Investing in Poland – Key Facts for the UK investors | IMD Corporate

Investing in Poland – Key Facts for the UK investors

Posted by: IMD Solicitors
Posted in: Reading room
Date published: 02/04/2024

British Investments in Poland

One of the most interesting destinations to allocate British capital is Poland. Companies such as BP, GlaxoSmithKline, Imperial Tobacco, Reuters, Rolls Royce, Shell, Royal Bank of Scotland, TJX, Xerox, Cadbury’s Schweppes, and AstraZeneca already placed their investments in Poland several years ago. Recently lots of small and medium-sized companies are looking towards Poland while considering expansion to Europe / Middle East Europe.

UK – Poland Trade, Services and Investment

The UK is the third biggest destination of Polish exports and the ninth biggest destination of Polish imports. In 2022 trade between Poland and the UK reached a turnover of 23 231 mln EUR, as (*1):

Polish exports from the UK amounted to 16 818 mln EUR, while
Polish imports to the UK amounted to 6 413 mln EUR.

Polish companies (in 2021) delivered services to UK companies for the value of 5,4 mld EUR, while UK companies purchased services from Polish entities for the value of 3,4 mld EUR.

British companies are the eighth biggest investor in Poland with a commutative investment value of 8 530 mln EUR. As per Polish Statistical Office statistics – over 1370 UK companies operated in Poland in 2020.

Considering Investing in Poland?

Polish Economy was peaking during the last 30 years – GDP grew over 10 times to reach 690 billion USD in 2023. The growth factor was much higher than in Czechia or Hungary.

Poland is currently considered as leading localisation for investments in CEE due to the following factors (*2):

Membership in the EU along with all the benefits of the common market and NATO,
Strategic location in Central Eastern Europe with access to the Baltic Sea
Well-developed infrastructure – of highways, railways, and 15 airports
Huge consumer market of almost 40 mln residents
Promising HR market – due to size (15 mln employees), cost, and talent education

What are the incentives to invest in Poland?

British investors choose to invest in Poland, not only due to the country’s characteristics but also due to incentives offered by the Polish investment / legal environment. Amongst the most popular investment incentives, we shall name:

Holding company scheme which allows to benefit from discounted 5% CIT on dividends received from a subsidiary from outside EU, and no income tax (CIT) on trade shares.
Estonian CIT scheme which allows to pay 0% corporate income tax if the profit is reinvested.
Possibility of investment in Economic Zones where individual benefits may be obtained – such as exemption from corporate tax as well as from real estate tax.
IP Box scheme which allows to benefit from a 5% tax on income from IP rights
R&D scheme which allows to a decrease in taxation of research and development projects

What are the standard corporate taxes in Poland?

Rates of corporate income tax may be significantly decreased by utilizing the abovementioned tax schemes.

Nonetheless, it is important to bear in mind that Polish corporate income tax rates are lowered than in the UK.

The standard corporate income tax rate for small companies in Poland (below 2 mln EUR turnover) equals 9%. While the standard corporate income tax rate for all other companies equals 19%.

Opening Branch vs. Registering Company in Poland

Polish Law provides a wide variety of legal forms to do business in Poland. In practice – foreign investors choose between two most popular options:

Registering Company in Poland, or
Opening a Branch Office

Almost 95% of investors choose to incorporate local Ltd and just 1% decide to open a branch.

The procedure of company or / and branch registration in Poland is rather straightforward and can be completed remotely within a 2 – 4 week period.

LTD in Poland

Limited liability company in Poland (“Spółka z ograniczoną odpowiedzialnością” or “Sp. z.o.o.”) is the most popular form of investment in Poland as it provides a high level of flexibility, reasonable taxation, and shareholders liability limitation (up to the amount contributed as capital).

Polish “spółka z ogarniczoną odpowiedzialnością” (Ltd):

May be set up within a couple of weeks, also remotely
Minimum capital contribution equals 5.000 zł
The capital may be covered by cash or in-kind contributions
Director/s must be appointed (no requirement of residence)
The Supervisory Board is not mandatory
The company may be financed by prepayments, capital injections, or loans
Audit is mandatory only if criteria for “big company” are met

Branch in Poland

Despite the common belief that a branch involves less bureaucracy and lower taxation – from those points of view branch is almost the same as Ltd in Poland. Accounting, tax, and reporting rules for branches and Ltd as almost the same. Differences are negligible. Both are obliged to run Polish ledgers and report in the same periods, both are subject to VAT and the same rates of CIT.

The key difference between Ltd and the branch is that the latter does not provide a separate legal personality and in consequence limitation of liability. If you decide to invest in Poland via branch it means that you are investing directly with your foreign company and your foreign company will bear all the risks related to failure on the Polish market.

A potential benefit of a branch may be identified in regulatory fields. If your foreign company has licenses that will be used or extended to Poland, it is worth considering this legal form of investment. Ltd, as a separate legal entity, will need to obtain its license in Poland and the extension will not be possible.

Labour Regulation

Rules of employment law in Poland are comparable to other EU countries. Employee’s and employer’s rights and obligations are comprehensively regulated in the Polish Labour Code.

Contract types: permanent, probation and fixed-term employment agreement
Minimum wage – 4.300 PLN per month
Standard working hours – 8 h / day per 5 days within 40 h / week
Overtime – additionally paid 50% or 100% per each hour
Rest – minimum 8 h / day and 35 / uninterrupted hours / week
Holiday –20 or 26 days per calendar year
Benefits – insurances are mandatory and include health care, disability, sickness, retirement, accident

Buying Property in Poland

Purchase of real estate in Poland by foreigners (non-EU corporations or citizens) is restricted in Poland and requires obtaining a special permit. However, there are two important exemptions that facilitate property purchases in Poland:

apartments are a rule may be purchased without requirement to obtain the permit; and
purchase of property via a local subsidiary (e.g. Polish Ltd or other EU company) shall not require obtaining the permit.

Investment Advisory in Poland

If you are looking for investment or legal advisory related to your company’s expansion to Poland, please feel free to reach out to our Partners, namely Dudkowiak, Kopeć & Putyra law firm or e-mail directly at: michal@dudkowiak.com.

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