Company formation in Poland

Before deciding to set up a new company in Poland, read the information below to understand the characteristics of a Limited Liability Company (LLC) / Spółka z ograniczona odpowiedzialnością (Sp. z o.o.):

Shareholders: the company must have a minimum of 1 shareholder. Shareholders can be individuals or legal entities, regardless of citizenship and location.

Director: the company must have a minimum one director. Directors can be composed entirely of non-residents.

Company secretary: the legislator does not require, if desired.

Minimum share capital: PLN 5,000 (~ €1,100). The share capital can be covered by monetary or non-monetary contributions (in-kind contributions, e.g. ownership of the movable or immovable property).

Legal address: a local address is required. But the company may be registered at a virtual address.

Liability: shareholders are only liable to the extent of the invested capital.

Accounting: all companies must submit financial statements once a year to KRS. Additionally, companies that surpass any two of the following criteria for two years in a row are subject to audit: net income exceeds €5,000,000 per year; asset value exceeds €2,500,000; more than 50 employees. VAT registered companies also file monthly tax returns.

• Non-residents pay CIT only on local income, residents - on global income.
• The standard rate is 19%.
• Nevertheless, small companies (so-called small taxpayers) can benefit from a reduced 9% income tax, provided that their income does not exceed €2 million during the tax year.
• If a company's activities relate to intellectual property, income from such activities may be taxed at the rate of 5%.
• Companies that do not pay dividends and reinvest profits do not need to pay income tax (i.e. 0% tax) if they fulfill specific criteria. This is the so called Estonian CIT, which you can take advantage of if, for example:
• you are not a credit or financial institution
• your shareholders are individuals only
• you derive your income mainly from activities (not from passive income)
• you have filed a notification with the competent tax authority
• you do not operate in a special economic zone
• you employ more than 3 full-time employees
• you do not prepare financial statements in accordance with IFRS
Personal income tax (PIT)
• Individuals who are residents for tax purposes in Poland are taxable on their worldwide income.
• The tax rates are: annual taxable income up to PLN 120,000 (approx. €28,000) is taxed at 12%; annual taxable income above PLN 120,000 (approx. €28,000) taxed at 32%.
Value-added tax (VAT)
• The standard rate is 23%.
• Reduced rates are 8% (e.g. healthcare products, admissions to cultural, sporting and recreational events and hotels), 5% (e.g. some basic foodstuffs and books), 0% (export of goods and services).
• The threshold for compulsory VAT registration for a taxable person with a registered office, place of business or permanent establishment in Poland is a turnover of PLN 200,000 (approx. €46,000) reached during the previous 12 consecutive months.

Double taxation avoidance agreements in Poland: Albania, Algeria, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Egypt, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kyrgyzstan, Korea, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Philippines, Portugal, Qatar, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Syria, Sweden, Switzerland, Tajikistan, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uruguay, Uzbekistan, Vietnam, Zambia and Zimbabwe.