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Doing Business in Poland in few steps

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©2012 Consuldimo

Consuldimo ul. Torfowa 12/4 Cracow, Poland Author Julita Mortka Lawyer - M&A Specialist Phone: Mobile: Email: Twitter: Skype: www: +39 (0564) 405991 +39 (334) 9818178 j.mortka@consuldimo.com Consuldimo julitamortka www.consuldimo.com

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Why Poland is the right choice for investors? (1/2)

Poland is the only European country that does not give up recession Currently, the euro zone is in crisis, a large economy remains stagnant and the changing political situation in many of them does not improve the situation. This is an excellent opportunity to change the viewing direction and pay attention to Central Europe. Poland is the only European country that does not give up recession and on the contrary, gradually growing. Geographical Position Poland is an attractive country located in the heart of Europe. The geographical position is a huge advantage of Poland. As a result, Poland has become a naturally gateway to eastern markets. Poland’s economy combines both western and eastern. As a proof,there is still growing exports and imports. A large market Poland due to its surface is attractive market, bigger than the other Central European countries all together.

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Why Poland is the right choice for investors? (2/2)

Stable and growing economy Despite the world news on the economic crisis, Polish economy remains stable. This is due to several factors, including competitive products, the reference value for money, favorable legislation and funding from the European Union. The International Monetary Fund predicts that Polish GDP in 2012. 2.6%, and in 2013 3.2%. It is expected that Poland is now the fastest growing country in Europe.

EU Support It should be noted that through the support programms for new EU members in the years 2007 – 2013 in Poland has been allocated 67 billion of euro. By drawing the appropriate application, enterprenuers can get funds to run a business.

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Main legal facilities

Grants from UE 2007- 2013 Special economic zones Duty-free zones Support for hiring unemployed Exemptions from local taxes

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Principle legal regulations for enterpreneurs

The legal concept of doing business in Poland is best defined under Polish law in the Act on Freedom of Economic Activity (2004); When you want to set up a company you should consider requirements under Polish Commercial Code (2004); Others:

Banking Act Bankruptcy and Reorganisation Law Labour Law

Competition Law Tax regulations Civil Code Insurance Act

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Business regulations for EU citizens and others

Regulations for EU citizens

According to Polish legislation, foreign citizens of EU, EEA, EFTA and foreign persons from countries not party to the Agreement on the European Economic Area, which may benefit from the freedom of establishment of the contracts by these countries with the European Community and its Member States could carry out economic activities on the same terms as Polish citizens.

Abovementioned means that they are free to choose the best suited form of activity either: - as an individual business, - partnership, - capital company.

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Business regulations for EU citizens and others

Regulations for citizens out of EU In other cases, citizens of other countries may pursue economic activity only in: - limited partnership - limited joint stock company - limited liability company - joint stock company

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In the case of citizens of countries other than those mentioned above who: 1) posses in Poland: a) the permit to settle, b) the permit long-term resident of the EU c) the permit for temporary residence d) the permit the temporary residence granted, staying on Polish territory or staying on that territory for the purpose of family reunification, family members e) the status of refugees, 2) enjoy the Polish Republic temporary protection, 3) posses a valid Card of the Pole, 4) are family members

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Few steps to start your business

Starting activity

Notification of registration to public entities

Obtaining license or permissions if necessary

Registration as VAT remitter

Opening a bank account

“one window rule” moduls for KRS, ZUS, US, GUS

Choice of a proper legal form

Drafting articles of association or statute

Signing notary’s deed

Signing contract for registered office

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How much does it cost?

