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Branch in Poland for companies from the EU
Opening branch in Poland for a company from an EU member state is a fairly simple process. This is a good solution due to the European Union’s principles of freedom of establishment and the principle of the single market. However, while EU legislation facilitates intra-EU branches, there may be specific requirements and nuances depending on your company’s industry. Furthermore, laws and requirements may change over time. Thus, it is important to check with the relevant Polish authorities and be aware of any changes in the legal and regulatory environment.
Branch in Poland for a company from non-EU countries
Setting up a branch in Poland for a company from a non-EU country is a slightly more complicated process compared to setting up a branch as an EU company. The reason for this is the fact that you will need to check immigration and work permit issues, as well as comply with Polish business rules. Employees from non-EU countries can establish branches in Poland on the basis of reciprocity. This means that the possibility of establishing a branch company depends on whether international agreements guarantee Polish entrepreneurs equal rights. The process of establishing a branch in Poland for a non-EU company can be complex. It depends on your particular circumstances, the nature of your business, and any bilateral agreements between your country and Poland.
Advantages of establishing a branch in Poland
Establishing a branch in Poland provides many advantages for companies wishing to expand in Europe. Poland is the largest economy in Central and Eastern Europe. It has experienced significant economic growth in recent years.
In Poland and other countries, a branch office has no legal personality. Although this means that the foreign legal entity bears all the activities of the branches, this entity is easily established and can start its work quickly. Its Polish representative should be appointed by the foreign entity.
Branches in Poland operate within the objectives of the parent company. They are essentially a separate and independent part of the company, operating in another country.
It’s important to note that while Poland offers numerous advantages, there are also challenges and considerations. For example, local competition, regulatory compliance, and cultural differences. Conducting thorough market research and seeking professional advice are essential steps before establishing a branch in Poland or any foreign market.
Branch registration in Poland
To officially register your branch in Poland, you will need to submit the following documents to the National Court Registry (Krajowy Rejestr Sądowy or KRS) and pay the registration fee:
- Application for registration (provided by the registry court)
- A resolution or decision of the appropriate body of the foreign company regarding the establishment of a branch
- Certified copies of registration documents (Articles of Association) of the foreign company and extracts from the register in the country where the foreign company is registered. These documents shall be provided in a sworn translation in Polish. The translation of the Articles of Association shall be certified by a Polish notary.
- Power of attorney for the representative in Poland
- Information about the legal address in Poland
- Corporate information about the foreign company. It should include the names of the directors, the members of the Management Board, and the Supervisory Board, for those companies that have one
- Personal information of the person appointed as the representative in Poland
- Details of the activities of the branch according to the local classification of business activities
- Any other documents required by the particular registry court
Legal status of a company branch in Poland
It should be noted that a branch of a foreign company in Poland does not have a legal personality under Polish commercial law like a Polish limited liability company (spółka z ograniczoną odpowiedzialnością or “sp. z o.o.”) or a Polish joint-stock company (spółka akcyjna or “S.A.”). It is simply a separate organizational and financial unit. Also, it is located outside the usual place of business of a foreign corporation.
Since a branch of a foreign company in Poland has no legal personality, it cannot operate in an independent economic relationship. Agreements between contractors shall be concluded only in the name and on behalf of the foreign company.
How to open company branch in Poland
Opening a company branch in Poland involves several steps and legal requirements. Here are all the instructions on how to do it.
- Select a branch representative. This person will be responsible for all legal and financial matters of the company.
- Register the Branch in the National Court Register (Krajowy Rejestr Sądowy or KRS).
- Open a bank account for a branch in Poland. You will need to make the initial capital deposit according to Polish law.
- Obtain a Polish tax number (Numer Identyfikacji Podatkowej or NIP) for the branch. This number is required for tax purposes and can be obtained from the relevant tax office (Urząd Skarbowy).
- You may need to register for value-added tax (VAT) in Poland depending on your business activities. This registration is done through the tax office (Urząd Skarbowy).
- You may need to obtain additional licenses or authorizations depending on your duties and the nature of your business. Be sure to research and address the requirements of each specific industry.
- Branch registration in Poland can be a complicated process. The exact steps may vary depending on your specific circumstances. It is therefore important to seek expert guidance and assistance to ensure that your branch set-up in Poland smoothly and successfully.
