Doing Business In... 2019 Comparisons

Last Updated July 15, 2019

Law and Practice


Clifford Chance, Janicka, Krużewski, Namiotkiewicz i wspólnicy sp.k. opened in 1992 and is the Warsaw office of the global law firm, Clifford Chance. It combines local expertise with the depth and range of resources offered by Clifford Chance as a single, fully integrated, global partnership across five continents. The firm's clients include corporates from all the commercial and industrial sectors, governments, regulators, trade bodies and non-profit organisations. The corporate/M&A department in Warsaw has over 30 lawyers (including three partners) who handle complex cross-border M&A transactions, as well as corporate restructurings, and the team has a proven track record advising across all sectors and practice areas in some of the largest and most innovative transactions in the region. The lawyers are also highly active in private equity deals, and have a strong background in banking, litigation and real estate.

Like many other countries in continental Europe, Poland's legal system is based on the civil law tradition dating back to the Napoleonic Code, with some influences of both the German and Austrian civil codes.

During the 15-year period between the fall of communism in 1989 and Poland's accession to the EU in 2004, the Polish legal system underwent substantial changes to accommodate the transition to a free-market economy and the implementation of EU legislation. Since then, the Polish system has continued to evolve.

Presently, the basic legislative framework for business activities in Poland is provided by the Civil Code of 1964, the Commercial Companies Code of 2000 and the Act on Entrepreneurs of 2018. The key act on foreign investment is the Act on Rules of Foreign Entrepreneurs' and Other Foreign Persons' Involvement in Trading in Poland of 2018.

The present Polish constitution of 2 April 1997, vests judicial powers in the Supreme Court, the common courts (district, regional and appeal courts), the administrative court (provincial administrative courts and the Supreme Administrative Court) and military courts.

The judicial order is based predominantly on the common courts, which ensure the proper administration of justice. The role of administrative courts is to control the activity of the public administration.

In principle, proceedings before a common court consist of two stages (though extraordinary cassation appeals to the Supreme Court are available in certain circumstances). In general, the first stage of civil proceedings is conducted in a district court and its ruling may be appealed before a regional court. However, there are some exceptions, where the case is heard by the regional court in the first instance and is then appealed before an appeal court.

The Supreme Court has a special position. Its role is to ensure uniformity and accuracy of interpretations of the law and to issue opinions on statutes. Additionally, in particular cases, it hears cassation appeals.

In general, foreign investment in Poland does not require special approval from the authorities. Poland, as a member state of the EU, applies the principle of free movement of capital and the principle of non-discrimination. Therefore, investors from EU or EEA or EFTA member states may invest according to the same principles as Polish citizens and are not treated as foreigners.

However, in order to enjoy the same rights as Polish citizens, foreign investors need to meet certain criteria, eg, obtain a residence permit in Poland. Otherwise (save for where international treaties provide differently), an investor may only participate in a limited liability company, joint-stock company, limited partnership or partnership limited by shares.

Moreover, there are limitations on foreign equity participation with regard to some sectors of the economy, eg, the aviation sector and radio and television broadcasting.

In the aviation sector, a licence to manage an airport may be obtained only by a company in which shareholders independent of foreign persons hold at least 51% of the shares and have a decisive impact on management bodies, transfer of the company's assets and conduct of its business. Additionally, no more than half of the members of the company's management board may at the same time be members of the management board of an entity that is:

  • the company's direct or indirect subsidiary;
  • a subsidiary of a foreign entity; and/or
  • has any foreign shareholders.

A radio or television broadcasting licence may only be granted to a company in which foreigners hold no more than 49% of the share capital and of the total number of votes.

However, certain limitations apply, regardless of the investor's origin, with regard to certain regulated activities where a concession, licence or registration in the register of regulated activities may be required.

These sectors include, for instance:

  • searching for and exploration of minerals;
  • underground storage of substances and waste in rock masses or in underground mines;
  • manufacturing and trading in explosives, ammunition, weapons and other items and technology for military or law enforcement purposes;
  • manufacturing, processing, storing, delivery, distribution of and trading in fuel and energy;
  • security services for persons and property;
  • transmission of carbon dioxide for its storage underground;
  • radio and television broadcasting; and
  • air transportation.

In these areas, the relevant regulatory bodies may be authorised to revoke licences for state security interest reasons. In some sector regulations, the regulators have the express right to revoke a licence upon change of control.

Finally, some consents (eg, antitrust approval or consent of the Polish Financial Supervisory Authority to acquisition of certain stakes in a bank or certain other, regulated financial institutions) may be required irrespective of whether the investor is foreign or domestic.

Therefore, regulatory requirements, if any, must always be double-checked at an early stage of preparations for a proposed investment.