Constant registration fees
- 500

PLN despite of the legal form of company PLN for notification in MSiG

- 500

- 17

PLN for VAT registration

Notary’s fees depend on amount of share capital

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association

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Legal forms of business activity

BUSINESS ACTIVITY

Sole proprietator Taxes: 18%, 32% or 19%

Civil Law Partnership

Partnerships

Capital Companies

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Partnership

There is no share capital required, no legal personality, partners represent a company, unlimited joint and several liability of the partners’ personal assets for the liabilities of the company

Registered partnership - model company for partnerships, unlimited responsability of partners for company’s debts Professional partnership - reserved for professionals

Limited partnership - based on at least two subjects: general partner with unlimited responsability, limited partner who finance the company Limited join stock partnership - combination of partnership and joint stock company

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Capital company

Capital company is obliged to establish share capital according to legal limits, has a legal personality. There is division between assets which belong to shareholders and to company. Also management is separated from the owners rights. One of the main advantage is limited liability of shareholders with unnlimited responsability of company in the same time.

◆ Limited liability company - min. share capital, 5.000 zl, one share at least 50 zl, subject to corporate income tax 19%, exists after signing articles of association (in organization)

Joint stock company - min. share capital 100.000 zl, one stock 1 gr, supervisory board obliged, shares may be subject to public trading, subject to corporate income tax 19%
◆ ◆

European Company

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Accounting obligations

Documents for AGM All companies that are obliged to prepare annual audits where they must publish their: - balance sheet, - profit and loss account, - statement of changes in the share capital and the cash flow statement; - as well as an introduction to the financial statements, - the auditor’s opinion (if required), - the statement of discharge granted by the Annual General Meeting of Shareholders (which must take place max. before 6 months after finishing financial year) and the decision on profit distribution in the “Monitor Polski B”. Audit Annual consolidated financial statements of capital groups and annual financial statements of joint-stock companies, banks, insurers and investment and pension funds must be audited by licensed auditor.

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Taxation

◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆

corporate income tax (CIT), personal income tax (PIT), tax on civil law transactions, real estate tax, tax on means of transport, inheritance and donations tax, agricultural tax, forestry tax, tax on dogs,

◆ ◆ ◆

tax on goods and services (VAT), excise duty, game tax

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CIT

Corporate Income Tax

19 % tax rate in 2012. Tax year could be different from the calendar year, but always 12 months; A branch of a non-resident company is generally taxed under the same rules as Polish company. Only its Polish source income is subject to taxation; Corporate income tax is paid annually, advance monthly payments have to be made;

Tax losses suffered by the company may be carried forward and set off against over the five years; The standard withholding tax is 19% on dividends and 20% on interests and royalties. If paid abroad the rate may be reduced under the double tax treaties.

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PIT

Personal Income Tax

Domiciled individuals in Poland (over 183 days in Poland or if they they have “life center” in Poland) are subject to tax on their world-wide income In most cases, natural persons in Poland are subject to the income tax calculated in compliance with the progressive tax scale, differentiating following income thresholds, 18% and 32% There is also a 19% lump sum rate tax applicable to natural persons conducting business Capital revenues from sale of shares are subject to 19% tax

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VAT

Value Added Tax
Polish tax law provides for 4 VAT rates.
◆ The

basic rate is 23% which is applied to majority of goods and services. rates:

◆ Other

8% - applies to a few groups of goods and services, e.g. goods related to health protection, groceries, 5% - applies to supply of some farm produce and foodstuffs;
◆ The

rate of special significance is a 0% rate. It is applicable, in particular, to exports and intra-Community supply of goods, international transport services.

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VAT

Value Added Tax
Objective scope of taxation, determines chargeable events. Each person who professionally carries out the below stated activities:
◆ supply

of goods (meant as transfer of the right to dispose of tangible property as owner)

effected for consideration,
◆ supply

of services for consideration; supply of goods is meant as any transaction which

does not constitute a supply of goods,
◆ export ◆ import

of goods, of goods, supply of goods, acquisition of goods

◆ intra-Community ◆ intra-Community

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…is subject to taxation.

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Contacts Phone: General: Facebook: Twitter: Blog: Poland 12 Torfowa Street, Cracow, Poland j.mortka@consuldimo.com Skype: julitamortka Cell: +48 (607) 97 99 80 Cell: +39 (334) 98 18178 +39 (0564) 405991 info@consuldimo.com Consudimo Consuldimo www.forbusinessinpoland.com