Registration of IT Company in Poland. Taxes and Lifehacks.
Poland is the sixth largest economy in the EU as well as the first of the post-communist countries which succeeded to raise its economy to the level of developed economies (e.g., the USA, the United Kingdom, Canada, Norway, Germany, etc.).
For Ukrainian IT startups and young companies, registration of company in Poland is one of the easiest ways to enter the EU market. Likewise, it is much cheaper and easier to open a company in Poland than in the most popular jurisdictions such as Germany, the United Kingdom, USA, etc. Here is a short guide on how to take and register a desired LLC in Poland.
Basic Requirements for Registration of IT Companies.
We shall notice that the article describes the LLC’s registration process. We recommend you to choose this type of company as it is the most common, predominantly unified within all countries, and therefore understandable for your potential business partners unlike other types of Polish companies (spolka jawna, spolka cywilna etc.). However, if necessary, you can register a company of any type.
Basic requirements for registration of LLC in Poland are:
In general, requirements of Polish laws regarding the registration of LLC are quite similar to the Ukrainian laws’ requirements. It simplifies the registration and business processes of a company.
IT Company Registration Process
One of the key advantages of registration of IT Company in Poland is that it can be completed online from home. It usually takes from 2 to 3 days to consider the application for registration. All companies shall be registered in Register of the National Court of Poland (https://ekrs.ms.gov.pl). The only requirement for electronic registration of the company is the obtaining of a Polish digital signature or account in one of the public services (in majority, these are banks).
In the aforementioned application for registration you shall indicate the information as follows:
- Name of company, location and address;
- Purposes of company;
- Amount of share capital;
- Indication whether shareholder may have more than 1 share;
- Surnames, Names and addresses of the Management Board members and type of Management Board (Board of Directors or Director);
- Surnames and names of Supervisory Board or Audit Committee if the law of Charter requires to establish them;
- Duration of Company (you may indicate that duration is unlimited).
You will need to fill automatically generated annexes to application, namely:
- annexes regarding the branches, divisions of the company, information about the partners of the company, its bodies, field of activity etc.;
- Charter (more details in the next section);
- statement of board on contribution of capital and confirmation of payment;
- document on the appointment of members of company bodies (director, supervisory board, etc.), their name and addresses;
- surname, company name and address of the registered office, as well as the address of the sole shareholder (if there is one).
N.B.: registration form is available only in Polish. Therefore, we strongly recommend that you fill out the registration application only with the help of a professional translator.
During the registration you will need to choose the company’s codes of activity (Polish analogy of foreign economic activity codes). You should choose types of activities provided in section INFORMACJA I KOMUNIKACJA (Dział 58-63) during the registration of IT Company.
If you want (or if necessary), registration may be proceeded in a phisical way, “on a paper”, personally or through representative in Poland. It usually takes from 2 to 3 weeks to consider the application for registration under this procedure. Likewise, it is important that printed version for the Charter attached to application for registration shall have a form of notary deed.
Requirements to the Charter of Company.
Charter of LLC in Poland shall contain the following information as minimum:
- name of company and address of registered office;
- subject matter of activities of company;
- duration of a company (you may indicate that duration is unlimited);
- amount of share capital;
- indication whether shareholder may have more than 1 share;
- number and nominal value of shares which shall be signed by every and all shareholder;
Additional provisions of the Charter may relate to matters like enlargement of share capital, allocation of shares, matters of representation etc.
We shall notice that during registration of a company online the Charter is going to be automatically generated by the website as a model charter of LLC. On the one hand, such Charter reflects the minimal necessary functionality provisions of a company. On the other hand, you will not be able to modify the Charter up to your needs if you want to specify the rights, obligations and responsibilities of the shareholders or your IT Company has the significant specifics and philosophy of activity.
Otherwise, shareholders’ agreement is an effective way to regulate the rights, obligations and responsibilities of the shareholders. However, if you need to specify the subject matter of the company’s activity you have to conclude a personalized Charter which can be registered only physically. Such process takes more time but 2 weeks of waiting can help you to avoid the possible issues in future.
Company Registration Cost
If you are going to register the company online the cost will be:
- court charge for registration is 350 zloty;
- economical monitoring fee is 100 zloty.
If you are going to register the company physically the cost will be:
- court charge for registration is 600 zloty;
- economical monitoring fee is 100 zloty;
- expenses on notary services, transport/representative expenses etc.
What Taxes Shall Pay the IT Company in Poland?
The cornerstone of company registration in any jurisdiction is the matter of taxation.
Income tax rate in Poland is quite flexible:
- 19%, standard rate;
- 9%, reduced rate for:
- companies which have revenue (including VAT) less than 1 200 000 EUR in equivalent to zloty for previous tax year (2 000 000 EUR since January 1, 2020); or
- companies during the 1st year of their registration.
Associated taxes that may apply to the company are:
- withholding tax (dividends), 19%;
- payroll tax, 17% (rate increases to 32% if salary exceeds the level of 20 000 EUR per year and applies only profit over 20 000 EUR);
- VAT, 23% (only if the annual turnover of the company exceeds 200 000 zloty); moreover, there are the reduced rates for certain goods (8%, 5% and 0%).
N.B.: since August 1, 2018 Poles under the age of 26 who earn less than approximately 20 000 EUR per year are exempt from 17% payroll tax. This tax exemption allows IT companies to save on tax costs, subject to the recruitment of young professionals.
High requirements of the Polish laws’ regard to registration of LLC (amount of share capital, detailed information on shareholders) and, at the same time, flexibility of the registration process (the possibility of online registration, significant tax benefits for small and start-up businesses) have at least two undeniable advantages.
Firstly, they create an image of a reliable EU business partner for your company.
Secondly, they give entrepreneurs the opportunity to save significant financial resources subject to smart company’s activity planning.
That is why, our sincere and subjective conviction is that Poland is one of the best foreign jurisdictions for registration of IT Companies today.