How to Open a Company Branch in Poland: 5 Ways to Do It

Ani Gasparyan

Last updated on July 30, 2024 | 27 min read

BusinessGuidePoland

Oder Lake and the Collegiate Church of the Holy Cross and St. Bartholomew in Wroclaw.

Poland, situated at the heart of Europe, has become a prime destination for businesses seeking to expand their reach. Its robust economy, strategic location, and connectivity to the European Union make it an attractive choice for international companies. Poland presents extensive business opportunities, being the 6th largest economy and the 7th largest country by size within the European Union. The country has a notably lower cost of living compared to other European countries and the US. On average, living expenses in Poland are 38% lower than in the United States, making it an appealing choice for businesses looking to expand in Central and Eastern Europe.

Furthermore, with high consumer demand and a population of 38 million residents, Poland offers abundant opportunities for suppliers across various industries. The country’s labor market is substantial, boasting 15 million employees. Additionally, Poland’s education system places a strong emphasis on STEM fields, fostering a vibrant community of IT professionals. As of 2023, the country boasted over 607000 IT specialists and software developers, underscoring its robust talent pool and further enhancing its attractiveness for business investment in the region. Thus, expanding your business into Poland can be a strategic move to tap into the Central European market.

As companies from abroad seek to establish local branches in Poland, they often require specialized assistance to navigate the complexities of the market. There are companies equipped to provide this assistance, and one such company is DevsData LLC. It brings its expertise to optimize this process, ensuring compliance with Polish laws and regulations while facilitating smooth integration into the Polish market. With their assistance, businesses can establish branch offices that operate efficiently within the Polish business landscape. Here is the guide to exploring the various methods and advantages of establishing a branch office in Poland, with DevsData LLC as your trusted partner in navigating the process effectively.

What is a branch office in Poland?

A branch office in Poland is an extension of a foreign company operating in Poland. It does not have a separate legal status but conducts business in Poland on behalf of the parent company. This setup simplifies various administrative processes and ensures that any legal or financial matters are directly managed by the parent company. However, it is essential to note that there are several other options to consider when expanding into Poland. Each approach offers distinct benefits and can be suited to various business goals. Let’s examine the key methods for establishing a presence in Poland:

5 ways to open a company branch in Poland

1. Formal registration as a branch of a foreign company

To open a company branch in Poland, you need to register with the Polish National Court Register (KRS). This requires submitting key documents, such as the parent company’s incorporation documents, a resolution to establish the branch, and details about the branch’s representative in Poland. This process ensures the branch is legally recognized and compliant with Polish law. Although this method can be time-consuming and requires careful attention to detail, it provides complete control over the branch’s operations. Branch registration typically ranges from 2 weeks to 2 months.

Registering a company branch in Poland must be done electronically, as paper applications are no longer accepted by the registry court. You need to file your application through the Court Registers Portal (PRS) and ensure it is completed in Polish. Partnering with a Polish law firm can significantly ease this process.

2. Setting up a subsidiary (sp. z o.o.) in Poland

When expanding operations to Poland, one of the most popular methods is setting up a limited liability company (sp. z o.o.). This can be done in two primary ways, each offering distinct advantages based on your specific needs:

Through the S24 portal

The process is completed electronically via the Ministry of Justice’s S24 portal. It begins with creating an electronic account on the S24 portal, available only in Polish. After setting up your account, you can complete and electronically sign the necessary documents. You will also need to pay the registration fee online. This system is designed to make the company registration process more efficient and accessible.

With the assistance of a notary

This method is ideal for those who require a more customizable company structure and contractual agreements. While the process may take longer, working with a notary provides the flexibility to tailor the company’s framework to specific needs. The notary guides you through each step, ensuring that all legal requirements are met, and handles the electronic submission of documents on your behalf.