Furthermore, acquisition of real property (including the so-called perpetual usufruct right in real property) by foreigners requires a permit from the Minister of Interior and Administration. This restriction also applies to the acquisition of shares by a foreigner where this results in the takeover of control over a company owning real property and to the purchase of shares in a company owning real property which is a controlled entity. With regard to agricultural land, in general, only individual farmers may purchase it. All other entities must first obtain permission from the President of the National Agriculture Support Centre, and this is subject to the fulfilment of strict requirements.

As mentioned above, only entities from outside the EU and EEA are treated as foreigners.

Where a permit issued by the Minister of Interior and Administration is required for the acquisition of real property or shares in companies that own real properties, acquisition without such a permit will be null and void.

It may take several months to obtain a permit and the actual duration of the proceedings may vary depending on the circumstances.

In respect of certain sectors, where the formal consent of the regulator is not required but a change in the shareholding would trigger certain rights for the regulator, it is usually recommended, where feasible and practicable, for the proposed investor to introduce itself to the regulator before making the investment in order to determine whether the investment would raise any concerns for the regulator.

Since no specific approval is required for a foreign investment, the authorities do not make approval conditional upon certain commitments.

Some commitments will usually be required if an investor (whether foreign or domestic) applies for state aid for its investment.

It is worth noting that certain regulators, eg, the Polish Financial Supervisory Authority, usually expect various specific commitments from both foreign and domestic investors who wish to acquire large stakes in regulated financial institutions.

Since specific approval for foreign investment is not required, there is no specific authorisation procedure, either.

However, where licences, concessions and permits are required, as mentioned in the points above, they are granted in administrative proceedings and any unsatisfactory decision may be challenged.

Foreign investors usually operate in Poland through one of the available domestic entities. However, it is not uncommon for investors (especially from the EEA) to register an overseas company as having a branch or representative office in Poland, without incorporating a new Polish legal entity.

The choice of an appropriate legal form usually depends on the nature of the contemplated business.

Most Common Forms of Legal Entities in Poland

Limited liability company

A limited liability company (spółka z ograniczoną odpowiedzilanością, or sp. z o.o.) is the most popular form of corporate vehicle in Poland.

The governance structure includes the following corporate bodies: shareholders' meeting, management board and, where applicable, supervisory board (or audit committee). The appointment of a supervisory board or audit committee is optional as long as the company's share capital does not exceed PLN500,000 and there are no more than 25 shareholders.

The management board manages the affairs of the company and represents it in relations with third parties. The management board consists of at least one member, who may be appointed from among the shareholders or outsiders. Unless the articles of association provide otherwise, the members of the management board are appointed and dismissed by way of a resolution passed by the shareholders' meeting.

The shareholders' meeting makes the decisions on the company's most crucial affairs stipulated in the Commercial Companies Code or in the articles of association. The Commercial Companies Code distinguishes between 'ordinary' and 'extraordinary' shareholders' meetings. The first must be held within six months of the end of each financial year and it should adopt resolutions to approve the management board report, the financial statement for the previous financial year, the distribution of profits or financing of losses, and the discharge of duties by members of the company's corporate bodies. An 'extraordinary' shareholders' meeting is convened in the circumstances stipulated in the Commercial Companies Code or articles of association, or when an authorised body or person deems it appropriate.

The supervisory board or audit committee, if appointed, must be composed of at least three persons. The role of the supervisory board is to exercise day-to-day supervision over all areas of the company's activity. The supervisory board may give the management board instructions, but they are not binding. The audit committee's duties are limited to reviewing the financial statements and the management board's motions to distribute profit and cover loss.

The shareholders of a limited liability company are not personally liable for the company's liabilities. The company is treated as a legal entity separate from its shareholders. Therefore, the shareholders may lose only their investment in the company.

The minimum share capital of a limited liability company is PLN5,000 and the nominal value of one share may not be less than PLN50. There is no minimum number of shareholders, so the limited liability company may have only one shareholder. However, a limited liability company may not be formed by another sole-shareholder limited liability company.

A limited liability company is quite a flexible vehicle, suitable for numerous purposes.

Joint-stock company

In general, a joint-stock company (spółka akcyjna, or S.A.) is quite similar to a limited liability company. The fundamental difference is that a joint-stock company may raise its capital by public subscriptions and issue its shares in the form of securities.

The joint-stock company has three corporate bodies: the general meeting, the management board and the supervisory board. The characteristics and competences of those bodies are almost the same as those in a limited liability company.

