Starting a business
Łukasz Śliwiński, attorney-at-law, Daria Goliszewska, M&A and Corporate practice, Wardyński & Partners
Establishing individual business activity by an individual is a basic form of business operation in Poland. The process of launching and operating such a business, including registration, is relatively easy.
A foreigner may establish and operate a business under the same rules as a Polish citizen if the foreigner is a citizen of a member state of the European Union or the European Economic Area, or a citizen of another country holding a Polish permanent residence permit, a long-term EU residence permit, a temporary residence permit or a valid Pole’s Card (Karta Polaka).
The Pole’s Card is a document that only confirms that the holder belongs to the Polish nation, but is not a proof of Polish citizenship or a document entitling the holder to settle in Poland. Having a Pole’s Card exempts holders from the obligation to have a work permit and allows them to take up and carry out economic activities on the same terms as Polish citizens.
A Pole’s Card may be applied for by a person who demonstrates his relationship with Poland and whose parents, grandparents, or two great-grandparents were of Polish nationality. Alternatively, it is also possible to present a certificate from an appropriate Polish community organisation confirming active involvement in cultivating Polish culture. A Pole’s Card can also be obtained by people of Polish origin, confirmed in accordance with the Polish Repatriation Act, with at least a basic command of the Polish language. As a rule, a Pole’s Card is issued for 10 years and can be obtained by submitting to the consular office all documents confirming fulfilment of the above conditions, together with an identity document. The application is free of charge.
According to information provided by the Polish Ministry of Foreign Affairs, work is currently underway regarding the status of British foreigners in Poland after the Brexit transition period ends on 31 December 2020. However, as of now (2 December 2020) there are no regulations providing British foreigners any preferential conditions for establishing their businesses in Poland, meaning that they will be treated as third-country nationals (non-EU citizens) after the transition period.
Foreigners may take up business activity in Poland without meeting the foregoing requirements, or other requirements, exclusively as partners or shareholders in a limited partnership (spółka komandytowa), a joint-stock limited partnership (spółka komandytowo-akcyjna), a limited-liability company (spółka z ograniczoną odpowiedzialnością), or a joint-stock company (spółka akcyjna).
An individual planning to operate individual business activity in Poland must register the business with the Central Registration and Information on Business (CEIDG). The application may be filed online at the CEIDG website (with a qualified electronic signature or trusted signature under the e-PUAP system), or completed by hand and filed with the municipality where the person plans to operate the business. If the application is filed by an attorney or by certified mail, the signature and thus the identity of the business owner must be confirmed in the application by a notary. The business operator may obtain only one entry in CEIDG, but it is possible to conduct different types of activity under the same entry.
There is no filing fee.
If the application is correctly filed, as a rule the entry will appear in CEIDG the next business day and business activity can be started. The business operator will also automatically be issued a tax number (NIP), which is used for example on invoices. It is also possible to obtain a VAT number if the person plans to operate a business involving trading in goods. Registration of the business operator as a remitter to the Social Insurance Institution (ZUS) also occurs automatically along with registration of the business. However the operator must then independently register as insured, which can be done online or in writing on the CEIDG form.
The individual business operator represents the business personally, but it is also possible for the operator to appoint an attorney.
The business operator is liable with all his or her assets (including personal assets) for obligations arising from operation of the business. The business operator’s spouse is jointly and severally liable for such obligations along with the business operator if they maintain joint marital property, not severed by any agreement or final judicial ruling.
Joanna Goryca, Tax practice, Wardyński & Partners
Foreign nationals conducting individual business activity in Poland may select (limited to some extent by the type of business activity) one of several available forms of personal income taxation, i.e. according to the tax scale (17 and 32%), the flat-rate tax (19%), lump-sum tax based on recorded revenue, or the tax card.
They can also decide the basis for calculation their social insurance and health contributions (within the thresholds set by the Polish law) usually allowing to pay lower contributions compared to those due from persons working under employment contracts or contracts of mandate (for provision of services). Sickness insurance contribution is voluntary.
Taxes, social insurance and health insurance contributions are financed entirely by the business operator.
Income from an employment contract is subject to progressive income tax of 17% and 32%, i.e. income (salary decreased by social insurance contributions financed by the employee and a fixed annual deduction of 3,000 zlotys) up to 85,528 zlotys is taxed at 17%, and the excess above that amount is taxed at 32% (after taking account of potentially tax-exempt amounts).
Employment revenue is subject to social insurance contributions, which are financed partly by the employer and partly by the employee. The employer effectively bears a 20.48% contribution on top of gross salary (assuming that the accident insurance portion is 1.67%), while the employee bears a contribution of 13.71% of gross salary. The employee’s contributions are deducted from gross salary.
Additionally, the employee is required to pay health insurance contributions, but these are to a great extent deductible from personal income tax.
In terms of tax and social insurance consequences, a contract of mandate is similar to an employment contract. In terms of social insurance, the sickness insurance contribution (2.45%) is not mandatory in a case of this type of contract.
Working in some sectors may also lead to a right to apply a higher tax deductible expenses of 50%. This applies to creative work performed under an employment or mandate contract. This “super deduction” applies to remuneration for transfer of copyright to works created under contract. The super deduction can be claimed up to 85,528 zlotys a year. Examples of taxpayers who may benefit from this higher tax deduction are computer-game designers, software designers, and architects.
Healthcare & Education
Aleksandra Wójcik, Employment & Global Mobility practice, Wardyński & Partners
High-quality healthcare, both public and private, is available throughout Poland.
EU citizens are entitled to free public healthcare services in Poland, while persons from outside the EU must pay for them. Usually they are required to hold private health insurance with minimum coverage of €30,000 (around $35,000) for Poland, especially if they are required to hold a visa or a stay permit.
Emergency medical services are never refused to anyone, regardless of whether a patient has health insurance and regardless of their citizenship.
Poland also has a system of high-quality public and private educational institutions, from preschools through universities.
Education in public primary (elementary) and secondary schools (highshcools) is generally free for Polish and foreign citizens. Tuition is charged at preschools. Private schools set their own tuition and enrolment requirements, but compared to most other countries in Europe, their fees are fairly low. Children who are not Polish citizens but reside in Poland must enrol in regular public schools (or can choose private schools) under the same rules as Polish children (i.e. education is mandatory until the age of 18). They are assigned to the proper grade on the basis of a certificate or other document confirming completion of a relevant level of education abroad. If such documents are not available, a placement interview is be conducted by the school principal or teachers. A school may hire a cultural assistant for a child who do not speak Polish at a sufficient level, to help them grasp the educational material.
As for higher education, citizens of other EU, EEA or EFTA countries and their family members, as well as holders of a Pole’s Card (Karta Polaka) or a permanent, temporary (due to special circumstances) or long-term EU residence permits are entitled to study at public universities in Poland on the same basis as Polish citizens – generally free of charge. Other foreign nationals may have to pay tuition to study in Poland, or may study free of charge under a scholarship granted by the state, their home institution abroad, or the Polish host institution, depending on arrangements between the countries or educational institutions.