Branch Registration In Poland – Step By Step Guide

A foreign investor seeking to penetrate the Polish market with their business may establish a branch in Poland. This approach serves as a direct expansion of the parent company without a need to establish a separate legal structure. A key benefits of setting up a branch in Poland are direct investment, light corporate structure, easy start and liquidation, and relatively low cost of maintenance, as opposed to other business structures. Discover the steps involved in establishing a branch in Poland and explore the legal intricacies associated with this process.

CHARACTERISTICS OF A BRANCH IN POLAND: THE MOST IMPORTANT INFORMATION

The possibility and principles of establishing a branch of a foreign company in Poland are regulated by the provisions of the Act of March 6, 2018, on the principles of participation of foreign entrepreneurs and other foreign persons in economic turnover on the territory of the Republic of Poland.

One of the key aspects of establishing a branch in Poland under the aforementioned law is no separate legal personality. In practical terms, this means that the branch functions as an extension of the parent company, eliminating the need for the founders to establish a new, independent entity in Poland to conduct business activities. This includes selling goods or providing services. Furthermore, the branch operates under the complete authority of the parent company, ensuring that the parent company retains full control over its operations.

However, the lack of a separate legal personality also implies that the parent company assumes responsibility for all activities conducted by the branch in Poland, and the branch itself lacks legal or judicial capacity. The foreign company bears the legal responsibility for the branch in dealings with the court, creditors, or authorities.

What other notable characteristics does a Polish branch of a foreign company possess?

• The same scope of business activities: a branch in Poland must carry out the same activities as the foreign parent company, or only part of them. However, it cannot perform a different type of activity from that specified in the company's charter. Thus, if, for example, a foreign entrepreneur is engaged only in the outsourcing of human resources and payroll, he cannot run an advertising agency in his Polish branch.
• The same company name: the name of the branch in Poland must be a translation of the parent company name with the addition of "oddział w Polsce". For example, if the foreign company is called "Company Name Ltd", the Polish branch should be called "Nazwa Firmy Sp. z o.o. Oddział w Polsce".
• The same capital: opening a branch in Poland does not require separate share capital. The branch may use the capital of the foreign parent company.

Branch in Poland vs. representative office – which is better?

Foreign entrepreneurs can establish branches and representative offices of their companies in Poland. What are the differences and similarities between these two main ways of entering the Polish market?

Who can open a branch in Poland?

Entrepreneurs from EU or EFTA member states can establish a branch in Poland. However, opening a branch in Poland is contingent upon reciprocity for companies outside the EU or EFTA. This means that the foreign company can only establish a branch in Poland if a Polish company can do the same in the foreign company's country and receive equal economic rights as local companies. This principle applies to countries like the USA and the Swiss Confederation, where relevant international agreements are in place:

• The treaty between the United States of America and the Republic of Poland, concerning business and economic relations, signed in Washington on March 21, 1990.
• Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons.

HOW TO ESTABLISH A BRANCH IN POLAND?

Establishing a branch in Poland entails fulfilling crucial legal and tax requirements, compiling necessary documents, and covering associated court and administrative fees. Given the complexity of this process, seeking assistance from a team of specialized lawyers, such as Law Firm in Poland, can prove invaluable due to their extensive experience in registering branches in Poland.

What are the primary steps involved in establishing a branch of a foreign company in Poland, and what considerations should be taken into account?

Step 1 - Resolution of a foreign entrepreneur to open a branch in Poland

The first stage in establishing a branch of a foreign company in Poland involves passing a resolution to create the branch. This resolution is typically approved by the body representing the foreign entrepreneur, such as shareholders or the board of directors. The resolution passed by the board to set up a branch in Poland should detail the following:

• the name of the branch in Poland,
• the registered office address of the branch in Poland,
• the physical address of the branch in Poland,
• the individual authorized to represent the entrepreneur within the branch (referred to as the company's representative) – more information about the selection process will be provided in the subsequent section of the article.

Step 2 - Selection of a representative of a branch in Poland

According to Article 16. of the rules of participation of foreign entrepreneurs and other foreign persons in economic turnover on the territory of the Republic of Poland: a foreign entrepreneur setting up a branch is required to establish a person authorized in the branch to represent the foreign entrepreneur. It is crucial to note that:

• The selection of a representative from the parent company is conducted through a declaration of intent.
• There are no specified limitations in the law regarding the quantity of appointed representatives.
• The law does not impose restrictions based on nationality or residency for representatives. Therefore, individuals such as foreign company directors are eligible to serve as representatives.
• The foreign entrepreneur establishes the guidelines for company representation by representatives and the protocols for interaction among authorized individuals if multiple representatives are appointed.
• The appointment document must contain detailed descriptions of both the company's representation guidelines and the interaction protocols among representatives.
• Representatives of the parent company at the branch in Poland are required to register in the National Court Register (KRS). Consequently, their personal information, including name, surname, and address, is publicly disclosed in the register.
• Branch representatives are obligated to fulfill tax responsibilities, reporting requirements, and other obligations.