The management board deals with the company's affairs. Its members are appointed and removed by the supervisory board, unless the statutes provide otherwise. Some issues listed in the Commercial Companies Code or the statutes require resolutions adopted by the general meeting. A supervisory board is a requirement in a joint-stock company. Its role is to monitor the company's activities, and in particular to review the financial statement and the management board's report on company activity. Its members are appointed by the general meeting, but the statutes may provide otherwise. In principle, the supervisory board acts collegially, but it may also delegate certain supervisory activities to individual members.

The shareholders are not liable for the company's liabilities.

The minimum share capital of a joint-stock company is PLN100,000 and the nominal value of one share may not be less than PLN0.01. There is no minimum number of shareholders, so the joint-stock company may have only one shareholder. However, it may not be formed by a sole-shareholder limited liability company.

A joint-stock company is usually used by businesses intending to raise capital through an IPO or when Polish law requires this form of company (eg, in the case of financial institutions, banks, pension funds and insurers).

Less Common Types of Corporate Vehicles in Poland

General partnership

A general partnership (spółka jawna, or sp.j.) is a basic type of partnership. Although it does not have a legal personality, it has the capacity to acquire rights, incur debts, sue and be sued.

It is managed and represented by its partners. In principle, each of the partners is entitled to deal with the general partnership's affairs and represent it. However, the partnership deed or a resolution of the partners may provide that the partnership is managed by one or several partners. Moreover, the management of the partnership may be entrusted to third parties, but not in a way that excludes all the partners. However, decisions on matters beyond the ordinary scope of the partnership's business require the consent of all the partners (including those whose right to manage it is limited). Regardless of such limitations, all the partners have the unlimited right to be informed of the state of the partnership's assets and its business, and the right to review its books and documents.

All the partners are jointly and severally liable for the general partnership's debts, but this liability is subsidiary, ie, the partnership's creditors should first seek satisfaction from the partnership's assets. If that proves ineffective, they may institute enforcement against a partner's assets. The partners' liability may not be limited.

In a general partnership, there is no minimum share capital requirement, but a general partnership must have at least two partners.

Most often, a general partnership is used when a large amount of capital is not required, the partners desire to have a personal impact on the business and the business itself is not risky.

Professional partnership

A professional partnership (spółka partnerska, or sp.p.) is designed for certain groups of freelancers (such as lawyers, doctors, tax advisers, architects, etc) for the purpose of exercising their professions in a partnership. Only natural persons licensed to practise their professions may be partners in a professional partnership.

Each partner has the right to manage the partnership's affairs individually. Additionally, the professional partnership may be managed and represented by a management board, modelled on the one in a limited liability company. At least one of the partners must sit on the board.

The partners' liability is similar to that in a general partnership, but the partners are not liable for the partnership's obligations arising in relation to the practise of professions by the other partners or resulting from acts or omissions of the partnership's employees who are supervised by another partner.

As in a general partnership, there is no minimum share capital requirement. A professional partnership must have at least two partners.

This type of partnership is designated for certain groups of professionals.

Limited partnership

In a limited partnership (spółka komandytowa, or sp.k.), there are two groups of partners – general partners who have unlimited liability and limited partners whose liability is limited.

The status of the general partners is similar to the status of partners in a general partnership. They represent the limited partnership and manage its affairs. Limited partners may represent the partnership only on the basis of a power of attorney granted by the partnership. Although management of the partnership is the general partners' right and duty, decisions on matters exceeding the ordinary scope of the partnership's business activity require the consent of the limited partners as well.

The general partners are liable for the partnership's obligations to the extent of all their personal assets, whereas the limited partners are liable up to the declared limited contribution (suma komandytowa).

There is no minimum share capital requirement. A limited partnership must have at least one partner who is the general partner and at least one partner who is the limited partner.

A limited partnership allows some of the partners to enjoy limited liability and avoid double taxation.

Partnership limited by shares

A partnership limited by shares (spółka komandytowo-akcyjna, or S.K.A.) is a combination of a joint-stock company and a limited partnership.

A partnership limited by shares has two corporate bodies: the general meeting and the supervisory board. A partnership limited by shares does not have a management board. Instead it is managed and represented by the general partners. However, certain matters listed in the Commercial Companies Code or partnership deed require the resolution of a general meeting. Both the general partners and the shareholders participate in the general meeting, but only the latter are entitled to vote. A supervisory board is not mandatory unless the partnership has more than 25 shareholders. Once appointed, the supervisory board exercises permanent supervision over the partnership's activities. The supervisory board must have at least three members.

The general partners' liability is unlimited, whereas the shareholders are not liable for any of the partnership's debts and may lose only their investment in the partnership.

The minimum share capital of a partnership limited by shares is PLN50,000 and the nominal value of one share may not be less than PLN0.01. A partnership limited by shares must have at least one general partner and at least one shareholder.

