A Polish limited liability company abbreviated Sp. z.o.o, is the most commonly used legal entity in Poland. It is the equivalent of the Estonian OU company or the private limited liability company in other jurisdictions. It is suited for medium-sized and large companies and it is popular among investors because of the fact that founders are only liable to the extent of the invested capital. It is recommended for those investors who wish to enter into a business that will have a relatively small number of shareholders (as compared to the larger number of shareholders in a joint-stock). It is also recommended for those investors who will be company shareholders and wish to closely supervise the company activities.
The list below is a short summary of the four main steps that need to be accomplished in order to open a Sp.z.o.o.:
Draw up the Articles of Association: the limited liability company is incorporated based on the execution of the Articles of Association which is in the form of a notarial deed.
Deposit the share capital: the minimum share capital for this type of company is 5,000 PLN and had to be deposited in full before the company is registered.
Appoint the company directors: this is a mandatory step and the company can have one or more shareholders but cannot be formed by a sole trader; a separate resolution to appoint the Board of Directors can be drawn up at the same time with the Articles of Association.
Register the company: the actual registration of the company with the Commercial Register, the step that certifies that the legal entity exists and has legal capacity.
Although this business type is a widely-used one, our company formation experts in Poland can offer you more information about other types of companies in Poland. Businessmen interested in starting a LLC in another country, for example opening a SRL in Moldova, can receive assistance from our partners.
The characteristics of a Polish Sp. z.o.o
A Polish limited liability company is a type of business that has a legal personality and it may be incorporated by one or more individuals or legal persons. The minimum share capital required to incorporate a Polish Sp. z.o.o is 5,000PLN or the equivalent of less than 2,000 EUR, with a general value for one share of 50 PNL or less than 12 EUR. The share capital is divided into shares that can be of equal or unequal value (the types of shares are described in the company’s Articles of Association). The required amount must be paid in full before the new LLC is registered with the National Court Register. The shareholders can increase the capital of an Sp. z.o.o through a special amendment of the Articles of Association.
The rights of the shareholders include the possibility to vote (within a certain limit of votes per share), the right to receive dividends (up to a certain percentage, also according to owed shares) and to receive part of the assets in case of company liquidation. The shareholders are allowed to hold their meeting either at the place of business where the registered office is located or at another location if so stipulated in the Articles of Association.
The company is run by a management board that is composed of one or more members and it can be appointed for an indefinite period of time. The Board members are subject to a number of regulations or rules, including but not limited to a non-competing obligation. The members of the board are jointly liable towards the creditors. Supervisory Boards are mandatory in case of limited liability companies that have an initial share capital that exceeds 500,000 PLN and have more than 25 shareholders.
As far as liability is concerned, the shareholders and the legal entity are separate. The liability of the company as a legal entity is unlimited, and it is liable for its debts and obligations with all of its assets. The company shareholders do not bear liability for the legal entity's obligations, however, their financial risk is limited to the amount invested in the company’s share capital.
An important characteristic of the Sp.z.o.o in Poland is that there are no restrictions on foreign shareholders. Our agents can help foreign investors who wish to know more about the initial steps for starting such a company in the country.
The first step in incorporating a Polish limited liability company is to draw up the Articles of Association in the form of a notarial deed. The Articles of Association are the documents that provide the general information about the company, such as the business name, its registered seat, and the objectives of the company as well as its duration, details about the share capital as well as the nominal value of a share. The incorporation documents also contain information about the shareholders and the management board. It is usually recommended for the same articles to also contain the resolution for the appointment of the initial Board of Directors for the company.
Our Polish company formation agents recommend that the company directors should take the time to also arrange for the certification of their signature specimens when they visit the Polish notary for the purpose of drawing up the notarial deed.
The actual company registration phase starts with an application for registration with the National Court Register. The following documents need to be presented:
-copies of the Articles of Association;
-statement proving that the capital has been paid up (signed by the Board members);
-the shareholder’s list, also signed by the Board members;
-the names and identification details for the directors;
-proof of having rented or purchased a real estate that will serve as the registered office.
These documents, together with the filled in application for registration, are submitted to the National Court Register. The founders also need to handle the REGON number registration and the registration with the Social Insurance Institution as well as the registration with the tax authorities for the purpose of the NIP tax identification number. All of these steps are inter-related, as one stage cannot be complete unless a previous registration is performed. For example, the company can send the application for registration with the Social Security Institution after the NIP identification number is issued.
When drawing up the Articles of Association, the founders can choose to only include the essential information, as listed previously in this article. However, our company formation agents recommend that founders take the time to include the detailed information about the division of power within the company. This means that the powers of the Board of Directors, that of the Shareholder’s Meetings and the Supervisory Board (if needed according to size), are to be clearly determined and highlighted. The Articles can also include clauses that will provide easy solutions management issues, such as the process of increasing the share capital (which can be clearly outlined in the Articles). Alternative dispute resolution methods can also be provided from the start, in the incorporation documents. If they choose to do so, company owners may include arbitration clauses – which may be faster and more cost-efficient compared to litigation.
