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How to start a business in Poland …

Warsaw 2012

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Agenda

Why in Poland?

Poland in brief

Establishing and doing business in Poland

Legal forms of entities

Business activity – basic regulations

Taxation

Investment incentives

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Why Poland?

The main reasons why to consider investing in Polan d:

� investment potential

� Human capital

� Strategic location

� Large and growing domestic market

� Investment incentives

� Industrial service hub

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Poland in brief

Geographic location Central Europe, east of Germany and west of Russia; Baltic Sea in the North, mountain range of Sudety, Carpathians in the South

Border neighbors Germany, Czech Republic, Slovak Republic, Bielarus, Ukraine, Lithuania and Russia

Climate Moderate continental

Land area 322 575 sq km

Resources Wood, hard coal, crops, livestock, fish

Geographic brief Poland has a little everything, from seacoast on th e North to forests, lakes and farmland through the center, to mountains in the south. Poland’s strategic location between Germany and Rus sia has deeply impacted the evolution of the Polish nation

Population 38 463 689 (8th largest country in Europe and 34th l argest country in the world by population size)

Nationality (noun) Pole (s), (adjective) Polish

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Poland in brief

Time zone Central European (one hour ahead of standard GMT)

Ethnic divisions 98% Polish, 2% Belarusian, Ukrainian and German

Political system parliamentary democracy (Republic of Poland)

Administrative divisions

16 provinces, 380 administrative districts or povia ts (of which 66 are cities with poviat status) and 2,478 municipalities (gmina)

Major cities Warsaw (capital), Łód ź, Kraków, Wrocław, Pozna ń, Katowice, Gda ńsk

Currency Zloty (PLN) (zł)

Fiscal year Starts January 1st

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�The legal concept of doing business in Poland is be st defined under Polish law in the Act on Freedom of Economic Activity (2004);

�The investor from the EU and EFTA members may condu ct economic activity on the same terms as Polish citizens;

�Investor from countries that are not EU and EFTA me mbers may conduct economic activity on the same terms like Polish cit izens only if they hold permits legalizing their stay in Poland or through:

�Establishing limited partnership, limited join stoc k partnership, limited liability companies and join stock companies;

�Purchasing and acquiring shares in such companies

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Permits or licenses are required for instance for t he following activities:

� Wholesale trade and production of some alcoholic be verages� Conducting economic activities in special economic zones� Establishment of an investment fund or pension fund� Operation of a bank� Operation of an insurance company or brokerage agen cy� Operation of casinos, organization of lotteries and gaming� Railway transport� Road transport� Private investigation services� Operation of a customs agency� Tourism agency activities

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Establishing a business - Step-by-step

Choice of legal form

Signing the company’s Article of association or Sta tute (if limited liability or join stock company)

Arrange for an official address of the company (at least a lease agreement for the office)

Application to the Central Statistic Office (Głowny Urząd Statystyczny-GUS) for a Statistical Identification Number (REGON)

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Opening an account in the Bank

Applying to the Tax Office for a Taxpayer Identific ation Number (NIP)

Registration of the company in the Court Register ( Krajowy Rejestr S ądowy)

Notifying the Social Insurance Institution (such a obligation arises after employment of the first person)

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Notifying the National Labour Inspectorate (and oth er institution if necessary, including, for instance the General Personal Data P rotection Inspectorate

Receiving required permissions or licenses

Registration in Tax Office a VAT remitter

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The Following are the main legal forms available to Polish and foreign investors (based in countries that are EU and EFTA members):

� Join-stock company (spółka akcyjna- SA)

�European Company (Societas Europea)- (Spółka Europej ska SE)

� Limited liability company (spółka z ograniczona odp owiedzialno ścią -sp. z o.o.)

� Limited join stock partnership (spółka komandytowo- akcyjna- S.K.A)

�Registered partnership (spółka jawna- sp. j.)

� Limited partnership (spółka komandytowa- sp. k.)

�Professional partnership (spółka partnerska- sp. p.)