Most often, a partnership limited by shares is used in atypical VC/PE investments.

Other forms

Other forms, such as a co-operative (spółdzielnia) and a European company (Spółka Europejska or Societas Europea) are also available.

The process of incorporating a corporate vehicle begins with signing the articles of association or deed of formation. In the case of a limited partnership, a partnership limited by shares, a limited liability company and a joint-stock company, the articles of association or deed of formation must be executed before a Polish notary public in the form of a notarial deed.

The next step is to file an application with the National Court Register (Krajowy Rejestr Sądowy) to enter the company in the business register. Registration in the National Court Register usually takes four to six weeks (sometimes, especially during the summer holiday period, even longer). A partnership is established upon registration. In the case of the companies, they come into existence upon the conclusion of the articles of association, but upon registration they receive legal personality.

Additionally, a general partnership, a limited partnership and a limited liability company may be established electronically via a special internet portal. In such a case, there is no requirement to draft the articles of association in the form of a notarial deed. Instead, they are concluded based on the template provided in the system. However, the template has rather basic wording and any future amendments to it must be in the form of a notarial deed and must be registered with the court.

This method of incorporation is usually simpler and faster than the standard procedure, though not always suitable for more complex investments.

Polish private companies and partnerships are subject to disclosure obligations. Such obligations are of an informational nature only. They are performed by submitting relevant information and documents to the registry court, which are then published in the official Court and Economic Journal (Monitor Sądowy i Gospodarczy).

First of all, companies are obliged to notify the registry court of any changes to information disclosed in the register, such as the composition of their decision-making bodies, rules of representation, registered office and address, amount of share capital, and the names of their shareholders or partners. Additionally, companies must report any amendments made to the articles of association.

After the end of each financial year, a company must file financial statements, together with the shareholders' resolution approving them, the management board's report on the company's activity and the auditor's opinion (if required). Currently, these financial documents are only filed electronically.

Ongoing tax and employment-related reporting duties (eg, in respect of taxes and various social security contributions) will also apply. Certain additional reporting duties vis-à-vis the National Bank of Poland may apply regarding, among others, foreign exchange transactions and other financial matters. The company will usually be expected to provide certain specific data on a periodic basis to the statistical authorities.

Depending on the type of business, certain other ongoing duties (eg, waste disposal or other duties related to the environment) will apply. If the business is regulated, other regulatory duties may also apply.

Under Polish law, there is a two-tier management structure. The management board manages a company's affairs and has executive directors, whereas the supervisory board (with non-executive directors) or, less commonly, the audit committee, monitors its activities.

Each member of the management board, supervisory board, audit committee and any liquidator is an officer of the company obliged to act in its interests and is liable to the company for any damage caused by acts or omissions in breach of the law or articles of association.

The members of the management board may be jointly and severally liable for the company's debts in terms of all their assets if enforcement against the company proves ineffective (ie, if the company's assets are insufficient to cover the claims). However, a member of the management may be released from such liability in certain circumstances, in particular if he/she can prove that a petition to have the company declared bankrupt was filed in due time (or delayed without his/her fault), or that despite a delayed petition, a creditor has not suffered any loss.

As the burden of proof will rest entirely with the management board member, it may sometimes be very difficult for the member to succeed in being released from liability. Similar rules regarding the personal liability of management board members apply to taxes and certain other public charges.

Finally, a breach of certain duties (eg, reporting duties) may also trigger criminal liability.

In practice, the members of the management board (as executive directors) are more exposed to each type of liability than the members of the supervisory board (as non-executive directors), which is worth considering when deciding on the structure and composition of the boards.

Polish law does not currently recognise the concept of 'piercing the corporate veil' and attempts to introduce the concept by way of judicial interpretation of general principles of law have so far been unsuccessful. Periodically, draft legislation to introduce the concept is contemplated.

As it stands, shareholders are presently liable to the company only to the extent that they fail to make agreed contributions, receive unlawful distributions, or under the general principles of tort law.

Employment regulations are contained in a number of legal sources: statutes of law, collective bargaining agreements and other collective arrangements based on statutes and regulations issued by the employer. Statutes of law on employment are of a semi-imperative nature, which means that collective bargaining agreements, other collective arrangements and internal regulations may modify statutory provisions, but only for the benefit of employees. The same applies to individual employment contracts.

An employment contract should be concluded in writing (meaning in wet ink). However, failure to satisfy this requirement does not result in invalidity of the contract – an employment contract can be concluded orally or even per facta concludentia. Where the contract has not been concluded in writing, the employer is obliged, before the employee begins working, to confirm in writing the arrangements regarding the parties to the contract, the type of contract and the conditions of the contract. Any change to the terms of employment should be made in writing.

