How to set up company: guide for foreign residents
You are a foreign national and would like to run a business activity in Poland? What conditions do you have to meet to succeed? Where and how a foreign national can register a company in Poland and what to do when they cannot? These issues are key to foreigners who decide to relocate and work in Wroclaw. Our guide presents information to assist foreign nationals in registering a business in Poland.
Can all foreign nationals run a company in Poland?
The fact that a foreign national is not a Polish citizen does not constitute an obstacle for them to run their own business in Poland. However, some foreign nationals cannot become entrepreneurs in Poland.
The Act on Freedom of Economic Activity of 2 July 2004, Art. 13, defines and distinguishes between foreigners who may conduct business activities in Poland on the same terms as Polish citizens and those who are subject to some limitations. The former group includes:
- citizens of the European Union,
- members of the European Free Trade Association (EFTA),
- members of the European Economic Area (EEA),
- citizens of the countries other than above, subject to certain requirements.
The latter group, i.e. those that are subject to exceptions, comprise foreigners who:
- hold a permanent residence permit,
- hold a residence permit for long-term residents of the European Union,
- hold a temporary residence permit granted for the purpose of full-time university studies (Art. 144 of the Act on Foreigners) or reuniting with the family (Art. 159 of the Act on Foreigners), subject to exceptions,
- hold a residence permit for long-term residents of the European Union (Art. 186, Par. 3: temporary residence permit),
- are members of the family as defined in Art. 186, Par. 4, and hold a temporary residence permit,
- hold a temporary residence permit granted to family members residing in the territory of the Republic of Poland for the purpose of a family reunion under Art. 159, Par. 3 and 4;
- have a refugee status,
- are eligible for subsidiary protection,
- have been granted permission to stay for humanitarian reasons or a tolerated residence permit,
- hold a temporary residence permit and are married to a Polish citizen residing in the territory of the Republic of Poland,
- hold a temporary residence permit to perform economic activities, granted for the purpose of the continuation of business activities based on an entry in the CEIDG,
- and foreign nationals who: are eligible for temporary protection in Poland, have an valid Karta Polaka [Pole’s Card] or are family members (as defined by Art. 2, Point 4 of the Act on the Entering the Territory of the Republic of Poland of 14 July 2006) who reunite or stay with their relatives referred to in Par. 1.
For the above-mentioned persons who are entitled as individuals to conduct business activities in the territory of the Republic of Poland, the moment to begin their business operations is clearly defined.
“The right is granted as soon as the application has been made,” says Tomasz Czapczyński, Legal Adviser of the Tomasz Czapczyński Office of Legal Advisers.
Where and how a foreign national can register a business?
To start a business, a CEIDG-1 application must be made in the Central Registration and Information on Business. The entry can be done online (the form can be found here) or in a printed form to be obtained at your local city office.
What to focus on before and after filling in the form:
1) The registration process is the same for foreigners and Polish citizens alike. The only condition you have to meet is to provide the number of your temporary or permanent residence card, as applicable.
2) Before completing the application, you should also refer to the Polish Classification of Activity and choose a suitable code for your business. The Polish Classification of Activity and other useful information can be obtained here.
3) The CEIDG-1 form for natural persons that conduct business activity serves several different purposes. It can be used as:
- an application for entry in the national register of business entities (REGON),
- an application for NIP (tax identification number) or its update (to be submitted to your local tax office),
- a declaration of the choice of the form of income tax from natural persons,
- a declaration or a change of declaration of the contribution payer to the Social Insurance Institution,
- a declaration on the continuation of social insurance for farmers.
4) Before completing the CEIDG application, a prospective entrepreneur is required to choose their preferred form of accounting: independent accounting, the services of an accounting office or the services of an individual accountant.
5) Once your electronic application has been completed, you should go to your local city/municipal office. If as a foreign national you have an electronic signature or a trusted profile ePUAP, you can fill out an application at the CEIDG website without having to visit the office.
