Foreign investors can choose to open a branch in Poland as a means of doing business here. This is a business form that will have lower incorporation costs than other legal entities and the mother company will be able to control its actions.
The branch has several advantages as well as some particularities to which the company aboard must pay close attention.
If you want to open a Polish company and the branch is the chosen business form, our company formation experts can assist you.
The characteristics of the Polish branch
The branch in Poland is essentially an extension of the mother company incorporated in another country. This is an excellent choice for international companies that want to expand their activities to Poland and control the actions of their office in the country. Alternatively, foreign companies can open a subsidiary.
Below, we list the main characteristics of the branch:
•Business activity: the branch must have the same business activities as a foreign company; it cannot perform different business actions.
•Dependence: one particularity of the branch is that it is completely dependent on the foreign company.
•No legal personality: this business form is part of the foreign entity, it does not have legal personality and any action or liability of the branch in Poland will directly affect the foreign company.
•Name: the name of the Polish branch must be the same as the name of the foreign company, translated into Polish and with the termination “oddział w Polsce”.
The fact that the branch has no legal personality is one of the most important issues to take into consideration when opening a Polish branch. This means the following: without a legal personality, there is no legal or judicial capacity, meaning that the branch cannot be a party to legal proceedings. In addition, it does not have procedural capacity and it cannot defend its own interests before court. The foreign company retains all of the capacities that the branch lacks (legal, judicial and procedural).
There are no requirements for a minimum share capital value for a Polish branch, however, there are certain requirements for registration.
Once it is registered, the branch is granted a certificate of registration. The branch will also need to register for VAT purposes and one of our agents can assist investors during this step.
The branch may need special permits and licenses in order to engage in certain business activities.
Compared to the branch, the subsidiary is a locally registered company that is treated just like any other Polish resident company. It is incorporated by selecting a unique name, drawing up the Articles of Association and submitting the registration form together with the documents to the Register. Like the branch, it does need to be registered for VAT purposes accordingly and it does need to obtain special permits and licenses. Unlike the branch, the subsidiary is a separate legal entity from the parent company and it can engage in different business activities. The parent company retains a certain level of control by owning shares in the Polish subsidiary.
When setting up a subsidiary, our team of Polish company formation agents can instruct and assist on the most important steps. It is useful to note that, compared to the branch, the incorporation will involve more steps as the Articles of Association must be drawn up and signed by the founders. Another reason for foreign nationals to request our specialized aid is that, with our help, they are not required to be present in the country during all of the incorporation phases. One of our agents can handle part of these through a power of attorney. Please feel free to reach out to us for more information on the treatment and the formation phases for locally registered companies that are treated as resident legal entities.
Opening a branch in Poland
The branch in Poland is subject to much of the same obligations as other business forms in the country. It must keep its books in Polish, separate from those of the parent company, as per the accounting principles in Poland. Any factual of legal changes in the status of the foreign company abroad, including liquidation or bankruptcy, must be notifies to the Minister of Economy.
The Polish branch is required to have an appointed authorized person with the role of representing the foreign company. The representative will need to provide details about his or her identification details like name and address in Poland.
A branch of a foreign company needs to be registered in the National Court Register and the follow documents are required to make the registration:
General information: details about the registered office or place of business/address of the branch in Poland.
Member information: details about the members of the foreign company’s Board, their names and addresses.
Representative details: information about the individual appointed as branch representative in Poland.
The business scope: details about the business that will be carried out in Poland; the definition is made as per the Polish equivalent of the NACE classification.
In some cases, for example, when the parent company is a large foreign company, the names and addresses, as well as other details regarding the Supervisory Board member, may also be required. The personal identification data for the appointed Polish representative will also include his personal identification number, his address in Poland as well as the name of the company official who made the appointment as a branch representative.
In addition to the documents mentioned above, the following will also be required:
othe branch opening decision: the decision of the Board to open the branch in Poland;
othe decision to appoint the representative;
ospecimen signature of the individual who will act as branch representative in Poland, signatures submitted before the notary public;
othe certified copies of the foreign company’s Articles of Association and a sworn translation thereof.
Our company formation agents in Poland can help you submit all of these documents and make any necessary translations into Polish. These documents will need to be certified in front of a Polish notary public and one of our agents can help you handle this step. When needed, we can represent your interests in front of the notary public and in front of other Polish authorities through a special power of attorney.