Step 3 - Registration of a Polish branch in the National Court Register (KRS).

Commencing business activities for a Polish branch of a foreign entrepreneur is contingent upon registering the branch in the KRS. Hence, initiating the registration process for the branch in Poland requires submitting an electronic application via the Court Register Portal (PRS) to the district court overseeing the branch's location. This application must be supplemented with electronically signed documents using a qualified signature, electronic personal signature, or trusted signature.

The application for registering a branch in Poland in the KRS must include specific details and documents, such as:

• the name of the branch in Poland,
• the registered office address of the branch in Poland,
• the physical address of the branch in Poland,
• the address in Poland of the representative of the foreign entrepreneur,
• certificate verifying the reciprocity of operations for the representative office of the foreign entrepreneur,
• the founding document (memorandum of incorporation, agreement, or articles of association) of the parent company's registered office, along with an officially certified translation into Polish,
• a copy of the register of the parent company's registered office, accompanied by an officially translated version in Polish.

The processing of an application for the registration of a branch in Poland in the National Court Register is expected to take 7 days from the date of submission to the court. However, in reality, it may extend up to 1–2 months. If the application necessitates additional information or the submission of missing or supplementary documents, it will be reassessed within 7 days from the date of the applicant's submission of the requested data. Upon approval of the application, the branch will be assigned a Tax Identification Number (TIN) and a National Business Registry Number (REGON).

Step 4 - Providing additional information to the tax authorities after the branch's registration in the KRS

Upon approval of the foreign entrepreneur's application to establish a branch in Poland by the court and its registration in the National Court Register, it is obligatory to submit an identification notification for supplementary data to the National Court Register. This is done using the NIP-8 form. This submission must occur within 21 days of the branch's registration in the KRS and 7 days of the commencement of operations.

The NIP-8 form can be lodged through the Tax Portal of the Ministry of Finance. Subsequently, the tax office will forward the provided data to the Central Statistical Office (GUS) and the Social Insurance Institution (ZUS). The NIP-8 form should contain various details, including but not limited to:

• branch name,
• list of bank accounts,
• addresses of places of business and storage of accounting records,
• the expected number of employees,
• PKD code for the predominant activity,
• contact information.

WHAT AFTER REGISTRATION OF A BRANCH IN POLAND?

While a Polish branch of a company lacks legal personality in Poland, it is governed by Polish law rather than the law of the parent company's registration country. Consequently, a branch in Poland is obligated to:

• maintain accounting by the Polish regulations governing the keeping of books of account, including Corporate Income Tax Act, Value Added Tax Act, Accounting Act,
• keep accounting and other documentation in the Polish language – this also applies to the parent company's incorporation documents (e.g., articles of incorporation, articles of association), which must be translated by a Polish sworn translator and provided with an apostille or legalization clause,
• keep accounting records in a manner separate from those of the foreign parent company,
• register as an employer with the Social Insurance Institution (ZUS) within 7 days of registration with the National Court Register,
• hire employees by Polish legislation, which encompasses statutes such as the Labor Code and the Civil Code,
• register as a VAT taxpayer if the branch in Poland will perform activities subject to VAT.

TAXATION OF A BRANCH IN POLAND

A branch of a foreign entrepreneur in Poland is liable for corporate income tax (CIT) on a limited basis. Consequently, the branch is obligated to pay CIT solely on income generated within Poland, as its business operations are conducted there. Additionally, the branch may be liable for value-added tax (VAT) if it meets the criteria of a VAT taxpayer and engages in activities subject to VAT, such as the sale of goods, provision of services, export, or import of goods.

The principal tax obligations that a branch of a foreign entrepreneur in Poland may encounter in 2024 include:

• CIT 9%: reduced tax rate for small taxpayers (turnover not exceeding EUR 2 million),
• CIT 19%: basic tax rate,
• VAT 23%: basic VAT rate,
• VAT 0%, 5% and 8%: reduced VAT rate on certain goods and services.

Costs of opening a branch in Poland

Establishing a branch in Poland involves certain costs, such as:

• 500 PLN: a court fee for registering a branch of a foreign company in the National Court Register,
• 100 PLN: fee for the announcement of the entry in the Judicial and Economic Monitor (MSiG),
• 500-1000 PLN + VAT: fees for certified translation of necessary documents.

FAQ – BRANCH IN POLAND

Which is better – branch of representative office?

Branch seems to be better options as it allows to run proper business operations in Poland, while representative office can only perform advertising activities.

What are the steps to register branch in Poland?

1. Undertake resolution on establishment branch in Poland
2. Select and appoint representative for Poland
3. Submit registration application to KRS
4. Provide additional information to Tax Office

What is the cost of branch registration in Poland?

Expenses usually reach approx. 250 EUR, while legal fees for branch registration range from approx. 1.000 – 2.500 EUR from provider to provider.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.