3. Acquisition of a local company

Acquiring an existing Polish company and converting it into a branch office can be an effective strategy. This approach may involve less paperwork and provide immediate access to local market knowledge, infrastructure, and workforce. Additionally, this method allows the parent company to benefit from the acquired company’s established customer base and local business relationships, potentially speeding up market entry and profitability. DevsData LLC can also assist in the acquisition process, offering expertise in due diligence, legal procedures, and strategic planning to provide a smooth transition and maximize the benefits of this approach.

4. Partnership with a local entity

Partnering with a local company can be an effective way to operate in Poland without opening a branch office. The local partner can guide you through the complexities of the Polish market, making the whole process easier and faster. With their knowledge of local regulations and business practices, they can help you avoid common mistakes and get things done more efficiently.

Additionally, a local partner can introduce you to important contacts, like suppliers and customers, which can be crucial for your business’s success. This partnership might also open up new business opportunities. By working with a local company, you can build the groundwork needed for a successful expansion and ensure a smoother transition when you’re ready to establish a permanent presence.

5. Utilizing local law firms

Another efficient method for opening a company branch in Poland is to involve a local law firm. Engaging lawyers is often considered the easiest way to ensure that all legal procedures are handled correctly and the business entity is established in full compliance with Polish regulations. A legal firm will advise on the most suitable way to open a company branch tailored to the client’s needs.

Legal service rates in Poland typically range from 300 to 1000 PLN per hour, approximately $75 to $250. Rates below this range are uncommon, and rates above it usually reflect partner-level fees. The total cost of setting up a business entity with the help of a law firm in Poland is generally between 4000 to 10000 PLN, which is approximately $1000 to $2600. Some well-known law firms in Warsaw that specialize in corporate law include:

1. Sokołowski & Partners

Sokołowski & Partners is a boutique law firm based in Warsaw, Poland, recognized for its personalized approach to legal services. The firm caters to clients seeking tailored solutions for company formation, ensuring that every aspect of the process is handled with attention to detail. Their corporate law expertise and client-focused philosophy make them a preferred choice for businesses looking to establish a presence in Poland.

2. Wardynski & Partners

Wardynski & Partners is one of Poland’s most esteemed corporate law firms, known for its comprehensive legal services and deep expertise in business law. As a larger firm, they offer a wide range of legal solutions, but their services come at a premium price. Despite the higher cost, clients benefit from their extensive experience, which can be particularly valuable for complex business formations and corporate matters.

3. KZ Legal

KZ Legal is a mid-sized law firm in Warsaw that strikes a balance between cost-effectiveness and high-quality legal expertise. They offer a broad range of corporate law services and are known for their practical approach, helping businesses navigate the legal landscape efficiently.

Bonus: employer of record (EoR) services

For companies that do not want to set up a legal entity in Poland but still wish to operate in Poland, utilizing EoR services is a practical solution. The EoR provider is the legal employer, handling payroll, taxes, compliance, and other employment-related responsibilities. This approach significantly reduces the administrative and legal complexities of entering a new market. It allows the parent company to quickly build a local team and commence operations while the EoR meets all local employment laws and regulations. This method is particularly beneficial for companies looking to test the market or initially operate on a smaller scale.

When examining the complexities of employment processes and the importance of Poland EoR services, it is crucial to note that the legal transfer of intellectual property in Poland is binding only when the contract is manually signed or executed using a qualified electronic signature (QES) under the European eIDAS standard. Significantly, if a company uses DocuSign to sign contracts with a developer, the intellectual property transfer does not occur, posing a potential risk for companies. Therefore, businesses should exercise caution and consider working with a reputable local recruitment agency, EoR, or law firm.

Additionally, when forming a business-to-business (B2B) contract with Polish employees, confirming the contract is bilingual is vital. Legal proceedings are more efficient when documents are in both English and Polish. Polish courts accept only documents in Polish and will demand certified translations of all evidence if the documents are solely in English.

DevsData LLC has over 8 years of experience in this market. They have worked with global corporate clients and high-growth American and Israeli startups. What sets them apart is their diverse team, which includes US specialists, bringing a deep understanding of local and international business landscapes. The company has an in-depth knowledge of a smooth and efficient setup process, allowing the parent company to focus on core business activities. At the same time, they manage the nuances of registration and compliance.