6) The entry is made free of charge. The above information is worth bearing in mind because attempts were reported to extort money by fraudsters pretending to be CEIDG representatives (usually via email).
7) You do not need to be physically present to register the activity in Poland. The entire procedure can be made online.
What to do if you are a foreign national and cannot register business activity?
Many foreign nationals, including those who have been residing in Poland for several years, find it difficult to set up a business. One such person is Oksana Kartavtseva, who is now running her own company that specialises in relocating foreign employees: “I first studied in Poland for five years, and then continued to work for another several years. When I decided to establish my own business, I filed the CEIDG-1 application form at my local city office only to learn that I can’t. My temporary residence card, after so many years spent in Poland, gave me the right for legal employment or further studies. I had no legal right to set up a business, though. I had to fund a way to star my own company,” says Oksana Kartavtseva.
Foreign nationals who have not been mentioned above (as defined in the Act on Free Economic Activity of 2 July 2004, Art. 13) can be faced with similar problems. Pursuant to Polish regulations, they can run a company as:
- a limited partnership,
- a limited joint-stock company,
- a limited liability company,
- joint-stock company.
One more important thing is that a foreign national does not have to hold the right to reside in Poland to set up one of the above-mentioned companies. In this case, you might as well register a company via the Internet, using a standard template available in the ICT system S-24. To register the company in the S-24 system you are obliged to pay a registration fee of 350 PLN and an online payment fee (10-20 PLN).
“By principle, people without the right to conduct business in the territory of the Republic of Poland and are entitled to operate a limited partnership, limited joint-stock company, limited liability company or joint-stock company, can only act as partners in such companies, which entails using the equity interests only without the right to represent the company and conduct operations. This law means that as a foreign national you can share in the company’s profits without being able to perform activities on its behalf, e.g. based on a manager’s contract,” says Tomasz Czapczyński.
Registering a business at a notary’s office
You can also choose a more traditional method and set up a company by drawing a partnership agreement at a notary’s office. The registrations of a company at a notary’s office involves additional costs:
- legal fees amounting to 300 PLN depending on the length of the partnership contract and the company’s share capital),
- additional costs of translation if you cannot speak Polish,
- stamp duties: a court fee of 500 PLN and a tax of 100 PLN for the announcement in “Monitor Sądowy i Gospodarczy” [Court and Economic Monitor].
While the law accepts both methods, the registration process in the S24 system helps you to avoid all the above procedures. Regardless of the way in which you as a foreign national decide to set up a company, you can apply for a Polish visa as an entrepreneur for yourself and your family members and then request a temporary residence permit in Poland.
Conducting activities through a foreign branch
If you are already doing business in your home country, you may extend this activity in the territory of the Republic of Poland in the form of a branch.
“The condition here is that your home country, on a reciprocal basis, guarantees a similar opportunity for Polish citizens. This is a relatively easy way to enter the Polish market. However, it requires that the scope of activity of your branch in the territory of the Republic of Poland is not wider than the extent of your activity in your home country. Moreover, the Act on Free Economic Activity requires that you enter a branch in the National Court Register (including registration formalities) and authorise a person to represent your branch,” adds Tomasz Czapczyński.
A foreign entrepreneur who operates a branch in Poland is also obliged to use the original name of the company, but with translated information on the form of activity, in accordance with the Polish legal system (for example, the Ukrainian “tawaristwo of obmieżenaju widpowidalnistju” should be rendered as “spółka z ograniczoną odpowiedzialnością, oddział w Polsce” [limited liability company, Polish branch]). The branch also has an obligation to keep a separate accounting. It is also worth considering, however, whether it would not be easier to register your company in your home country and then establish a branch in Poland.
“It goes without saying that you should always examine tax issues, in particular, to avoid double taxation imposed on the same income (in the territory of the Republic of Poland and your home country). However, each case must be investigated individually. This commentary is simply too brief to present the issue in its complexity,” adds Tomasz Czapczyński.
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