�Sole proprietorship (indywidualna działalno ść gospodarcza)

�European Economic Interest Grouping (europejskie zg rupowanie interesów gospodarczych)

�Civil law partnership (spółka cywilna)

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Sole proprietorship (indywidualna działalno ść gospodarcza):

� Small business by a private individual

� Personal liability with all assets

� The sole proprietor is subject to personal income t ax (PIT) – 18%;32% or 19%

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Limited liability company (Spółka z ograniczon ą odpowiedzialno ścią – sp. z o.o.):

� Minimum initial share capital – 5.000 PLN

� Minimum nominal value of share – 50 PLN

� Acquires legal personality at the moment of registr ation in the National Court Register

� Shareholders - not liable for the obligations of the company

� The limited liability company is subject to corpora te income tax (CIT) –19%

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Join-stock company (spółka akcyjna-SA):

� Minimum initial share capital – 100.000 PLN

� Minimum nominal value of share – 0,01 PLN

� Shares may be subject to public trading

� Shareholders - not liable for the obligations of the company

� Acquires legal personality at the moment of registr ation in the National Court Register

� The joint stock company is subject to corporate inc ome tax (CIT) – 19%

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Business Activities – Basic Regulations

Accounting & auditing

� Polish accounting standards do not differ significa ntly from international standards, especiallyafter the most recently introduced amendments and i nterpretations.

� Furthermore, in cases where no national accounting s tandards exist, the appropriate International Financial Reporting Standard’s (IFRS) may be applied .

� As of 1st January 2005, all companies listed on the Warsaw Stock Exchange are obliged toprepare their financial statements in accordance wi th the International Financial ReportingStandards.

� In addition, the Polish subsidiaries of companies l isted on any regulated market within the European Union may decide to prepare their statutor y financial statements under IFRS, as adopted by the EU, rather than in accordance with l ocal accounting laws.

� Accounting may be handled by the company itself (at the company’s registered office) or by another authorized entity providing external servic es. The Tax Office should be informed of the latter case in writing.

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Accounting & auditing (cont..)

� Annual consolidated financial statements of capital groups and annual financial statements ofjoint-stock companies, banks, insurers and investme nt and pension funds must be audited.

� Other companies must be audited if two of the follo wing three conditions were met in thepreceding financial year:

� average annual employment amounted to at least 50 p eople;� the total net turnover and financial income amounte d to at least EUR 4 million;� the total balance sheet assets as at the end of the accounting year amounted to at least EUR

2 million.

� The euro / zloty exchange rate announced by the Nat ional Bank of Poland (NBP) on the last day of the fiscal year is used for the calculation.

� Audits must be conducted by an independent firm, wi th a license to perform audits, before the financial statements are accepted by the Annual Gen eral Meeting of Shareholders.

� All companies that are obliged to prepare annual au dits must publish their balance sheet, profit and loss account, statement of changes in the share capital and the cash flow statement; as well as an introduction to the financial statements, the auditor’s opinion, the statement of discharge granted by the Annual General Meeting of Shareholde rs and the decision on profit distribution in the “Monitor Polski B”.

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Other regulations..

�Code of Commercial Companies – this relates to form of doing business by companies and partnerships,

�Act on Freedom of Economic activity,

�Council Regulation on Statute for European Company (EC),

�Council Regulation on European Economic Interst Grou ping (EEC),

�Act on European Economic Interest Grouping and Euro peans Company,

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Other regulations.. (cont.)

�Banking Law,

�Law on Privatization and Commercialization of State -owned Enterprises,

�Insurance Law,

�Capital Market Regulation Act

�Labour code

�Competition Law

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Taxation

� Nine direct taxes:

� corporate income tax (CIT),

� personal income tax (PIT),

� tax on civil law transactions,

� real estate tax,

� tax on means of transport,

� inheritance and donations tax,

� agricultural tax,

� forestry tax,

� tax on dogs

� Three indirect taxes:

� tax on goods and services (VAT),

� excise duty,

� game tax.

The Polish tax system distinguishes 12 types of tax es, including:

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Taxation

CIT

�19% tax rate in 2012. Tax year could be different t o the calendar year;

�A branch of a non-resident company is generally tax ed under the same rules as Polish company. Only its Polish source income is su bject to taxation;

�Corporate income tax paid annually, advance monthly payments have to be made;

�A „tax capital group” may be formed for corporate i ncome tax purposes.

