Conditions for investing in Poland – the latest information
By KPMG
The publication Investment in Poland. A rough guide to successful investing in Poland is a comprehensive report providing crucial information to foreign investors, who are considering doing business in Poland.
The guidebook is divided into eight chapters. Individual sections describe the current economic and demographic situation, legal and tax considerations as well as the M&A market and deliver essential information on all geographic regions of Poland. Compared to last year’s edition, this guide has two new chapters, which outline ESG trends and the business services sector in the context of running a business in Poland.
The report opens with an overview of Poland’s economy, outlining macroeconomic indicators and the impact that inflation and geopolitical tensions have recently made on the Polish economy. We learn that despite the troubled times, Poland continues on a growth path. The main contributors have been its fiscal policy and a growing labour market, supported by an influx of workers from Ukraine. This short-term domestic demand may provide a boost to the economy in the future.
Poland remains an attractive destination for foreign investors, and the number of M&A transactions has been growing in recent years. Only last year, over two hundred transactions were carried out, almost one-fifth of which in the high-tech sector. For more information on this section, please refer to the additional booklet on acquisition.
Business services became one of the most important and fastest-growing sectors in Poland. Despite the pandemic and geopolitical tensions, Poland continues to strengthen its competitive advantage globally. The country is not only the regional leader for business services in Europe, but also a favourable location for investors to set up new business services centres.
The report pays much attention to significant ESG regulations that affect many aspects of the Polish economy. The introduction of more restrictive rules regarding greenhouse-gas emissions may affect the costs of doing business, especially in sectors generating high emission levels. Therefore, transition to a low-carbon and climate-resilient economy has to be adapted by organisations in all sectors, ranging from transport and real estate to the financial industry.
Another chapter highlights different forms of business activity of foreign entities in Poland, with the vast majority being limited liability companies. This legal form has all the advantages and characteristics expected by investors. It is also a precise, clear and safe legal vehicle for conducting business in the form of a joint venture with other partners, whether Polish or foreign. Unlike a joint-stock company, a limited-liability company is significantly deformalised, which makes it very easy for the investor to exercise control over the company.
The reader can also learn about the Polish tax system, which, due to constant changes in Polish law, is subject to continuous modifications. These new regulations have also been set out in the report. The Polish tax authorities hold power to launch a tax audit during the five years after a tax liability has arisen and to reassess the amount of that tax liability. The obligation to pay CIT arises three months after the end of the fiscal year. The tax liability in PIT arises in April of the following calendar year. Income received by an individual under employment contract concluded with a Polish entity is always subject to Polish PIT in accordance with progressive rates of 12% and 32%. Both taxes are paid in the advance payment system during the tax year, and after the end of the year the difference is paid or the tax overpayment is refunded. On average, European OECD countries levy a corporate income tax rate of 21.5%. The basic CIT rate in Poland of 19% is therefore lower than the EU average. Moreover, potential investors will also find information on mandatory disclosure rules for tax schemes (MDR), and General Anti-avoidance Rule (GAAR), withholding tax, transfer pricing, social security and VAT.
Reporting requirement on statutory financial statements of entities in Poland invariably consist of the following elements: balance sheet, profit and loss accounts and notes to the financial statements. Financial statements prepared by entities subject to a mandatory annual audit also include a statement of changes in equity and a cash flow statement. In 2022, there were 416 companies listed on the Warsaw Stock Exchange, 318 of them on the main market and the other 98 on the OTC market. Of all companies listed on the WSE, 45 are foreign entities. Companies listed on the WSE have the option of preparing their financial statements in accordance with International Financial Reporting Standards (IFRS).
The last section covers investment destinations. Depending on the region in which the investment takes place, there are different tax incentives available to investors. For the purpose of this report, Poland has been divided into seven macro-regions, made up of 16 voivodships, all with different maximum aid intensity under the Polish Investment Zone programme.
