We present below an outline of the main Polish regulations regarding the branch of a foreign entrepreneur. The information provided in this memorandum is of a general nature and should not be considered exhaustive.
The branch is the simplest form of a foreign entrepreneur’s business in Poland.
Subject to certain restrictions, any foreign entrepreneur (trader), including but not limited to an individual or a company, is allowed to establish its branch in Poland. The branch is simply an organized part of the foreign entrepreneur’s business. It does not have legal personality. All rights and duties relating to the branch’s activity belong to the foreign entrepreneur. Consequently, the foreign entrepreneur is fully liable for all obligations incurred as a result of the branch’s operations.
2. Decision to establish the branch
In order to establish its branch in Poland, the foreign entrepreneur (if the foreign entrepreneur is not an individual – its relevant governing body) must take the corresponding decision determining also the objects and seat of the branch.
The seat of the branch is the locality, such as a city or town, where the branch has its main office. The address of the branch must be located in the branch’s seat (i.e. in the relevant locality). The branch may thus change its address without moving its seat, if the new address is in the same locality as the previous one.
The objects of the branch cannot be wider than those of the foreign entrepreneur. For practical reasons, it is recommended to draft the clause of the decision to establish the branch that deals with the objects by referring to the statistical classification known as ‘Polish Classification of Activities’ or ‘PKD’. This classification will be applied to entering the objects into the National Court Register. The objects’ leading (core) item must be so entered as identified at the subclass level.
The foreign entrepreneur must further appoint an individual who will represent it as far as the branch’s activity is concerned. That individual should have his address for notices in the European Union, although he need not reside there. The representative should be granted a power of attorney given by the foreign entrepreneur.
The branch’s name consists of the foreign entrepreneur’s name, the Polish translation of the legal form of the foreign entrepreneur, such as the limited liability company, and the phrase ‘oddział w Polsce’ (branch in Poland).
The branch’s activities cannot commence prior to its entry into the National Court Register. The branch is registered by the registration court following an application filed by the foreign entrepreneur. The application must include as enclosures in particular an extract from the foreign entrepreneur’s relevant register and a certified copy of its articles of association. The branch should have its address prior to filing that application.
For practical reasons, in order to become fully operational, the branch also needs a REGON statistical number, a NIP fiscal identification number and registration (as part of the foreign entrepreneur) for the purposes of Value Added Tax.
The branch receives its NIP fiscal identification number and REGON statistical number automatically, after it has been entered into the National Court Register. In addition, the foreign entrepreneur must file with a tax office, after the branch’s entry into the National Court Register, a form including certain information such as information on the branch’s bank account and some statistical data.
If the branch is to be registered in Warsaw, the registration proceedings will usually take about three weeks from the date of filing the application.
The following costs will be incurred in the process of establishing the branch assuming that no unusual events occur:
- costs of entry into the National Court Register – PLN 600,
- additional fees – about PLN 100,
- costs of obtaining an extract from the relevant register of the foreign entrepreneur and a copy of its articles of association as well as of their authentication and translation,
- costs of VAT registration – PLN 170.
4. Taxation and accountancy
The tax treatment of the income generated by the branch’s operations depends on the contents of the non-double taxation agreement between Poland and the foreign entrepreneur’s country. It is fair to say, however, that in most cases such income is subject to taxation in Poland as if the branch were a company separate from the foreign entrepreneur.
The branch must keep its accounting books in the Polish language and according to Polish law.
The branch is liquidated if the foreign entrepreneur so decides.
The minister of economy may issue a decision preventing the foreign entrepreneur from conducting activity within the branch where the foreign entrepreneur manifestly violates Polish law, the foreign entrepreneur’s liquidation has commenced, the foreign entrepreneur is no longer allowed to carry on business activity, the foreign entrepreneur has been removed from its relevant register, or the foreign entrepreneur’s activity poses a threat to an overriding public interest. Except in the two last-mentioned cases, the branch is then liquidated following a procedure similar to that applicable to a limited liability company.
The rules discussed in the preceding paragraph do not apply to foreign entrepreneurs from European Union or European Economic Area member states.
Prepared by the law firm:
Kłoda Toczko sp.p. Adwokaci
ul. Piękna 28/34 lok. 9
00-547 Warsaw POLAND
Telephone: (48) (22) 654 76 51
Fax: (48) (22) 654 78 51