Branch in Poland: Complete Guide - Registration & Investment

What is Branch?

A branch is an extension of a foreign company to Poland enabling initiation of local business operations. Legally, it is regarded as a distinct organizational unit of the parent company, which does not possess separate legal personality. This makes the parent company fully liable for its operations. Despite being the simplest / lightest legal form for conducting business in Poland by foreign investors, its administrative and maintenance expenses are just slightly lower to those of subsidiary (e.g. LLC in Poland).

Why Shall I Open a Branch in Poland?

Poland provides various opportunities for new business’ as it is 6th biggest economy and 7th biggest country in terms of size in European Union.

Well-developed infrastructure (15 airports, 20.000 km of railway, 5.000 km of speedways) along with central location of Poland, delivers good access to each part of Europe.

Massive consumer demand (38 mln residents) provides number of chances for suppliers in various industries. Huge labor market (15 mln employees) aggregates talents also from neighboring countries, incl. Ukraine, Belarus, Russians, Lithuanians. Despite that unemployment rate for years keeps at levels around 5%.

In addition to above investor friendly environment provides variety of incentives to place your business in Poland incl. Special Economic Zones, exemption or discounts in real estate tax, R&D reliefs, IP box benefits, 0% corporate income tax (Estonian CIT), holding company tax exemptions.

Branch, Representative Office or maybe Subsidiary?

When evaluating possibility of investment or starting a business in Poland, potential investors most usually compare three alternative legal form: branch, representative office (or representation office) and local LLC (subsidiary):

• Representative office is often ruled out quickly, as this legal form does not allow to run regular business operations in Poland. It is designed just to provide advertising of foreign entity. It might be reasonable for first stage of investment (e.g. involving market research) or for companies that plan to expand advertising rather than local operations.
• Establishment of subsidiary – i.e. company registration in Poland – is definitely the most popular form of investment in Poland, as it provide separate legal personality, liability limitation and unrestricted possibility to expand local business in Poland.
• Branch is considered as reasonable alternative to LLC. It provides comparable expansion opportunities without necessity of creating separate legal entity in Poland. Registration of branch allows your foreign company to start direct business operations in Poland.

Branch vs LLC - Complete Comparison of Key Features

Place of Registration

• Both are Registered in KRS (National Court Register)

Legal personality

• Branch: Has no separate legal personality
• LLC: Has separate legal personality from the parent company

Liability

• Branch: Parent company bears full, unlimited liability for the branch
• LLC: Parent company bears no liability for the debts of the subsidiary

Capital requirement

• Branch: There is no capital requirement
• LLC: Minimum share capital requirement for is 5.000 PLN

Business scope

• Branch: Only the type of business that parent company runs
• LLC: No biggest restrictions (except for regulated activities such as Banks, Insurance companies, etc.)

Registration time

• Branch: 2 weeks to 2 months
• LLC: depending on the company registration mode - online - 1 - 5 days; traditional via Notary 2 weeks to 2 months

Registration Required Documents:

• Branch registration usually requires gathering complete constitutional documents (of the parent company), while
• LLC registration requires usually only obtaining excerpt / good standing certificate (rather than complete constitutional set)

Corporate Reporting

• Both - Branch & LLC - are subject to mandatory, annual financial statements reporting to National Court Register.

Accounting

• Both - Branch & LLC - are obliged to run accounts / ledgers in accordance with Polish Accounting Standards.

Local representation

• Branch: is obliged to appoint "local representative"
• LLC: is obliged to appoint Director or Board of Directors

Ability to Employ in Poland

• Both - Branch & LLC - may employ employees in Poland

Liquidation

• Branch: quick and simple procedure
• LLC: lengthy and complex procedure

Annual Maintenance Cost

• Comparable - Branch may be slightly cheaper in maintenance - by approx. 15%.

Branch In Poland - Main Takeways

Branch has no Legal Personality - What Does it Mean?

It means that the process of branch registration does not create a separate entity (as opposed to company establishment). As a result, it means that the founding company (parent company):

• will be operating in Poland directly; and
• will bear full unlimited liability for the branch.

This translates into exposure of the founding parent company to risks related to failures, due taxes, mistakes, underperformance, employment etc.

