Poland Info
Joined: 20 Apr 2007
Posts: 23
Home Country: poland
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 Posted: Wed May 23, 2007 8:27 am Post subject: DOING BUSINESS IN POLAND / POLAND BUSINESS GUIDE |
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DOING BUSINESS IN POLAND
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Sp z.o.o. - Limited Liability Company
Minimum Capital Requirement: 50,000
City: Warsaw
Registration Requirements:
Procedure 1. Notarise company agreement
Time to complete: 1 day
Cost to complete: PLN 1,010 notary fee + 0.5% over PLN 60,000 + 22% on top of notary's fee (VAT) + 0.5% of share capital (civil law transaction tax)
Comment: Maximum notary cost cannot exceed six times the average monthly wage (i.e. 2,289.57 PLN x 6 = 13,737,42 PLN) plus VAT and civil transaction tax This agreement could be standard if the company has only one shareholder (or a shareholder with definite majority of votes at the Shareholders' Meeting), no need to be written by a lawyer. It must be then notarised. For setting up whole company (tax, social insurance, etc. included), a lawyer would normally ask for PLN5000 up to PLN25,000.
Procedure 2. Obtain "REGON" number (statistical number)
Time to complete: 1 day
Cost to complete: no charge
Comment: It takes half an hour if there is no queue. REGON - Rejestr urzędowy podmiotów Gospodarki Narodowej - Official Register of Entities of National Economy) is obtained at local statistical office (US - Urząd Statystyczny). The Regon number should be obtained prior to registration of the Company in the National Court Register within 14 days as from the date of the notarial deed.
Procedure 3. Deposit paid-in capital at the bank
Time to complete: 1 day
Cost to complete: no charge
Comment: To open a bank account a limited liability company has to provide the bank with the Founding Deed and a REGON certificate.
Procedure 4. File Articles of Association registration date, registration number with the Tax Office; Obtain tax identification number (NIP)
Time to complete: 24 days
Cost to complete: no charge
Comment: In order to obtain tax identification number (NIP), the Company must provide the following documents: notarial deed on setting up thereof, company's excerpt from the register, confirmation of assignment of "REGON" (statistical number), list of all agreements for bank account, agreement for office rental (or another document confirming legal title to the office/building where the company's activity shall be conducted), book-keeping agreement (if concluded). Some tax offices may request additional documentation (depending on the tax office).
Once the Company obtains a confirmation of its registration with the Tax Office it may benefit from VAT deductions and issue invoices for its contractors. Therefore it is strongly advised that the Company be registered with the Tax Office as soon as possible. The number is usually issued within a month.
Procedure 5*. Register for VAT
Time to complete: 1 day (simultaneous with procedure 4)
Cost to complete: PLN 152
Comment: The Company is required to register for the purposes of VAT by the date of conducting for the first time the business activity covered by VAT. The registration should be submitted with the Tax Office as referred to in Procedure 4. The Company is required to provide information concerning: its business name and legal form, "REGON" (statistical number), date of commencement of its business activity, address of its registered office.
If the Company is planning to conduct foreign trade activities within territory of European Union in the future, it would also be obliged to register as a VAT EU taxpayer. The Company should submit an application for registration as the VAT EU taxpayer before commencing its foreign trade activity within European Union. However, it should be noted that prior to registration as the VAT EU taxpayer, the Company should be registered as a regular VAT taxpayer.
Procedure 6*. Register in the Register of Entrepreneurs maintained by the National Court Register
Time to complete: 14 days (simultaneous with procedure 4)
Cost to complete: PLN 1,500 (PLN1000, registration fee + PLN500 publication cost)
Comment: Documents required for registration: (i) Articles of Association of the Company, (ii) representation of all Management Board members that the contributions towards the share capital have been made by all shareholders in full, (iii) shareholders' list, (iv) notarised specimens signature of all Management Board members (v) document confirming appointment of the members of corporate bodies (i.e. Management Board and supervisory body, if any).
At the Court the company obtains number and date of registration. The announcement on the company's registration is published in "Monitor Sadowy i Gospodarczy" court gazette. The text of announcement is prepared and forwarded for publication ex officio by the court.
On 14 November 2003 (with effect as of 1 January 2004) an amendment of Law on Economic Activity and some other laws was adopted by the Polish Parliament. In particular, the company may file together with its application to register the company at the State Court Register (Court of Registration) (i) an application to be registered in the register of economic entities (REGON) maintained by the State Statistical Office and (ii) application to receive a tax identification number (NIP) given by tax authorities. The court of registration is ex officio obliged to send the REGON application to the relevant State Statistical Office and NIP application to the tax office indicated by the applicant immediately and not later than 3 days after the entry to the court register has been made.
However, it is still advised for all companies to have their REGON and NIP applications filed separately as such bundled filing proves more time-consuming and, in practice, the Company may not carry on its activity prior to the registration in National Court Register and further obtaining of REGON and NIP number. In addition the court decides when subject documents are to be sent to the relevant authorities, which in some instances may result in unexpected extensions of the whole registration procedure. As a result, most companies choose to file the REGON and NIP applications directly.
New time limits have been introduced - the judge is required to issue a decision within 14 days; in case any hindrance from registration occurs the judge is obliged to issue a decisions within 7 days from the date such hindrance has been removed; in case the examination of the application requires an open hearing this has to be done not later than within a month. However, the time limit is not strictly binding.
On 21 August 2004, the Economic Freedom Act came into force. The Act foresees electronic registration, as well as the establishment of a "one-stop shop". It will allow entrepreneurs to apply for the NIP and REGON, and register with Social Insurance Office (ZUS) at one office. These systems are planned to be in place by early 2007.