Polish law provides for three types of employment contracts, based on the period for which the contract is concluded:

  • employment contract for a probationary period – the purpose of this contract is to verify an employee's suitability for the given position. It may be concluded for no longer than three months and, in principle, only once in relation to the same employee and the same position;
  • employment contract for a fixed term – this may be concluded for a maximum period of 33 months (where the same parties have concluded more than one contract, the periods of the contracts should be added to each other). Also, no more than three contracts may be concluded between the same parties. If these limits are exceeded, the contract automatically becomes a contract for an indefinite term. The law provides for certain exceptions where the limits may be exceeded without the contract becoming a contract for an indefinite term. These exceptions include, among other things, conclusion of a contract for a term of office or a situation where the employer can objectively justify exceeding the limit; and
  • employment contract for an indefinite term.

Employees may be employed part time or full time and there are no minimum working hours. However, the law provides for maximum working hours of eight hours a day and 40 hours a week. These limits may be modified based on the system and work time schedule adopted. The employer must ensure minimum periods of uninterrupted rest, ie, a minimum of 11 hours per day and 35 hours once a week.

Overtime work is, in principle, permitted for the employer's justified needs and the need to conduct a rescue action. Overtime hours should not exceed 150 annually, but the employer may modify this to up to 416 hours.

For overtime work, employees are entitled to their regular remuneration plus 50% or 100%. The higher addition applies if overtime work is performed at night, on a Sunday or a holiday, or on a day off granted to an employee for work on a Sunday or holiday, and also for every overtime hour exceeding the weekly working hours. Instead of paying additional overtime remuneration, the employer may grant the employee time off.

Employment contracts may be terminated with or without notice (by the employer or the employee) or by means of a termination agreement between the parties. The notice period depends on the type of contract and the duration of employment. For employment contracts for a fixed term and an indefinite term the notice period is: two weeks if the period of employment lasted less than six months, one month if the period of employment lasted at least six months, and three months if the period of employment lasted at least three years.

Termination by the Employer

To terminate an employment contract agreed for an indefinite term, the employer must state the reason for termination in the notice. The reason must be real, specific and serious enough to justify termination. Moreover, if there are trade unions at the employer's establishment, the employer must consult the trade union representing the relevant employee concerning the intention to terminate an employment contract agreed for an indefinite term. However, the employer is not bound by the opinion of the trade union.

Some categories of employees are protected from termination, for example, employees of pre-retirement age and pregnant employees. There is no obligation to make any additional payments to an employee whose contract is being terminated with notice (apart from regular remuneration until the end of the notice period).

In certain circumstances, the employer may terminate an employment contract without notice through the fault of the employee. These circumstances include:

  • severe violation of basic employee duties;
  • committing a crime which makes it impossible to continue employment in a given position; and
  • loss of the qualifications to perform work in a given position through the fault of the employee.

In the case of such termination, the notice must state the reason(s) for termination (irrespective of the type of employment contract) and the employer must obtain an opinion from the trade union representing the relevant employee.

The employer may also terminate a contract without notice without the fault of the employee if the employee remains on sick leave for a certain period (longer than three or nine months, depending on the duration of the contract) or where his/her justified absence for other reasons lasts longer than one month. There is no obligation to make any additional payments to an employee in the case of termination without notice.

Termination by the Employee

An employee can also terminate an employment contract with or without notice. Termination without notice can take place where a doctor diagnoses a detrimental effect of work on the health of the employee and he/she is not transferred to another position, or where the employer severely breaches its basic duties to the employee. In the latter case, the employee is entitled to compensation in the amount of his/her remuneration for the notice period applicable to his/her contract or, in the case of a contract for a fixed term, for the remainder of the term of the contract, provided it is not longer than the notice period.

The terms of termination agreements are agreed by the parties and it is common for the employer to make an additional severance payment to the employee, although this is not a legal requirement.

Collective Redundancies

If an employer with at least 20 employees terminates some of their employment contracts for reasons not attributable to the employees, it is referred to as 'collective redundancy' if it involves:

  • 10 or more employees, where the employer has fewer than 100 employees;
  • 10% or more of the employees, where the employer has at least 100 employees, but fewer than 300 employees; or
  • at least 30 employees, where the employer employs 300 employees or more over 30 consecutive days.

The employer is obliged to consult the trade unions of the intention to carry out group redundancies. The employer must also notify the trade unions of, among other things, the reasons for the planned redundancies, the number of employees to be made redundant and the period during which the redundancies will take place. This information must be submitted to the relevant labour office. If there are no trade unions at the employer's establishment, the relevant rights are exercised by employee representatives.