Additional information about branch registration in Poland
The branch registration application is examined by the National Court Register Department in approximately within 7 days of receipt. When any faults or missing documents are found in the application, the Court will return it to the applicant and he will have another 7 days to make the necessary corrections. When, for the application, it is also necessary for the Court to conduct a hearing, then the examination may last approximately one month. If, following the proceedings (non-contentious ones), the Court decides that the application is not possible (meaning that the branch will not be registered), then the applicant has a right to appeal and this shall be lodged with the district court via the court that issued the decision (within two days after this decision was delivered, together with a suitable justification).
Apart from the registration with the National Court Register, the branch also needs to be registered with the Social Insurance Institution (ZUS) within 7 days and with the tax office (and the Central Statistical Office) within approximately 21 days. One of our agents who specialize in Polish company formation can provide you with more details with the existing deadlines for registration and can help you with additional information on the data that needs to be provided.
Special conditions for branch opening in Poland
Opening a branch in Poland is subject to whether or not the foreign company opening the branch is registered in an EU or a non-EU country. In the first case, the procedure is straightforward and the EU-based company is under the same conditions for branch incorporation as a Polish national.
When the foreign company opening the Polish branch is not incorporated in an EU or EFTA member state, then it can only open the branch under a reciprocity procedure, meaning that for this to be possible, a Polish company must also be able to open a branch in that same country.
As previously stated, the branch in Poland may not perform other business activities than the parent company. In order to ensure that this rule is observed, the business activity of the foreign company will be examined during the branch registration procedure.
One of our agents who specialize in company formation in Poland can provide foreign investors with more details about the conditions under which they can open a branch, depending on the country of registration for the parent company. We can also provide important details regarding taxation and the applicability of a double tax treaty if one is signed between Poland and the country in which the foreign parent company is based.
A branch in Poland may be suited to some types of businesses. Investors should keep in mind that is has no legal personality and it does not act independently when engaging in business activities in Poland.
Alternatives to the Polish branch
Apart from the subsidiary, briefly discussed above by our Polish company formation agents, another manner in which a foreign company can establish its presence in Poland is through a representative office. The most important difference is that the representative office may not engage in economic activities, only in promotional ones or advertising. This means that this form of entering the Polish market is only suitable to foreign companies that are interested in preliminary activities that are useful for establishing a client base before opening a company or maintaining the relationship with business partners or potential clients. Like the branch, the office will need to have a registered office.
The representative office has the same name as the foreign company and, just as the branch, it foes not have legal personality or capacity. There are no capital requirements, however, it must be registered with the Register of Representative Offices. Because is cannot engage in economic operations, that would mean that it can derive profit, the representative office is not subject to taxation or reporting requirements. Unlike the branch, it can only be set up for a limited time (two years, in general, with an option for renewal for another two). A foreign representative is required in Poland, for the operation of the office.
Our agents who specialize in company formation in Poland can provide you with more details on the two alternatives to the branch, the representative office, and the subsidiary.
Branch taxation and reporting in Poland
The Polish branch is subject to taxation in the country, as per the provisions set forth by the Ministry of Finance and as per the Corporate Income Tax Law. The list below includes the main taxed payable by companies, both branches, and resident companies:
-19%: the standard corporate income tax rate;
-9%: the reduced corporate income tax rate applicable to income except for capital gains, which is available to certain small taxpayers;
-19%: the withholding tax on dividends paid by a Polish resident company to a non-resident company; can be reduced as per a double tax agreement.
-23: the standard VAT rate;
-5% and 8%: the reduced VAT rates for certain goods and services.
As far as the branch’s reporting obligations are concerned, it is expected that this business form will keep its accounting records separate from that of the parent company. Moreover, these must be kept in the Polish language, irrespective of the language in the country where the headquarters of the parent company is based. Our team of agents who specialize in company formation in Poland can provide more information on the accounting regulations and the keeping of the tax records as per the law in force.
Below, we present a short video on the main traits of the Polish branch:
Entrepreneurs who wish to know more about taxation as well as about their other options such as the subsidiary can reach out to us.
Call us now at +48 42 663 65 03 to set up an appointment with our company formation agents in Poland. As a CGO Legal Counseling client, you will beneficiate from the joint expertise of local lawyers and international consultants for opening a company in Poland.
Michał Gawlak - Partner / Attorney-at-Law
Jakub Chajdas - Partner / Attorney
Piotr Owczarek -Partner / Attorney
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