and should be registered in the National Court Register (KRS). In this case, each partner is liable for the obligations of the company without limitation, from all of its assets jointly and severally with other partners and with the company. There is no minimum initial capital required by law to form this kind of company;
- Limited partnership (Sp. k.) – this kind of partnership does not have legal personality, but has legal capacity. In order to form a limited partnership one should conclude an agreement in a form of a notarial deed and then the partnership should be registered in the National Court Register (KRS). This kind of company consists of general partners and limited partners. General partners are responsible for the obligations of partnership of all its assets. There is no minimum initial capital required by law to form this kind of company.
- Limited joint stock partnership (S. k. a.)– limited joint-stock partnerships are, in principle, large firms, e.g. large family firms. This kind of partnership requires a statute which has to be drafted in the form of a notarial deed and then the partnership should be registered in the National Court Register (KRS). The minimum required share capital is PLN 50 000. This kind of company consists of general partners and shareholders. General partners are responsible for the obligations of partnership of all its assets
- Professional partnership (Sp. p.) – this kind of partnership is intended for practicing a freelance profession (e. g. legal advisor, patent attorney, advocate, architect, nurse, physician, veterinary physician, tax advisor and other) by partners within an economic organization running an enterprise under its own business name. The partner is not liable for the obligations of the partnership which arose due to the performance of the freelance profession by other partners. There is no minimum initial capital required by law to form this kind of company.
- Limited liability company (Sp. z o.o.) – limited liability company may be established for any purpose admissible by law. This kind of company is a legal person. In order to establish a limited liability company it is necessary to: draw up the Articles of Association of a limited liability company in the form of a notarial deed, pay in share capital prior to its registration (the minimum share capital amounts to PLN 5 000), appoint the company’s governing bodies, register the company in the National Court Register. The company shall be liable for obligations with its entire assets without limitations. Partners shall not be liable for the company’s obligations, they bear risk up to the amount of contributions made.
- Joint-stock company (S. A.) – this kind of company is intended for running large and medium enterprises. A joint stock company is a legal person. In order to establish a joint stock company it is necessary to: draw up a company’s statute, pay in share capital prior to registration of the company, appoint the company’s governing bodies, register the company in the National Court Register. The minimum required share capital is PLN 100 000. The company shall be liable for obligations with its entire assets without limitation. Shareholders shall not be liable for the company’s obligations, they bear risk up to the value of shares held in the company.
and, moreover, like:
- Branch office
- Representative office
- Joint Venture
- Commercial agreements
Setting up a business
- One–man business
For a natural person to be able to set up a business it is necessary to complete and submit an application for entry in the Central Registration and Information on Business (CEIDG).
An entrepreneur may start doing business on the date of submission of the application. The entry is made no later than on the next business day after the receipt of a complete application by CEIDG. The entrepreneur, however, may specify in the application a later day of commencing business activity than the date of application.
After making the decision as to the form of doing business, certain steps must be taken to set up a company. In point above we mentioned general principles in that regard – the steps are different for each kind of company. Generally, in most of cases it is obligatory to draw up a company’s statute (Articles of Association), pay in share capital, appoint the company’s governing bodies and register the company in the National Court Register. An application for registration shall be submitted on an official form with attachments.
Restrictions to foreign investment
Some foreigners may establish and conduct business activity based on the same principles as Polish citizens. This means that they may take up and conduct each form of business activity admissible under Polish law. These are foreigners in Poland who have: permanent residence permit, a long-term EU resident permit, a residence permit for a specified time granted to a foreigner’s family member to be united with the family, a temporary residence permit granted on the basis of a long-term EU resident permit from another Member State than Poland provided that such a person justifies his residence in Poland, a temporary residence permit granted to a foreigner’s
family member who holds a long-term EU resident permit granted by a Member State other than Poland and who justifies his residence in Poland provided that the family member resided with the foreigner on the territory of another state, a temporary residence permit in order to start or continue full-time tertiary studies or full-time doctoral studies in Poland, a temporary residence permit and are married to a Polish national residing in Poland, refugee status, supplementary protection, a tolerated residence permit, temporary protection in Poland, a valid Pole’s Card.
Other foreigners not listed above may take up and conduct business activity exclusively in the form of: limited partnership, limited joint stock partnership, limited liability company, joint stock company.
- Corporate Income Tax
In determining the existence of the corporate tax and its scope it is crucial to determine whether the taxpayer or the Board of Directors are established on the territory of the Republic of Poland (in other words, if the taxpayer is the resident of Poland or not). Taxpayers, who have their registered office in Poland are liable to pay tax on all their income (unlimited tax liability). Taxpayers, who does not have a registered office or the Board on the territory of the Republic of Poland, are levied with tax only on income arising in Poland. The rate of taxation in the case of corporate income tax is 19%.
- Indirect Taxes
The standard VAT rate in Poland is 23%. However, for some goods and services provided there is a reduced rate of 8% (i.g. in some cases this rate refers to building materials etc.) and 5% (food, books and magazines). There is also a 0% rate, which applies to intra – Community supply of goods and export of goods.
In Poland, an employer may employ a employee, both on the basis of a contract of employment, as well as a civil contract. The legal basis regulating the employment relationship resulting from a contract of
employment is the Labour Code. The agreement must be concluded in writing not later than on the date of commencement of work. The contract of employment places certain responsibilities on the employee and the employer. The employment contract may be concluded for a trial period, an indefinite period or for a fixed term.
The employment contract for a trial period not exceeding three months, is included in order to check the qualifications of the employee and the possibility of his employment in order to perform a particular job.
A fixed-term contract is concluded for a predetermined time indicated by the employer and employee, which means that it is an agreement valid temporarily, for a specified period.
Contract for an indefinite period is the most advantageous contract form from the point of view of the employee, as it is characterized by the absence of a predetermined duration of employment.
The employer and employee can also conclude civil law contract, which are commonly used when the employer does not plan to employ a worker under an employment contract. Such agreements (commonly named as junk contracts) are generally less favorable for the person performing the work. In certain cases, nowadays, the aim is to reduce the possibility of concluding them in favor of the employment contract.
Buying real estate property
Foreigners from the European Economic Area and Swiss Confederation may acquire real estate on the territory of Republic of Poland without restrictions, but with the exception of agricultural land and forests, the acquisition of which is much more complicated. Regarding other foreigners, the acquisition of real estate by a foreigner and purchase or acquisition of shares in companies established in the Republic of Poland by a foreigner who already are the owners of the property located in Poland requires the authorization of the minister responsible for internal affairs.
Publisher: Kański Kapczuk Kniat-Borsut