Additional information about limited liability registration
The information presented below by our team of Polish company formation agents concerns the registration of the business entity with the National Court register. The issues presented for consideration below occur once the company’s documents have been drawn up and the minimum capital payments have been made.
The form required for the registration of a limited liability company is an official one and it is provided by the Register (form KRS-W3). It is filled in in Polish in a legible manner or on a computer (when done by hand it is completed in capital letters). The application is accompanied by the following additional documents:
- additional forms that are filled in by the partners as well as a special form for a branch, when the legal entity will serve as suck; another important form is that which indicates the company’s object of activity;
- the management’s statement on the injection of capital;
- the list of partners and the document through which the governing members are appointed;
- the identification details for the board members or sole company owner (name, surname, address);
- proof of payment for the registration fees;
These documents are submitted in their original form or in certified copies/excerpts, as applicable. Electronic documents must bear an electronic signature.
Investors who wish to open a Polish limited liability company should know that there are fees for registration and an application for entry that has been concluded using the contract form provided by the electronic system that has been left unpaid has no legal effects. Our team of company formation agents can assist those who are looking to obtain the official forms and need more information on how to make the submission.
When registering a company in the traditional (paper, not electronic form), the fees are 500 PLN for entry and 100 PLN for the announcement of the entry in the Court and the Economic Monitor. When the company is registered in the traditional form (with the paper submission) the payment options are cash, cashless or court fee e-sign. More information can be provided upon request about the court bank account number or the e-Payment system. For the online company registration the initial court fee for entry is higher (250 PLN) while that for the announcement for the entry in the Court and Economic Monitor is the same (100 PLN).
Most applications for the registration of a limited liability company with the National Court Register are examined within 7 days following the receipt of the documents. In case of electronic submissions (using the ICT system), the application can be examined within 1 day from its receipt. In some cases, the application may need additional documents or in some cases even hearings. When a hearing is required, the examination of the application can last approximately one month.
If an application for registration is not approved after the hearing, the party that was refused has the right to appeal. This appeal is lodged with the court that issued the decision within two weeks of delivery (and it is accompanies by a proper justification).
In addition to the registration with the National Court, other registrations are needed for a Polish limited liability company. These are the following:
- registration with the Social Insurance Institution (within 7 days of commencing the operations);
- registration with the Central Statistics Office and the tax office (to take place within 21 days after the registration with the National Court Register).
These institutions will require information about the status of the company, its place of business, expected number of employees as well as bank account information.
Any changes that take place within the company after its registration are to be notified to the Register within 7 days. Such changes include but are not limited to a change of company type, change of company seat or name, modifications in the number of shareholders, etc.
Other obligations for those who register a Polish limited liability company include some of the following:
- making a physical inventory;
- buying and registering a fiscal cash register (required in some types of activities);
- making any other needed subscriptions for services required to run the business.
The main taxes for these types of companies in Poland are the following:
-the corporate income tax: the standard value is 19% with a lower 15% rate that can be available in some cases to small companies.
-social security contributions: both the employer and the employees pay this tax and it varies according to the employee’s salary.
-real estate tax: imposed at a local level for land, buildings and construction; varying rates.
-stamp duty: varies according to the activity that is performed, for example when a certificate is issued.
-tax on civil law transactions: it has varying rates of 0.1%, 0.5%, 1% and 2%.
-VAT: a standard VAT rate of 23% with reduced rates of 8%, 5% and 0% for some types of goods and services.; some of the 8% and 5% goods and services include medicines, selected foodstuffs, hotel and catering services, selected transport services and others; among the exempted services we can include medical and cultural services as well as some of the financial services.
The tax year for a Polish Sp.z.o.o can be the calendar year or any other chosen twelve-month period. A simplified self-assessment method is available, based on the company’s results in the previous year. Advance income tax payments can be made during the year and the final tax determination is to be made within three months of the end of the tax year. Penalties applied for failed tax reconciliation and noncompliance. The Head of National Tax Administration, as well as the Ministry of Finance, are the main tax authorities in the country.
Our Polish company formation experts can answer any questions about the corporate tax in Poland as well as all the other taxes for companies, such as the dividend tax.
Poland also offers a number of incentives to qualifying companies. These are offered in the form of deductions for some types of expenses for research and development activities. Companies that have the status of R&D center can benefit from additional deductions. The Special Economic Zones (SEZ) in Poland are areas where investors benefit from preferential conditions for setting up a business such as tax exemptions, lower rent, employment incentives, and others. Companies that create jobs in Poland, particularly for disabled workers, can also benefit from grants.
In some cases, entrepreneurs can benefit from forms of relief for starting a business, such as an exemption for paying social security contributions for six months or paying contributions to the Labor Fund. Our agents can guide investors who wish to make these applications. Another option is to only pay part of the social security contributions.
If you are interested in investing in Poland, our company formation agents can offer you detailed information about attractive investment opportunities and can provide complete company management services in Poland. Our team of company formation consultants is part of a wide network of business consultants, accountants, and legal advisors, therefore if you need company incorporation services or legal advice in another country, such as the US, we can put you in contact with our partners.
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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