Requirements for opening a branch in Poland
Opening a branch in Poland, as a foreign company or entity, involves several legal and administrative steps. Poland is a member of the European Union, which means that EU rules and regulations apply. Here are the key requirements and steps you’ll need to follow.
Required documents and conditions
A branch of a foreign company has to be registered in the National Court Register. The following documents are required for the registration.
- details of the place of business
- specific details of the board of directors of the foreign company, including their names and addresses
- details of the person appointed as a representative in Poland
- details of the business activities to be carried out in Poland. This definition is made as per the Polish equivalent of the NACE classification
- payment of registration fees
- the Board’s decision to establish a branch in Poland
- the decision to appoint the representative
- notarized specimen signature of the individual who will act as a representative in Poland
- the certified copies of the foreign company’s Articles of Association and a sworn translation thereof
Local representative office and registered office
Besides a branch, another way for a foreign company to start its presence in Poland is through a representative office. The most important difference is that the representative office may not be engaged in financial activities. Only in promotional or advertising activities. This indicates whether this entry into the Polish market is suitable for foreign companies interested in establishing preliminary customer-advantageous activities prior to opening a company or maintaining the relationship with business partners or potential clients.
The representative office bears the name of a foreign company. Its adversaries have no legal personality or power, the same as for the branch offices. There is no capital requirement, still, it must be registered in the Representative Office Register. As it cannot undertake economic activities, which would mean it can make a profit, the representative office is not subject to tax or reporting requirements. Unlike a branch, it can only be established for a limited period of time (usually two years with an option for renewal for another two).
Taxation and financial issues
The Polish branch is taxed in accordance with the policies established by the Ministry of Finance and in accordance with the Corporate Income Tax Law. Under Polish tax laws, the branch of a foreign company in Poland is subject to a limited tax obligation under corporate income tax. This means that only income earned within the territory of the Republic of Poland is subject to corporate income tax. A branch of a foreign company in Poland is subject to Polish VAT registration.
Employment and labor law
Employment and labor law in a branch of a foreign company in Poland closely aligns with the national employment laws in Poland. Key considerations include:
- Employment contracts in the Polish office must comply with local labor legislation. They should specify terms and conditions, may be for indefinite or fixed periods.
- The branch must comply with the Polish legal minimum wage.
- Standard working hours, overtime regulations, paid holidays, and other working conditions must follow Polish labor standards.
- The employment contract may be terminated in accordance with Polish labor law, taking into account the end of the notice period and legal grounds.
- The company must ensure compliance with Polish labor laws. It includes health and safety requirements, collective agreements, and the protection of employee rights.
Activities of the branch and reporting
With regard to the reporting obligations of the branch, the expectation is that this business form will keep its accounts separate from the records of the parent company. Moreover, these should be kept in Polish, irrespective of the language of the parent’s country of corporate headquarters. In Poland, the branch is responsible for reporting annual financial statements to the Polish Companies Register (KRS).
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Branch vs. subsidiary in Poland
There is no universal answer to the question of which is best – a branch or a subsidiary. Each and every business has its own unique circumstances. It can be said generally that the incorporation of a subsidiary provides a limitation on liability, which does not exist in the case of a branch. On the other hand, it is sometimes easier to open a branch and rely on an existing license, especially in highly regulated industries, than to open a subsidiary and go through the whole process of obtaining new local licenses for a Polish subsidiary. In any case, it is always recommended that you consult with a lawyer before making any decision.
Branch vs. representative office in Poland
The main difference between a branch office and a representative office is the ability to run a business. Such offices are allowed to carry on business activities and are therefore registered in the same register as companies (KRS). Unlike that representative offices are not allowed to run business in Poland on their own. Their activities can be limited to advertising only. For this reason, most foreigners choose to establish a branch.
Poland is an attractive destination for foreign business owners. Foreign investors can establish a branch in Poland as a way to do business here.
Obviously, the activities of a foreign company in Poland have their own peculiarities. Structurally and financially a branch of a foreign company in Poland is an independent part of the economic activity carried out by the foreign company on the Polish territory. This is a business model that will have lower incorporation costs than other legal entities. Also, the parent company can control its activities.
If you want to open a Polish company and the branch is the chosen business, you can contact our experts. Our lawyers specialize in a variety of legal matters and can help you with any legal issues if you are interested in starting a business in Poland.