by Piotr Kopec
Business activity in Poland may be conducted in different forms that are similar to the forms of doing business in other EU countries. Below I try to shortly overview the possible forms of doing business in Poland.
Individual business activity.
It is one of the most frequently chosen forms of doing business in Poland. It is appropriate for small-scale business activity. Due to the easy registration process it is inexpensive. It needs to be registered in Polish Central Business Activity Record and Information (CEIDG). This type of enterprise is usually run by one individual, who owns and represents the company. The owner is subject to all the profits and the losses. Income of a person conducting individual business activity is subject to personal income tax (PIT).
It is created by a small number of partners, who share mutual trust and who contribute their own capital. It is governed by the provisions of the Commercial Companies Code. An agreement of a partnership must be concluded in writing. It shall be registered in National Court Register (KRS). Each partner is liable for the obligations of the partnership. The partnership does not pay income tax on the income it earns. The partners pay either personal income tax (PIT) or corporate income tax (CIT).
A professional partnership is a partnership created by partners for the purpose of pursuing a profession. Persons qualified to create a professional partnership are mainly advocates, pharmacists, architects, auditors, insurance brokers, tax advisors, stock brokers. In other aspects it is similar to the registered partnership.
The same registration process applies to limited partnership as to the two abovementioned companies but the articles of association of a limited partnership shall be made in the form of a notarial deed. It is a beneficial form of cooperation for a persons who bring to the company various contributions, for example one partner brings money, the other brings ideas and work. Its greatest advantage is the fact that one partner is liable to the creditors for the obligations of the partnership without limitation and the liability of other partners is limited. Each of the partners has to pay taxes separately.
Limited Joint-Stock Partnership.
This type of partnership requires a minimum share capital of 50,000 PLN. At least one partner is liable to the creditors for the obligations of the partnership without limitation and at least one partner is a shareholder. The statutes of a limited joint-stock partnership shall be made in the form of a notarial deed. The partnership pays corporate income tax (CIT at a rate of 19%) on the income it earns.
Limited Liability Company.
This is one of the most common form of economic activity. A limited liability company may be incorporated by one or more persons. It is regulated by the same Commercial Companies Code. The share capital of the company is at least 5,000 zlotys. Limited Liability Company is represented by a the Board Directors. The shareholders in Limited Liability are not liable for the company’s obligations. It is a separate legal entity, it is taxed by Corporate Income Tax (CIT).
A joint stock company is the most complex form of a trading company designated to developing business at a large scale. It is similar to a limited liability company but the share capital of the company shall be at least 100,000 zlotys. Polish Joint Stock Company is represented by a the Board Directors. The supervisory board will exercise permanent supervision over all the areas of the company`s operations. It shall be registered in National Court Register (KRS). Joint-stock company is a separate legal entity, it is taxed by Corporate Income Tax (CIT).
To sum up, it is important to choose the appropriate form forms of doing business in Poland as it has the influence on methods of making decisions in the company, the responsibility of the owner as well as tax obligations.