Within 20 days of the date of notification, the employer must conclude an agreement with the trade unions regulating the group redundancies process. If an agreement cannot be reached, the employer unilaterally regulates the group redundancies process in relevant by-laws. If there are no trade unions at the employer's establishment, the employer issues the by-laws after consulting the employee representatives. The relevant labour office must be notified of the agreement concluded or the by-laws issued.

Employees whose contracts are terminated in a group redundancies procedure are entitled to additional severance pay of one, two or three months' remuneration, depending on the duration of their employment (respectively: less than two years, from two to eight years, longer than eight years).

In principle, there is no legal requirement to have any kind of employee representation or for management to inform or consult employees. However, a company that has more than 50 employees is obliged to inform employees of the possibility of setting up a works council. Works councils have consultation and information rights, but they do not participate in the management of the company.

Employees of privatised companies have certain rights of representation on the supervisory board. Additionally, if such privatised company has more than 500 employees on average over the year, its employees have the right to elect one member of the management board.

Trade unions, if present at the company, retain significant influence; negotiations with trade unions may be required in some situations, in particular if there is a planned group redundancy or a transfer of an employment undertaking.

In general, under Polish law there are no requirements to negotiate with trade unions or works councils when a Polish company or its assets are being acquired. However, such negotiations are common when the company being sold is state-owned.

Personal Income Tax

In principle, employees in Poland are subject to PIT at the rate of 18%, provided that a 32% rate applies on the portion of thetaxable profit exceeding PLN85,528 in the tax year. Certain incomes are taxable at 19% or 20% flat PIT rates. Incomes from different sources are not mixed and tax is calculated for each source of income separately.

A personal allowance reducing the tax base and ranging from PLN8,000 (if the annual income is PLN8,000) to zero (if the annual income is PLN127,000 or more) may apply. No tax is effectively payable on an annual income of up to PLN8,000.

A limited number of reliefs and allowances may be available to employees, for example, for the use of the internet and for certain donations made to charity and/or if they have children who are:

  • under 18; or
  • under 25 and continuing their education without having their own income; or
  • disabled and receive special benefits.

Tax deductible costs (other than social security and health insurance contributions) for employees are lump sums ranging from PLN1,335 to PLN2,502.56 per annum. However, certain employees who, as part of their duties, create IP rights may be eligible for lump-sum costs at the rate of 50% of the portion of their remuneration allocated to such IP rights (provided that such costs do not exceed PLN85,528 in total).

Social Security Contributions

Social security contributions (to finance retirement, disability pensions and sick leave benefits) may total up to 29.97% (ie, 13.71% payable by and tax deductible for the employee, and 16.26% payable by and tax deductible for the employer), provided that the retirement and disability pensions contributions are capped at PLN27,903.84 per annum. Health insurance contributions would also apply at a rate of 9% (7.75% of the tax base is tax deductible; the remaining 1.25% is not).

Additional occupational accident contributions and some other social security contributions payable by and tax deductible for employers may apply, depending on the circumstances and the type of business and work carried out, and the number of employees employed by the employer.

The above rates and values are applicable in 2019 and may change from time to time.

Social security contributions may differ slightly from the above if an individual is employed under a civil law contract (as opposed to an employment contract) or is self-employed.

Payment of Tax and Reporting Duties

The employer is obliged to calculate and remit the tax advances to the relevant tax office, and the health insurance and other social security contributions to the Social Security Office (ZUS).

Employees are obliged to make annual tax filings (which may be done electronically). Employees who do not intend to benefit from any reliefs and allowances can ask their employer to file annual tax filings on their behalf.

Company Income Tax

Legal entities in Poland are obliged to pay CIT on their income in Poland at the rate of 19%. A reduced 9% rate applies to taxpayers in the first year of starting a business and to those taxpayers whose annual income (including VAT) does not exceed EUR1.2 million. In respect of partnerships that are tax transparent, tax is payable by partners (CIT for partners being legal entities, PIT for individuals).

The CIT Act provides for specific rules to determine whether or not an item may count as a tax-deductible cost. The Act expressly identifies a list of items which cannot constitute tax-deductible costs. In particular, from 2018 the costs of certain intangible intra-group services will not be tax deductible to the extent they exceed 5% of EBITDA.

Certain allowances and reliefs may be available (eg, a 50% allowance in respect of the acquisition of new technologies).

The tax basis is calculated separately for capital gains (as defined in the CIT Act) and other incomes.