Comparison of business structures in Poland: Branch vs. Subsidiary

Features of a branch office in Poland

Branch offices in Poland possess several distinctive features:

Legal dependency and activities

Branch offices and subsidiaries differ mainly in their legal setup. A branch office operates under the same legal identity as the parent company, which simplifies administrative and financial matters in Poland. The parent company directly manages and oversees the branch’s operations, ensuring quick and coordinated responses to legal issues. However, a branch office’s activities are limited to those of the parent company and cannot extend beyond its established business scope. For instance, if the parent company is in IT, the branch cannot diversify into unrelated fields like manufacturing.

This setup maintains a unified focus but may not suit all businesses. If a company plans to engage in a broader range of activities or needs operations that differ significantly from the parent company’s core business, setting up a Polish limited liability company (sp. z o.o.) might be more appropriate. A sp. z o.o. offers greater flexibility and can support a wider range of activities, making it a better choice for companies planning to adapt their business model or expand into new areas that differ from the parent company’s primary focus.

Company information and transparency

The Polish National Court Register (KRS) provides public access to company information, including income statements and financial records, enhancing transparency. Under the Common Reporting Standard (CRS) regulations, companies must strictly define the “beneficial owner” (pol. beneficjent rzeczywisty), which ensures clarity on the individuals who ultimately own or control the company.

To check the status or details of a company in Poland, you can use online portals such as Rejestr or Wyszukiwarka KRS. These platforms provide easy access to company data, including registration status and financial records. Companies in Poland are also indexed in ALEO, the largest online company catalog, where potential partners or clients can easily search for and find detailed profiles.

Taxation

Branch offices are subject to Polish taxation on income from their operations within Poland. However, they benefit from Poland’s tax treaties with various countries, which can help avoid double taxation. This means that the income earned in Poland may not be taxed again in the parent company’s home country, providing financial relief.

When you set up a branch in Poland, it typically gets Permanent Establishment (PE) status, meaning it will be subject to corporate income tax (CIT) at a standard rate of 19% on income earned within Poland. Like other Polish companies, the branch must maintain detailed accounting records to ensure accurate tax reporting. The general value-added tax (VAT) rate in Poland is 23%, although reduced rates of 8% and 5% apply to certain goods and services. If the branch hires employees, it must also handle their social insurance contributions.

The CIT rate is also 19% for limited liability companies (sp. z o.o.), but smaller businesses with annual revenues up to 2 million euros can benefit from a lower rate of 9%. Additionally, withholding tax on payments such as dividends, interest, and royalties to non-residents is usually 20%. However, this rate may be reduced or not applied based on Poland’s tax treaties with other countries.

To comply with Polish tax regulations, it’s crucial to keep comprehensive accounting records and file annual tax returns. For more detailed information, visit this link.

Advantages of establishing a branch in Poland

• By establishing a branch in Poland, businesses gain direct access to the European Union market. Poland’s strategic location in Central Europe makes it an ideal hub for broader regional operations. This access allows companies to tap into the vast consumer base of the EU, benefiting from the free movement of goods, services, and capital within the union.
• Poland is renowned for its highly educated and skilled workforce, particularly in IT, engineering, and manufacturing. The country’s robust education system produces a steady stream of qualified professionals, providing businesses with access to talent pools experienced in meeting diverse industry needs.
• The next advantage of operating in Poland is the transparency of business operations. Financial data of Polish companies is publicly available, so it becomes easier to make informed decisions and build trust in the market.
• Poland also offers an affordable workforce, making it a cost-effective destination for hiring talented IT professionals. This affordability, combined with the high level of expertise, makes Poland an attractive location for companies looking to optimize their operational costs while maintaining high-quality standards. Thus, compared to other Western European countries, Poland offers a cost-effective business environment, boasting competitive labor costs and operational expenses. Read the article here to gain more insights.
• The Polish government actively promotes foreign investment by offering various incentives to foreign investors. These incentives include tax reliefs, grants, and subsidies, particularly in special economic zones designated to attract investment and stimulate economic growth. Such incentives can significantly lower the entry barriers for businesses looking to establish a presence in Poland.
• Poland’s economy is stable and steadily growing, driven by strong domestic demand and increasing foreign investment. The country’s resilient economic performance, even during global economic downturns, creates a conducive environment for business expansion. Moreover, Poland’s integration into global value chains and its commitment to economic reforms further enhance its attractiveness as a business destination.