Procedure 7. File amending application for "REGON" number with the Statistical Office
Time to complete: 1 day
Cost to complete: no charge
Comment: Once the company is registered with the National Court Register, it is required to file with the Statistical Office an "amending application" to update the company data (delete "in organization" next to the company name). Obtaining REGON number and NIP (tax) number before registration at court is not obligatory.
Procedure 8. Register the company at The National Sanitary Inspection
Time to complete: 1 day
Cost to complete: no charge
Comment: "Panstwowa Inspekcja Sanitarna" (National Sanitary Inspection) will be informed within 30 days of the commencement of business.
Procedure 9. Register the company at the local Social Insurance Office (ZUS) for social insurance payments
Time to complete: 1 day
Cost to complete: no charge
Comment: All social insurance and similar registrations are performed in ZUS (Zaklad Ubezpieczen Spolecznych). Company has 7 days to register after hiring the first worker. Along with application, the Company should, inter alia, attach NIP number and REGON number decisions.
Although it is not required by law to have NIP number at the time of registration for ZUS, in practice the software system used in ZUS does not accept entries without NIP number.
Procedure 10. Register the company at The National Work Inspection
Time to complete: 1 day
Cost to complete: no charge
Comment: "Panstwowa Inspekcja Pracy" (National Work Inspection) will be informed within 30 days of the commencement of business (the State Labour Inspectorate takes the "commencement of business" to mean the date on which the first employee was hired), the company must inform the relevant labour inspector in writing of the location, type and scope of business.
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
FORMS OF BUSINESS ORGANISATION
1. Joint stock companies
2. Limited liability companies
Companies can take a variety of forms, including the joint stock company, limited liability company, limited joint stock partnership, registered partnership, limited partnership, professional partnership, sole proprietorship and civil-law partnership.
Foreign investors enjoy national treatment if they are permanent residents or nationals of a country where reciprocal treatment is provided to Polish firms.
The financial centre is the capital, Warsaw. Major banks are also located in Poznan, Katowice, Krakow and other large cities.
TAXATION
Corporate tax
Main rate: 19%
Resident companies are taxed on their worldwide income; non-resident companies are taxed only on income sourced in Poland. A company is resident in Poland if its legal seat or management office is situated in Poland. Tax is imposed at a rate of 19%.
Dividends paid to corporate and individual resident shareholders are subject to a withholding tax of 19%, unless the dividends are paid between members of a tax group or the dividends qualify for exemption under the EC Parent-Subsidiary Directive. A corporate group may be formed where there is a 95% shareholding, subject to certain conditions.
Individual tax
Progressive rates up to 40%
Under the Polish Personal Income Tax (PIT) Law, individuals may be subject to limited or unlimited tax liability in Poland. The tax status of an individual depends on whether the individual has a permanent residence in Poland (a place at which the person stays with an intention to remain permanently). Polish residents are taxed on worldwide income, whereas individuals with non-resident status are taxed only on Polish-source income.
Generally, personal income tax is levied at progressive rates of 19%, 30% and 40%. A flat rate tax of 19% applies to certain types of income such as dividends and interest. Under some conditions, an individual may elect to be taxed at a flat rate of 19% on business income.
Capital gains
Gains on disposal of business assets are taxed as income
Capital gains of companies and individuals from the disposal of business assets are taxed as income. Capital gains of individuals from the sale of shares are taxed at a 19% rate (separately from income). Income derived by an individual on the sale of a dwelling, other building or land not used for business purposes is subject to a 10% rate. Such gains may be exempt from taxation if the proceeds are used to purchase another asset within two years or if the sale takes place five years after the purchase or creation of the asset.
Indirect tax
VAT standard rate: 22% ; Lower rates: 7%, 3%
Value-added tax (VAT) applies to most transactions (supplies of goods and services) at a standard rate of 22%. Items subject to the reduced rate of 7% include food, books and newspapers, services relating to agriculture and forestry, and some healthcare products. A 3% rate applies to agricultural products and some unprocessed food products. Exports are zero-rated. Exemptions include financial services and services related to science, the development of technology (in certain cases) and certain cultural services.
Registration is compulsory for businesses with annual turnover above €10,000. Taxpayers from outside the EU that register for VAT in Poland must appoint a tax representative.
Tax administration and compliance
Tax year: Corporations: accounting year ; Individuals: calendar year
Companies make monthly advance tax payments, based either on the estimated liability for the current year or on one-twelfth of the liability disclosed in a return filed in the year preceding the tax year (simplified method). An annual tax return is due within three months of the end of the tax year, and a final payment of tax is due by the same date.
Employment income of individuals is taxed by withholding. Individuals earning other types of income may be required to make monthly advance payments, with a final payment due after the end of the tax year. The tax return is due by April 30th following the end of the tax year. VAT returns are due by the 25th day of the month (or quarter in some cases) following each subsequent month (or quarter respectively).
Additional tax information
Withholding taxes: Dividends 19%, Interest and Royalties 20% (for non-residents). Rates for non-residents may be reduced or eliminated under tax treaties and EC directives.
Tax treaties: Poland has concluded more than 80 tax treaties.
Dividends: Dividends are subject to a 19% final withholding tax.
Revenue protection: There is transfer-pricing, thin-capitalisation legislation and an anti-avoidance rule concerning mergers and divisions.
Groups: There is provision for group taxation.
Incentives: There are special economic zones.
Other taxes: Agricultural/forestry taxes, Import duties, Inheritance and gift tax, Local urban property tax, Market duty, Stamp duty, Civil law transactions tax, Excise duty, Transportation tax. |
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