Taxation of Sole Traders

Individuals running businesses as sole traders (certain requirements need to be met) may elect whether to pay taxes:

  • according to the same rules and rates as employees (save that the actual tax-deductible costs, subject to statutory limitations similar to those applicable to CIT payers, would apply instead of lump sums); or
  • at a flat rate of 19%; or
  • according to special rules, in respect of some types of smaller businesses (eg, a lump sum of 2–20% of registered income or by means of the so-called tax card, where the amount of tax is a lump sum payable irrespective of income or profit).

Withholding Tax

Polish income tax laws provide for withholding tax on payments made to non-Polish residents at the rate of:

  • 20% on interest, royalties and certain services (eg, legal, advisory, management, data processing, HR, financial services); and
  • 19% on dividends and other capital gains and interest payable to individuals on some debt instruments.

Lower rates or exemptions from withholding tax may apply if provided for under bilateral treaties.

Moreover, under the provisions of the Parent-Subsidiary Directive and the Interest and Royalties Directive, which have been implemented into the Polish tax system, dividends, interest and royalties payable to a company with its registered office in an EU country are in principle exempt from withholding tax, provided that the company receiving the interest (its beneficial owner) holds at least 10% (in the case of dividends) and 25% (in the case of interest and royalties) of the shares in the company making such payments for at least two years. This holding period may end after the payments have been made.

The tax remitter is obliged to act with due care when verifying the requirements to apply such lower rates or exemptions on payments to a single entity of up to PLN2 million per annum.

Under the new withholding tax pay & refund mechanism which comes into force from July 2019, in respect of payments above this threshold, the tax remitter is obliged to collect withholding tax at the standard statutory rates of 19% or 20% (subject to a refund mechanism) unless:

  • it has obtained an individual ruling from the tax authority permitting an exemption, or collection of withholding tax at a lower rate, and members of the board of the tax remitter provide the tax authority with a written statement confirming, under threat of tax criminal liability for breach, that all the requirements for a lower rate or an exemption have been fulfilled; or
  • in the case of payments made to eligible shareholders, the company or the shareholder receives a ruling from the tax authorities on the applicability of the withholding tax exemption, valid for three years.

Significant fines apply if, in the absence of an exemption, a tax remitter does not collect the statutory withholding tax.

Value Added Tax

In principle (subject to some exceptions), anyone whose total sales of goods and/or services in the previous year exceeded PLN200,000 (provided that such threshold shall be reduced pro rata if the activity was conducted only for part of the previous year) must register as a VAT payer. The basic VAT rate is 23% (reduced rates of 8%, 5% or 0% may apply to some goods and services).

VAT rules are fairly strict and under some circumstances provide for joint and several liability of members of the supply chain for its payment. Under certain circumstances, additional penalty rates of 30% or even 100% may apply.

An electronic accounting ledger detailing all VAT-able transactions must be submitted to the tax authorities on a monthly basis.

In 2018, a split payment mechanism applied to some B2B transactions, whereby the VAT portion of the amount payable by a buyer to a vendor of goods or services was credited to a dedicated VAT bank account from which funds may, in principle, have been used only for payments of the VAT portion of the prices payable to vendors and for VAT settlements with the tax authorities (including VAT refunds). For the time being, the split payment mechanism is voluntary, although vendors participating in the system may benefit from various tax incentives (eg, they are released from joint and several liability and the risk of being exposed to making additional payments at penalty rates, and may benefit from a simplified VAT refund procedure). It is expected that the split payment will become compulsory from September 2019 in the case of payments for certain goods and services.

Other Taxes

Other taxes, such as property tax, excise duty, tax on civil law transactions, tax on means of transport or tonnage tax, may apply from time to time, depending on the type of business.

Subject to the restrictions and limitations resulting from the EU state aid laws, some tax incentives (such as income and property tax reliefs) may be available to investors that obtain a permit to invest in the so-called Special Economic Zones.

Some tax relief may also be available for the purposes of restructuring.

A tax group that enables a participating company to be treated as a single CIT payer (and consolidate the profits and losses of the group members) is available to Polish companies that meet the following criteria:

  • the registered share capital per participating company in the group is not lower than PLN500,000 on average;
  • a parent company directly holds at least 75% of the shares in the remaining group members;
  • no subsidiary of the parent holds shares in other members of the group; no group member is in arrears in respect of taxes;
  • in any tax year, the group's taxable profit cannot be lower than 2% of its income;
  • no group member may benefit from any tax exemptions or reliefs; and
  • all transactions between the tax group members and their affiliates outside the tax group must be on an arm's length basis.

An agreement to form a tax group for a period not shorter than three tax years must be executed as a notarial deed and registered with the tax office. Members of the tax group are jointly and severally liable for the CIT liabilities of the group for the period during which the tax group agreement remains in force.

