Starting up your own business abroad is an idea that eventually comes to mind of every entrepreneur who wants to expand their business. This immediately raises questions: where would be better, more convenient or cheaper? The choice of jurisdiction plays an essential role, as it will depend on the convenience and success of doing business.
Today, the “target” of doing business – neighboring Poland, and that’s why.
Political and economic stability of the State
The Republic of Poland has departed from its socialist past long ago and has been a member of the European Union since 2004. At the same time, the proximity of the Ukrainian and Polish mentalities, the common historical past, allow us to better understand the specifics of life and features of doing business in Poland, in particular, in terms of legal regulation.
Poland has a developed market-based industrial and agricultural economy. It is a regional State in Central Europe, with the largest stock exchange in Central and Eastern Europe. The basis of the Polish economy is industry, namely machine-building, metallurgy, mining and chemical. The country has the sixth largest economy in terms of nominal GDP in the European Union and the tenth largest in Europe.
Poland borders seven European countries: Ukraine, Belarus, Russia, as well as EU countries: the Czech Republic, Slovakia, Lithuania and Germany. It has access to the Baltic Sea – an important economic and recreational center of Europe. Such a successful geographical location and EU membership allows you to successfully implement business projects in Poland without any major risk.
In addition, doing business in Poland is calmer, given the absence of abrupt and radical changes in public life and, in general, the presence of corporate security.
Legal form of activity in Poland
The choice of the necessary legal form is an important stage of business implementation: it depends on both the relationship with partners and the number of taxes and fees that will need to be paid to the State Budget. In Poland, there are such legal forms as:
- simple partnership (spółka cywilna) – the simplest and least popular form regulated by the Civil Code;
- individual-entrepreneur (własna działalność gospodarcza) – an analogue of the Ukrainian sole proprietorship;
- limited liability company (spółka z ograniczoną odpowiedzialnością) – in Poland, as in Ukraine, is one of the most popular forms of doing business;
- partnership (spółka partnerska) – a form that unites persons of the professions determined by law (doctors, notaries, lawyers, etc.);
- general partnership (spółka jawna) is also popular in Poland;
- joint-stock company (spółka akcyjna);
- and a limited partnership (spółka komandytowa) are world-renowned forms of doing business.
Partnership Limited by shares (spółka komandytowo-akcyjna) does not have any analogue in Ukrainian law and consists of the combination of features of a limited partnership with a joint stock company, where along with a full participant also participates a shareholder
The simple joint stock company (prosta spółka akcyjna) is a novelty of Polish law, which became available on July 1, 2021. This is a simplified form of registration, maintenance and liquidation of the organization of business activities, which is something in between a joint stock company and a limited liability company. One person, including a foreigner, can be a shareholder of such a company. The shareholder (s) are not liable for the company’s obligations.
A distinct group consists of branches and representative offices of foreign legal entities (oddziały i przedstawicielstwa).
Tax treatment
Entrepreneurs who want to start a business in Poland are perhaps most interested in choosing the optimal tax treatment. Large taxpayers are required to file income tax and VAT reports on a monthly basis. Entities are less likely to choose a quarterly or even annual reporting period. The data in the tax returns of the company must be confirmed by entries in the Trade Book, in which all transactions are entered in chronological order in accordance with the accounting policy adopted by the company. The State does not insist on the use of a standard chart of accounts, allowing legal entities to use their own. Beginner businessmen can just hire a good accountant, whose services are not so expensive.
So, the main taxes are:
- corporate income tax CIT – the total rate is 19%, if the company’s turnover does not exceed 1.2 million euros – a reduced rate of 15% is applied;
- personal income tax (is paid by individual entrepreneurs and companies that are not subject to PIT tax) exists in two forms: 19% of the so-called “linear tax”, or 17% and 32% of the excess amount of 85,528 zlotys of income (i.e. paid according to the amount of employee income for the year);
- excise duty – as in Ukraine, applies to certain groups of goods (alcohol, tobacco, cars, gasoline, etc.);
- value added tax VAT – base rate 23%, reduced rates: 0%, 5%, 8%. For example, the rate of 8% applies to printing machines for Braille, some products of animal origin, etc.).