For this reason, customers considering bigger operations or in higher risk industries - often prefer to set up a separate legal entity (subsidiary) which will accumulate local risks in the local Polish entity and at the same time safeguard the mother company.

Branch Provides Features Allowing to Start Business

Registration of Branch in Poland will allow your foreign company to start regular business operations in Poland. In practical terms, your foreign company will be equipped with set of local features such as:

• KRS number - registration number in Polish Company Register (KRS)
• NIP number – Polish tax number provided by local tax adminstration
• REGON number – statistical number provided by Statistical Institution (GUS)
• Local representative – listed in local registration - KRS

All above will enable you expansion to Polish market by facilitating to:

• Open a bank account in local Polish bank
• Start signing contracts in Poland
• Register as Employer in ZUS (Social Insurance Institution) and start hiring employees in Poland
• Register for VAT and apply for EORI number
• Start offering your products and services

Branch May Only Run Similar Business in Poland

Polish branch of your foreign company cannot run business which is different to business run in the country of origin. As an example, if your original company in Germany is a food production company, the branch in Poland will be only allowed to run food production business in Poland. If you want to run a business of different nature in Poland, you shall establish a subsidiary, or simply extend scope of your business domestically.

Pros and Cons of Branch in Poland

Benefits of Branch in Poland

• provides ability of expansion and direct access to local market
• simplest form of business registration in Poland
• no minimum share capital requirement
• easy to liquidate and wind-up
• provides ability to benefit from parent company licenses or insurances
• no obligation to report beneficial owner in Poland (as opposed to LLC)

Disadvantages of Branch in Poland

• slightly more complicated registration as opposed to LLC
• does not provide liability limitation
• does not provide separate legal personality
• administrative burden is comparable to LLC
• maintenance cost is just slightly lower in comparison to LLC

What Taxes will the Branch Pay in Poland?

Branch will be obliged to pay similar taxes as subsidiary in Poland.

Corporate Income Tax - CIT

In accordance with most of double taxation treaties branch in Poland will be qualified as Permanent Establishment and as a result will be under obligation to pay local income taxes for the income produced locally:

• Standard Corporate Income Tax Rate: 19% on income
• Discounted Corporate Income Tax Rate: 9% on income (turnover below 2 mln EUR)

Value Added Tax - VAT

Branch that sells goods or provides services in Poland, EU or oversees will be obliged to register for VAT in Poland in order to calculate input and output VAT, and become eligible for VAT refunds.

Polish Tax law provides various tax rates, e.g.:

• Standard VAT Rate: 23%,
• Discounted VAT Rates: 8%, 5% and 0%.
• Intra Community Transactions (within EU) Rate: usually performed without VAT charge (reverse charge rule).

Procedure to Register Branch in Poland

1. Select a Branch Representative

Every branch must have a representative that will be a contact person for public authorities.

The Representative of the Branch:

• No restriction as to residence: Does not have to be a resident of Poland
• No Particular Requirements: Anybody can serve as a representative, also an employee or officer of your foreign company
• No restriction as to qualifications: Special knowledge about Polish law or investment environment is not required, as in practice such person may delegate most of the powers to experts, such as accountants, lawyers, etc.
• Main Obligations: Certain annual compliance documents may need to be signed by the representative directly.

2. Gather Required Documents

Establishment of branch in Poland requires to gather and submit to Corporate Register of all constitutional documents of the foreign company. It most of the cases those are:

• Constitutional Documents. E.g. articles of associations, statutes, partnership agreements or any similar, along with any modifications and amendments.
• Legalized / Apostilled. Such documents need to be furnished with Apostille or legalization.
• Translated. All the documents need to be translated into Polish language by Polish court approved translator (sworn translator).

Gathering of documents, obtaining legalization and translations is usually the most time-consuming stage of the procedure, therefore it is worth to start it at early stage in order to save time.

