Foreign investors who want to establish a business activity in Poland very often ask which business form of activity they should adopt. They can choose between establishing a Polish branch of their company or starting a separate legal entity (e.g. a new limited liability company). In this article, we will focus on the first of the abovementioned solutions and explain how a foreign company can deal with branch registration in Poland in 2023.
A foreign company’s branch in Poland – legal status
First of all, it should be emphasized that a foreign company’s Polish branch does not have a legal personality. It does constitute a separate organizational unit but it is still only a part of the foreign entrepreneurship. This means that foreign entrepreneur is responsible for the undertakings of the branch company. Essentially, the branch also does not have the capacity to be a party in court proceedings. Consequently, it is the foreign entrepreneur who will constitute a party (either plaintiff or defendant) in the event of a possible court trial. It does not apply, however, to cases concerning employees’ issues.
In the event of litigation between a foreign company’s branch in Poland and its employee (either former or present one), the branch company will always constitute a representative party to the proceedings. In other words, if the investor wants that his Polish part of business have a legal personality he has to register a company in Poland.
Branch in Poland for EU companies
In Poland, those entrepreneurs who originate from the European Union may establish a branch of their business practically without restrictions. Entrepreneurs originating from countries not belonging to the EU may establish a branch in Poland on the basis of reciprocity. This means that the possibility to establish a branch in Poland company depends on whether the international agreements ensure Polish entrepreneurs similar rights.
How to register a branch of a foreign company in Poland?
Moreover, registration of a company’s branch in Poland also requires:
- making an appropriate decision by a mother company (e.g. the resolution of an appropriate body of a company, such as management or board of directors);
- the application for the branch’s entry into the Polish National Court Register [Polish: KRS] rand by a district court;
- if a foreign entrepreneur operates on the basis of the partnership agreement, deed of foundation, contract, statute and/or entry into the Company Register, a certified copy of such documents together with their certified translation into Polish language should be submitted along with the application for entry of the branch into the Polish register.
Obviously, a foreign company’s branch should also have a legal title for its registered office in Poland (e.g. rent agreement). There are no legal obstacles to use a virtual office.
Keep in mind that foreign entrepreneur may start his business activity within the company’s branch only after obtaining an entry into the Polish National Court Register [Polish: KRS].
Representative of the Polish branch
An entrepreneur performing registration has to assign a person who will be authorized to represent the parent company (a branch representative). The branch representative shall act on behalf of and for the entrepreneur in relation to the branch company’s activities.
There are no particular requirements regarding the person indicated as a branch representative. Such person does not need to be a Polish citizen or an employee of the company’s branch. There is no requirement for a branch representative to speak Polish language. More than one branch representative may be assigned.
The representative may be dismissed by a parent company at any time. Both assigning and dismissing a branch representative shall be confirmed in writing.
A foreign company’s branch in Poland after registering in National Court Register
After the branch’s registration in the Polish Commercial Register one should fulfil a few more formalities. The most important ones constitute:
- reporting the parent company to the Internal Revenue Service – as a consequence, the tax office shall issue a unique Tax Identification Number [Polish: NIP] for a parent company;
- reporting a foreign company’s branch to the Internal Revenue Service – if the branch company is going to hire employees, it must apply for a separate Tax Identification Number [Polish NIP] in order to comply with the responsibilities to cover Social Insurance contributions and advance personal income tax payments;
- registering as VAT payer– if the branch company will conduct business activities covered by this type of taxation (it is worth noting that the foreign entrepreneur is subject to registration, not the branch company itself).
Business activity of the branch
The economic activity of the branch may cover only such scope of activities that is conducted by a foreign entrepreneur. It is a significant restriction in comparison to registration of a new limited liability company. Company’s range of operations is unrestricted as long as it is legally permissible.
The branch company is obliged to pay corporate income tax (CIT) on the income generated on the territory of Poland. The branch company is also a VAT payer. Moreover, if the branch company hires employees, it also becomes a payer of Social Insurance contributions. It should also pay and advance personal income tax payments for its employees.
The foreign company’s branch has to keep and maintain accounting in Polish language and in accordance with Polish accounting rules.
The branch of the company should have the original name of the foreign entrepreneur together with its legal form translated into Polish and an additional designation: ‘oddział w Polsce’ [branch in Poland].
Summary
Apparently, the economic activity of a foreign company’s branch in Poland has its own specifics. For your convenience, below we present several crucial differences between conducting business activity in the form of a branch company and Polish limited liability company:
| Foreign company’s branch | Limited liability company (subsidiary) | |
| Legal personality | NO | YES |
| Registration by notary required | NO | YES |
| The scope of activity | Identical with the scope of the parent company’s activity | Any economic activity allowed by law (resulting from the company’s agreement) |
| Share capital (minimum) | NON-APPLICABLE | 5000 PLN |
| Entity’s assets | Part of the parent company’s assets | Separate from the parent company |
| Name | The original name of a foreign company with the legal form translated into Polish and with a designation of “oddzial w Polsce” [“branch in Poland”]. | Any name with a designation: „spółka z ograniczoną odpowiedzialnością”
|
| Governing bodies | NONE | Management board Meeting of shareholders (optionally) Supervisory board |
If this article was interesting for you and you want to know more on the topic it concerned we encourage you to contact us. Specialists from our law firm in Poland, will be happy to help. If you are interested in company registration in Poland visit our dedicated landing page.
FAQ
Can a branch of a foreign company in Poland employ workers in Poland?
Yes, a branch of a foreign company in Poland can acquire a status of employer under the provisions of Polish labor code.
Can a branch of a foreign company in Poland be registered to VAT in Poland?
Yes, however it is limited to situations in which the branch is “active” meaning that it actually runs business activities in Poland. On the other hand we have a “passive” branch which does not run business activity and its presence limits to having a registered office in Poland.
What is the scope of acitivity of a branch of a company in Poland?
The business activity of the branch may cover only such scope of activities that is conducted by a foreign entrepreneur. It is a significant restriction in comparison to registration of a new limited liability company. Company’s range of operations is unrestricted as long as it is legally permissible.
How to register a branch of a foreign company in Poland?
Registration of a company’s branch in Poland also requires:
– making an appropriate decision by a foreign entrepreneur (e.g. the resolution of an appropriate body of a company, such as management or board of directors);
– the application for the branch’s entry into the Polish National Court Register [Polish: KRS];
if a foreign entrepreneur operates on the basis of the partnership agreement, deed of foundation, contract, statute and/or entry into the National Commercial Register, a certified copy of such documents together with their certified translation into Polish should be submitted along with the application for entry of the branch into the Polish register.
How much time does it take to register a branch of a company in Poland?
The procedure of registering of a branch of a foreign company in Poland takes around 1 -3 months
What is NIP number?
This is a Polish tax identification number. If your company is registered to VAT it is your VAT no. at the same time.
Should I register a company in Poland or a branch of my foreign company in Poland?
For nine on ten clients I recommend a subsidiary over a branch in Poland. Why so? Here are the main reasons:
– easy and fast incorporation with possibility of fiduciary set-up accelerating the registration process significantly;
– no issues with tax registrations – the company becomes a tax payer in PL by virtue of registration in Poland;
– no limitations as per the choice of the scope of activity;
– full discretion in choosing the name of the company;
– possibility of selling the shares in the company (as part of the international business).
Who can be appointed as a representative of a branch of a foreign company in Poland?
There are no particular requirements regarding the person indicated as a branch representative. Such person does not need to be a Polish citizen or an employee of the company’s branch. There is no requirement for a branch representative to speak Polish. More than one branch representative may be assigned.
