Subsidiary Company Registration in Poland | Complete Guide

Poland is an excellent location for any firm to expand its business. Corporate organizations from other EU members have the same freedom to open their businesses as other citizens of Poland have. 

When foreign entrepreneurs decide to establish a business in Poland, they could either open a branch office in Poland or do a subsidiary company registration in Poland.

Subsidiary company registration in Poland benefits entrepreneurs as a subsidiary firm is a distinct legal entity with its own legal competence. Moreover, the subsidiary firm is not required to do business operations like the holding company.

This guide provides insights into the process, benefits, and requirements of establishing a subsidiary in Poland.

What is a Subsidiary?

A subsidiary is a legally independent company owned and controlled by a parent company. Unlike a branch, which is simply an extension of the parent company, a subsidiary operates as a separate legal entity. 

This distinction offers significant advantages, such as limited liability, financial independence, and the ability to access local markets while maintaining a strong connection to the parent organization.

How to Establish a Subsidiary in Poland?

Setting up a subsidiary in Poland involves several steps, which are crucial for ensuring the legal and smooth operation of your business in the country. Here’s a simplified breakdown of the process:

1. Choose the Legal Form 

The most common legal entity for foreign businesses in Poland is the limited liability company (Spółka z o.o.), due to its flexibility and limited liability protection.

2. Register the Company 

The subsidiary must be registered in the National Court Register (KRS). This step includes preparing the Articles of Association, providing details about shareholders, and outlining the business’s objectives.

3. Obtain a REGON and VAT number

After registration, the company will receive a REGON number (National Business Registry Number) and needs to apply for VAT registration if it plans to conduct taxable transactions.

4. Open a Bank Account

A local bank account is necessary for conducting business transactions and managing the subsidiary’s finances.

5. Appoint a Management Board 

The subsidiary must appoint at least one director. The management board is responsible for day-to-day operations.

Benefits of a Subsidiary in Poland

Establishing a subsidiary in Poland comes with multiple benefits for businesses aiming for long-term growth and stability.

• Access to the European Market: As a member of the European Union, Poland provides access to the vast EU market, allowing businesses to operate freely across member states.
• Attractive Investment Incentives: Poland offers various investment incentives, including tax reliefs, grants, and Special Economic Zones (SEZs), which encourage foreign direct investment.
• Skilled Workforce: Poland boasts a highly educated, skilled, and cost-competitive labor force, particularly in sectors like IT, engineering, and manufacturing.
• Economic Stability: With steady GDP growth and a robust infrastructure, Poland is one of the most economically stable countries in Central and Eastern Europe.
• Limited Liability: Setting up a subsidiary protects the parent company from financial risks, as liabilities are limited to the assets of the subsidiary.

Documents Required to Register a Subsidiary in Poland

Registering a subsidiary in Poland requires specific documentation. Here’s a list of the key documents:

1. Articles of Association: This document outlines the company’s structure, shareholders, and management.
2. Proof of Shareholder Identity: Documentation that identifies the parent company or individual shareholders.
3. Appointment of Directors: Details of the appointed management board.
4. Registered Office Address: A local address in Poland for official communication.
5. Bank Account Confirmation: Proof that the company has opened a local business bank account.

Taxation for Subsidiary in Poland

Taxation is a crucial consideration for any business operating in a foreign market. Subsidiaries in Poland are subject to the following taxes:

• Corporate Income Tax (CIT): The standard CIT rate in Poland is 19%, though a reduced rate of 9% is available for small businesses with revenues below €2 million.
• Value-Added Tax (VAT): Poland’s VAT rate is set at 23%, with reduced rates applicable for certain goods and services.
• Withholding Tax: Dividends, interest, and royalties paid to foreign entities may be subject to withholding tax, though this can be mitigated by double taxation treaties.
• Social Security Contributions: Employers are required to contribute to social security for their employees, covering health insurance, pensions, and other benefits.

Conclusion

Establishing your business through a subsidiary in Poland has various benefits, including access to the European market and capitalizing on the country’s stable economy and competent workforce. While the process of establishing a subsidiary may appear difficult, the benefits far exceed the drawbacks.

OnDemand International specializes in providing expert assistance and hands-on support to organizations seeking to develop abroad. From legal setup to compliance and operational assistance, our experts can help you establish a subsidiary in Poland.