Possible obstacles to opening a branch in Poland

Opening a branch in Poland offers exciting opportunities, but there are a few challenges worth taking into account:

1. Regulatory compliance

Navigating the Polish legal landscape can be tricky. You’ll need to handle various paperwork and follow specific rules for registering your branch online with the Polish National Court Register (KRS). This process involves submitting documents digitally and complying with local tax regulations. Ensuring all your documents are accurately prepared and submitted online is crucial to avoid delays or issues.

2. Language barriers

Language can be a big hurdle. While many business people speak English, official documents must be in Polish. This means you’ll need to get certified translations for everything, which can add to the cost and complexity.

3. Cultural differences

Business practices in Poland might be different from what you’re used to. Understanding local customs, negotiation styles, and decision-making processes is important to building good relationships with partners, clients, and employees. Being aware of these cultural differences can help you navigate the business landscape more effectively.

4. Employment law and practices

Poland has its own set of rules for employment, including contracts, benefits, and how to handle terminations. It’s important to follow these rules to avoid legal issues or fines. Working with local legal and HR experts can help you stay compliant and handle any employment-related concerns.

5. Intellectual property protection

Protecting intellectual property in Poland requires careful consideration. Contracts related to intellectual property must be signed manually or with a qualified electronic signature to be legally binding. Utilizing platforms like DocuSign for IP-related agreements might not be sufficient, posing potential risks.

Given the complexities of establishing a branch in Poland, it is recommended that you find the right partner to help overcome these challenges. Collaborating with a local expert or business service provider can offer valuable support in navigating regulatory requirements, managing language barriers, and understanding cultural nuances. A reliable partner can simplify the setup process, mitigate risks, and provide insights into local market conditions, making the expansion into Poland smoother and more efficient.

Final thoughts

Opening a branch office in Poland can be a strategic move for companies looking to expand their presence in Europe. Poland offers numerous advantages with its favorable business environment, skilled workforce, and strategic location. By understanding the various methods to establish a branch and the benefits it can bring, businesses can make informed decisions and successfully enter the Polish market.

DevsData LLC can be your strategic partner in this process with its profound proficiency in EoR services and beyond. They have local offices in Poland, including Warsaw, Gdansk, Krakow, Poznan, Katowice, and Wroclaw, providing comprehensive support that encompasses legal and tax advisory services tailored to your needs. With a deep knowledge of local regulations, they can assist with matters related to employment law and HR advisory for clients considering local hiring or establishing a business entity in Poland. Additionally, they provide business process outsourcing (BPO) services to enhance operational efficiency for their clients. This comprehensive support can significantly ease the complexities of setting up a branch office and provide a smooth and successful expansion into the Polish market.

Moreover, DevsData LLC has over 8 years of experience in the industry, working with a diverse range of clients. Their portfolio includes global corporate clients and high-growth startups from the United States and Israel. Additionally, they have US specialists on their talented team.

For further information, contact DevsData LLC at [email protected] or visit their website at www.devsdata.com.

Address:
DevsData IT Recruitment Agency Poland
Jerozolimskie 181B, 5th floor,
02-222 Warsaw, Poland
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Ani Gasparyan Senior copywriter and marketer

Enthusiastic marketing professional and experienced content writer. Blending a passion for marketing with the art of language and crafting compelling narratives and informative content for broad audiences.

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