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.
World Bank Ease of Doing Business Ranking (1-190)
Tax rates 2020
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:
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.
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.
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.
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.
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.
There are two main types of business structure open to foreign investors in Poland.
• Spółka z ograniczoną odpowiedzialnością (Sp.z.o.o.) – a limited liability company
• Spółka Akcyjna (SA) – a joint stock company that separates legal liability from stockholders
Alternatively, you will be welcome to operate as a sole trader or partnership, or of course, open a branch of an existing overseas business. An Sp.z.o.o. has a lower minimum share capital requirement than an SA and is faster to set up, making it a popular choice with SMEs.
Expect to wait around 12 weeks before you are ready to start making hires for a new business venture in Poland.
It costs around 1.2 times an employee’s annual salary to bring in a new hire in Poland.
If opening an Sp. z.o.o. – the Polish equivalent of a limited liability company – you’ll need a minimum share capital of 5,000 Polish Zloty (PLN). This is around GBP£925. An SA (joint stock company) has a minimum share capital of PLN 100,000, or GBP£185,000. There is no minimum share capital required to open a Polish branch of an existing business.
It is not a legal requirement for trading to have a local bank account. However, you will need a Polish bank account when filing your VAT returns. As a result, it’s highly recommended to open a bank account when registering your business.
The standard working week ascribed by Polish law is the same as most standard western nations. It’s 40 hours in total, split over 5 working days.
In addition to government-mandated benefits, many employers in Poland also offer private health insurance, life insurance, accident insurance, an additional pension package and a cash allowance if an employee is unable to work for health or personal reasons.
Any termination of employment in Poland must be done in writing. Immediate termination is only permitted under the Labour Code of Poland in particular circumstances – most notably, acts of gross misconduct, including criminal charges unrelated to the workplace.
If the reason for dismissal is not covered by the Labour Code, you cannot terminate the employee without serving notice (anywhere from 2 weeks to 3 months, depending on the length of service) or making a severance payment equivalent to the salary that would be paid during this notice period.
Employees with less than 10 years of service are entitled to a minimum of 20 personal holiday days per year in Poland. After a decade of service, this rises to 26 days. Poland also observes 13 public holidays per year.
You will be welcome to open a branch of an established foreign company in Poland. This model has no minimum share capital requirement, but the usual caveats apply – your parent company will be financially and legally liable for any mishaps that befall the Polish branch, and the corporate tax rate remains the same at 19%.
Any employee that holds at least one of the following documents is free to work in Poland without restriction.
• Polish citizenship or a residence permit (including refugees)
• An EU, EEA or Swiss passport
• Marriage certificate that confirms marriage to a Polish citizen
• A valid Pole Card
• Graduation certificate from a Polish university or college
Any aspiring employee without such documentation will need a visa to legally work in Poland.
There are 3 primary types of visa granted to people seeking entry to, and work within, Poland.
• Type A visa (aka transit visa) – rarely issued, only used when visiting far-flung countries and travelling via Poland
• Type C Schengen visa – grants access to Poland, including the right to work, for a maximum of 90 days
• Type D visa – a national visa that is typically valid for one year, but can be extended after this time
Employees will also need a work permit. This will fall under one of the following 5 remits.
• Type A work permit – default work permit for employees without an EU, EEA or Swiss passport
• Type B work permit – for employees that serve on a board of directors in Poland for over 6 months
• Type C work permit – for ‘ground level’ employees working in Poland via transfer from an overseas parent company
• Type D work permit – for employees sent to Poland by an overseas employer on a sporadic or short-term basis. The employer cannot have a presence in Poland for a Type D work permit to be issued
• Type E work permit – used in the unlikely event that work permits A – D do not cover the criteria listed above
It’s not always easy to gain a work permit for overseas employees in Poland. You will need to prove that the role could not be filled by a local employee, and the application process is lengthy. The application will be made to the voivodeship that the employer is based in.
The cost of a visa depends on the country of origin but rarely exceeds GBP£60. A Type D work permit costs a flat rate of PLN 200 (around GBP£35). Other permits are charged at PLN 50 (around £10) for 3 months, or PLN 100 / GBP£20 for a longer stay. These fees will be payable every time the permit is renewed.