�Tax losses suffered by the company may be carried f orward and set off against over the five years

�The standard withholding tax is 19% on dividends an d 20% on interests and royalties. If paid abroad the rate may be reduced u nder the double tax treaties

�Tax on investment incentives

�Transfer pricing rules

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Taxation

PIT�Domiciled individuals in Poland are subject to tax on their world-wide income

�In most cases, natural persons in Poland are subjec t to the income tax calculated in compliance with the progressive tax scale, differentiating fol lowing income thresholds, i.e., 18% and 32%. Beside the progressive tax scale there is also a 19 % flat-rate tax applicable to natural persons conducting business activity.

�Income tax is paid on most sources including benefi t in kinds

�Interest income from personal bank account are subj ect to 19% withholding tax

�Capital gains from sale of shares are subject to 19 % tax

Personal income tax rates in 2012 r.

Taxable income in PLNTax rate

above to

85.52818% minus tax reducing amount of 556zł 02gr

85.52814.839 zł 02 gr + 32 % of the surplus over 85.528 zł

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Taxation

VAT- Tax rates

Polish tax law provides for 4 VAT rates. The basic rate is 23% (from 01.01.2011 to 31.12.2013) which is applied to majority of goods and services. Other rates :

� 8% (from 01.01.2011 to 31.12.2013) - applies to a few groups of goods and services, e.g . goods related to health protection, groceries, serv ices of hotels, folk art articles,

� 5% - applies to supply of some farm produce and foods tuffs; this rate is binding temporarily - until 31 December 2013

� The rate of special significance is a 0% rate. It i s applicable, in particular, to exports and intra-Community supply of goods, international tran sport services. Taxpayers enjoying 0% rate are not deprived of the right to deduct input VAT suffered upon purchases related to the activities subject to this rate.

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Taxation

VAT

Objective scope of taxation, determines chargeable events. Each person who professionally carries out the below stated activities:

� supply of goods (meant as transfer of the right to dispose of tangible property as owner) effected for consideration,

� supply of services for consideration; supply of goo ds is meant as any transaction which does not constitute a supply of goods,

� export of goods,

� importation of goods,

� intra-Community supply of goods,

� intra-Community acquisition of goods,

…is subject to taxation.

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Investment incentives

� Grants and incentives in Poland in 2007-2013

� Special economic zones

� Duty-free zones

� Customs (bonded) warehouses

� Support for hiring unemployed

� Exemptions from local taxes

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Contact Person

WARSAW AUDIT&OUTSOURCING

Mr Artur Rymarczykmobile.: (+48) 664 036 100e-mail: [email protected]: artur.rymarczyk

Audit

Mrs Katarzyna Sztangae-mail: [email protected]

Tax Advisory

Mrs Katarzyna Niedabylskae-mail: [email protected] Monika Pastuszake-mail: [email protected]

Bookkeeping

Mrs Katarzyna Maraszek-Zi ębae-mail: [email protected]

WARSAW LAW

Energy law & pharma law

Mr Marcin Milczarekmobile: (+48) 601 270 007e-mail: [email protected]: marcin_milczarek

IP & corporate law

Mrs Małgorzata Cichosz-Prokopczyk e-mail: [email protected]

Contracts and real estate

Mr Nikodem Multane-mail: [email protected]

Litigation & labour law

Mr Piotr Pru śe-mail: [email protected]

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Thank you ….

…. for your interest

ECOVIS Milczarek & Partners Law FirmUl. Wiśniowa 40B/502-520 WarszawaPoland

Tel.: +48 22 5424 128Fax: +48 22 5424 130E-Mail: [email protected]: http://www.ecovis.com/warsaw-law

ECOVIS System Rewident Sp. z o.o.ul. Rakowiecka 30a02-528 WarszawaPoland

Tel.: +48 22 38 00 38 0Fax: +48 22 38 00 38 1E-Mail: [email protected] Internet: http://www.ecovis.com/warsaw-sr

Documents

tax services accounting & auditing legal services ... · Border neighbors Germany, Czech Republic, Slovak Republic, Bielarus, Ukraine, Lithuania and Russia Climate Moderate continental