Support for small and medium-sized business in Poland
The Polish government and the EU are always in favor of supporting business. This support manifests itself in the form of subsidy, assistance and grants from both the State and the EU. This gives hope for receiving part of the money allocated for the development of the country’s economy by the financial institutions of the European Union. Non-refundable grants are provided directly to the companies themselves, so Polish state programs for small and medium-sized businesses are more focused on helping on collaboration with European organizations, simplify administrative procedures and reduce organizational burdens.
The times of the COVID-19 pandemic have also become a kind of touchstone that allows us to understand the scale of governmental support of business. We are talking about a number of regulations, the so-called Anti-Crisis Shields (Tarcze Antykryzysowe) – a package of laws to support certain sectors of the Polish economy, employers and workers. In general, the State has allocated more than 212 billion zlotys for the protection of jobs and the economy, 100 billion zlotys of additional funds under the Financial Shield. Assistance was implemented in 5 areas of activity: employees, companies, health care, financial institutions, investments.
In order to receive a subsidy, the entrepreneur must apply to the relevant government agency in Poland, and if the submitted business idea will meet the requirements of investors from the EU, the companies can allocate funds for up to 3 years.
When registering a new company in Poland, it is mandatory to have a memorandum of association and fully formed authorized capital. In addition, businessmen must get another document – a business plan to implement a commercial idea.
For young companies that have worked for at least a year, concessional lending for small businesses from Polish banks at a rate of 6-8% per annum is possible.
Promising ideas for business
In February 2021, almost four out of five economic immigrants from Ukraine had plans or were about to start their own business in Poland (according to a study of the employment agency Gremi Personal). This means that since last year, the group of Ukrainians who wants to start their own business in Poland has grown by a third. This trend can also be seen in the registers of the Social Insurance Institution (ZUS): the number of Ukrainian citizens doing business in Poland has increased by more than one-fifth over the last year, compared to last year.
Our fellow citizens in Poland are increasingly opening retail stores (often specializing in products and goods from Ukraine, Russia and Belarus), beauty salons, barbershops. Until recently, the hotel and restaurant business was also a popular destination. Compatriots often specialize in renovations and construction, create their own logistics companies, however, such businesses require a large number of permits and significant investment.
Also, a significant part of Ukrainian business in Poland are intermediary agencies for the employment of citizens of the former USSR, legalization firms (help to draw up documents for a temporary residence permit, provide advice).
Some Ukrainians also have to buy off-the-shelf businesses – franchises of stores, such as Żabka or bakeries, clothing stores, courier services, etc.
Legalization
Ukrainian entrepreneurs are often interested in the possibility of legal stay in Poland. As Poland is an EU country and a member of the Schengen area, it is also subject to EU rules on the stay of foreigners, as well as the provisions of the Schengen Agreement. Presence of the interest in regard of running your own business is not always a reason to issue a Schengen multi-visa. Buying or organizing your business in the country will allow you to get a residence permit in Poland – Beaten card (Karta pobytu).
Ordinary Card is issued for up to 3 years, then it lasts up to 5 years. After 5 years of legal residence in Poland, it is possible to obtain a long-term EU resident card, which in the future is the basis for obtaining citizenship. Such cards allow you to legally stay not only in Poland, but also in the Schengen countries. Decision fee for card issuance is 340 or 440 zlotys (depending on the type of permit), the fee for the issuance of a card (plastic) – 50 zlotys.
As for the time required to found your own company, the preparation and provision of the necessary package of documents, if you resort to the paid assistance of an intermediary firm, or individual professionals (lawyer, notary, accountant), will take several days. It takes up to a month to register a legal entity in the State Court Register.
Maria Bakerenkova
For more detailed information on doing business in Poland, you can contact the specialists of the Attorneys Association “Bauman Kondratyuk” by phone:
+3044 209 95 16
+3044 334 73 07,
or contact us via email: office@bkadvisers.com.ua