3. Undertake Formal Decision to Register a Branch

Polish law does not formulate any specific requirements as to corporate decision on branch establishment in Poland. It shall be:

• Explicit in terms of intentions and location of the branch in Poland
• Designating a city of Poland in which the branch will be located
• Valid and adopted in compliance with te laws of your company jurisdiction
• Executed in required legal form and undersigned by authorized signatories of foreign company

In majority of cases our Law Firm in Warsaw receives a corporate resolution indicating fact of branch establishment, location of the branch office and the name of representative. Such resolution is undersigned by authorized signatories of foreign company.

4. Submit Application to Company Register - KRS

Submission to Company Register (KRS) shall be completed via special portal (S24 or PRS) and signed electronically. All the documents related to the foreign company shall be also signed electronically. Company Register is run by the National Court Register (KRS departments). Submissions are usually resolved within 1 month. In consequence, if the submission is correctly filled in, stamp duty is paid, there are not mistakes, no requests from the court to replenish documents or information – entry is usually made within 2 - 6 weeks.

5. Complete Post Registration Compliance

Start of operations in Poland involves a little bit of red tape. This usually starts with:

• opening bank account,
• reporting account numbers to Tax Office (white list),
• reporting basic information to Tax Office (NIP-8 form),
• appointing accountancy provider and payroll provider,
• registering for VAT,
• obtaining e-signatures for signatories.

It is recommended to consult with incorporation attorney to be guided properly and to make sure that you have completed all the stages required for your business to start operation in Poland.

Branch Operations in Poland - Key Facts

Branch Name - Under which Name it Operates?

As opposed to subsidiary, branch cannot have a separate name. It must use the name of the foreign company with additional suffix “branch in Poland” (in Polish: Oddzia? w Polsce). So if your business name is FMP LLC, your branch name will be FMP LLC, Oddzia? W Polsce.

Can a branch employ employees in Poland?

Certainly! That is one of key benefits of branch establishment in Poland – you gain access to Polish labor market and HR resources.

Recruitment and employment activities of your business in Poland may be launched right after completing below steps:

• Registering the branch as an employer in ZUS (Social Security Institution)
• Appointing Payroll provider to run monthly calculations and reporting.

When employing personnel in Poland you will have to follow rules of Employment Law in Poland, including:

• Type of labor contracts: Employment contracts may be probation, definite or indefinite.
• Minimum salary: Employees’ remuneration cannot be lower than the statutory minimum salary, which in 2024 equals to 4.300 PLN (from June 2024)
• Working time: Standard working time for a full-time employee is max 8 hours a day and 40 hours a week in an average five – day working week. If the employee works overtime, the weekly working hours shall not exceed 48 hours a week.
• Rest time: Employee is entitled to a daily rest of minimum 11 hours. On a weekly basis the employee is entitled to a minimum rest of 35 hour. Employee working at least for 6 hours in line in a day is entitled to a 15-minute break included in the working time.

Standard Compliance Obligations of Branches in Poland

Tax: Each Polish branch will have to start paying local taxes – most usually it will be CIT (corporate income tax) and VAT (value added tax).

Accounting: From accounting perspective, the branch will have to follow Polish stringent accounting rules - that usually involves recording every month all the revenues, expenses, assets and liabilities in Polish law compliant accounting software.

Annual Reporting: Each year branch must follow annual corporate compliance, which involves approval and reporting of financial statements to company register.

Audit: Branches with higher revenues / assts / employment level may be subject to statutory audit.

From compliance obligations point of view – branch is not much different from local subsidiary.

EPUAP / Trusted Profile or E-signature for Branch Officers

Branch Representative are required to have:

• Trusted Profile / EPUAP; or
• Electronic signature

to be able to complete annual compliance for the branch. Therefore, it is not a requirement of first need, but sooner, rather than later you will need it.

Trusted Profile / EPUAP

Trusted Profile is a public digital signature that allows to communicate with public authorities and submit documents to various public institutions. It is free of charge and available upon visit of authorization center, e.g. in City Hall or selected banks. EPUAP does not allow to communicate with other / private entities, ability to sign documents, e.g. contracts is very limited.

E-signature

E-signature has similar toll as Trusted Profile but it provide much more functionalities. It allows to sign remotely employment contract, sign annual accounts, sign tax declarations, sign power of attorneys etc.

Recently most of the e-signatures are virtual and you can sign documents via special software or mobile app. The cost of such e-signature is in the range of 150 - 300 EUR. Some providers still offer cheaper e-signatures in the form of USB kit. The cost of such e-signature is in range of 100 EUR.

Polish e-signatures are highly trusted as they are issued only after official process of verification which can be performed:

• at the meeting in person with the verification agent,
• at your bank (if your bank provides such service),
• at online video conference (as some providers offer that service).

UBO and beneficial owner reporting

One of the pros of establishing branch in Poland, as opposed to subsidiary, is that branches are not subject to mandatory disclosure in CRBR – UBO register in Poland. It is assumed that branches are subject to UBO reporting in their country of origin. Therefore, they complete this process in accordance with local laws of country of origin and they are not obliged to follow Polish beneficial owner disclosure rules. As mentioned previously, local LLC – subsidiaries, are subject to UBO reporting in accordance with Polish rules, which means that within 14 days from incorporation they are obliged to disclose data of beneficial owner in public UBO register (CRBR).

Business licenses and permits

Certain business operation in Poland require to obtain license or permit – e.g. coal mining, trade with energy, trade with gas, run HR or employment agency, run crypto exchange platform or payment services platform, etc. In most of the cases local branch and subsidiary, will need to obtain local Polish license or permit. However, in case of branch, it may turn out that you can benefit from you domestic license – if you have one. This is due to the fact that within EU some regulatory requirements are harmonized, e.g. payment services – payment institution license (please note small payment institution licenses are not harmonized), and in such case, instead of applying for new license, you may extend (“passport”) your license to Poland. In certain industries this allows to save lots of time and start operation much faster.

Summary - Branch in Poland

Branch in the simplest legal form of launching a business in Poland by foreign investors. It provides variety of benefits along with ability of low cost and quick wind-up. However, compliance requirements, incl. tax, accounting and reporting, makes it no much different than local subsidiary. This translates into annual maintenance cost which is comparable to limited liability company, while the later one provides separate legal personality and liability limitation of the investor. Depending on the investor project and preferences, branch may be optimal solution for market entry. This is especially the case in regulated industries, where branch may benefit from licenses or insurances extensions.

Branch - Q&A

Is “Branch in Poland” a separate corporate entity?

No - Branch is not a separate entity as opposed to subsidiary (LLC or JSC).

Can a branch in Poland employee employees in Poland?

Yes – branch in Poland may employee employees.

How to register a branch in Poland?

You need to gather required documents, undertake formal decision on branch establishment in the form required in your jurisdiction, submit registration application to KRS and await for registration.

How long it takes to establish branch in Poland?

Documents gathering and translating usually takes 2-3 week, the registration process before KRS takes around from 2 weeks to 2 months.

Is branch more popular to subsidiary?

No, subsidiaries are definitely more popular than branches due to the fact that they provide liability separation and limitation.

Is it possible to convert branch into subsidiary?

Polish corporate law does not provide such possibility but in practice such an effect can be achieved by concluding a transaction of enterprise sale.

Can I run branch and subsidiary parallelly in Poland?

Yes – parallel operations of subsidiary and branch is possible and allowed.

More about Branch in Poland - sources

More about Branch in Poland may be found in reliable sources such as:

• https://www.lexology.com/library/detail.aspx?g=be4b4e4a-338a-407d-b767-7d59d65f7408
• https://www.mondaq.com/corporate-and-company-law/1469852/branch-registration-in-poland--step-by-step-guide-
• https://stat.gov.pl/en/metainformation/glossary/terms-used-in-official-statistics/3005,term.html
• https://www.biznes.gov.pl/pl/opisy-procedur/-/proc/1514

More about LLC in Poland may be found in reliable sources such as:

• https://www.dudkowiak.com/company-incorporation-in-poland/polish-limited-liability-company.html
• https://www.mondaq.com/shareholders/1465748/limited-liability-company-in-poland-2024
• https://www.lexology.com/library/detail.aspx?g=c099f9f6-19f1-41f6-8bc4-bc1ac7b42912

Legal Support in Branch Registration in Poland

Should you have any question regarding branch registration in Poland - please feel free to reach us our: [email protected]

Updated: 6.06.2024