If the status of a tax group is lost as a result of a breach of the applicable obligations, each participating company will have to adjust its tax filings for the most recent three tax years (as if the tax group did not exist) and, where applicable, settle any outstanding taxes.

In 2018 Poland replaced its previous thin capitalisation rules with new rules that apply to the financing provided to a taxpayer by both its affiliates and non-related third-party finance providers. The financing covered by the rules is not limited to loans but also includes other forms of financing, such as leasing.

Under the new rules, the financing costs will not be tax deductible to the extent they exceed 30% of EBITDA, unless such surplus over 30% of EBITDA in a given financial year does not exceed PLN3 million.

Costs that are not deducted in a given year due to the above mechanism may be carried forward for up to five consecutive tax years.

In Poland, transactions between related parties (defined on the principle of 25% ownership stake interpreted broadly, including not only shares but, for example, certificates in investment funds or similar instruments) should be done on an arm's length basis. Where applicable, transfer pricing documentation must demonstrate that all relevant transactions have been executed on terms that would have been applicable to unrelated parties.

The requirement to prepare the transfer pricing documentation applies in respect of transactions with a value of:

  • PLN10 million for financial transactions for the supply of goods; and
  • PLN2 million for services and other transactions not included above.

A lower threshold of PLN100,000 applies to transactions with related parties based in countries that would be tax havens under the OECD rules.

Under the new transfer pricing regulations introduced in 2019, where a markup of 5% applies in respect of certain low-value services such as accounting, HR, legal, tax or IT services, such services will be recognised as rendered on an arm's length basis.

In 2016 Poland introduced rules on combating tax avoidance, ie, any act that satisfies both of the following conditions:

  • it was effected primarily for the purpose of obtaining a tax advantage which, in the given circumstances, is an advantage contrary to the subject and purpose of tax law; and
  • the party that carried out the act acted in an artificial manner.

If the tax authorities identify an act effected primarily with the aim of achieving a tax advantage, the tax consequences of the relevant act are determined based on the state of affairs that would have existed if an 'appropriate act' had been effected. Where circumstances indicate that the achievement of a tax benefit was the only purpose of carrying out the act, the tax consequences are determined in such a way as if the act had not been carried out.

To obtain protection against the application of anti-avoidance rules in respect of a transaction in the future, a company or individual may apply to the minister of finance for a so-called security ruling. The minister has six months to decide on the application and may refuse to issue a ruling if the application relates to a case of tax avoidance.

Mandatory Disclosure Rules

Since 2019 the mandatory disclosure rules implementing the DAC6 Directive apply to certain tax arrangements.

The following are subject to mandatory merger control by the Polish Competition Authority (the PCA):

  • mergers;
  • acquisitions of direct or indirect control over one or more undertakings and/or assets; and
  • the creation of a joint venture (including non-full-function joint ventures).

The PCA must be notified of a transaction if, in the financial year preceding the concentration:

  • the combined global turnover of the parties exceeds EUR1 billion; and/or
  • the combined turnover of the parties exceeds EUR50 million in Poland.

Turnover includes the turnover of each party's capital group and part of the turnover of their jointly controlled entities (but the seller's turnover is excluded). The notification obligation is triggered if either of these thresholds is met; the thresholds need be met by one party only.

A transaction does not have to be notified if any of the following exemptions applies: 

  • in the case of the acquisition of control and/or assets – if the target's turnover in Poland did not exceed EUR10 million in either of the two financial years immediately preceding the concentration;
  • in the case of mergers as well as the creation of a joint venture – if the turnover of any party to the merger or JV did not exceed EUR10 million in Poland in either of the two financial years preceding the concentration; and
  • in the case of inter-related transactions (simultaneous or subsequent acquisitions from one and the same capital group of assets and/or control over an undertaking or undertakings that occur within a two-year period) – if the combined turnovers of all the acquired targets and targeted assets generated in Poland did not exceed EUR10 million in either of the two financial years immediately preceding the most recent concentration.

Additionally, the following fall outside the merger control system:

  • acquisitions of shares, on a temporary basis, by a financial institution or by an undertaking for the purpose of securing liabilities;
  • acquisitions of control or assets in bankruptcy proceedings (if the target does not compete with the buyer's capital group); and
  • intra-group transactions.

There is no formal pre-notification procedure in Poland, although consultations with the PCA prior to a transaction are possible. There is no statutory deadline by which a notification must be made to the PCA. However, the parties may not close the transaction until the PCA's clearance has been obtained or the statutory period for a decision to be issued by the PCA has lapsed (the stand-still obligation).

As a general rule, the PCA should examine the transaction within one month of the date the merger control proceedings are instituted (Phase 1). The PCA may extend the proceedings for an additional four months (Phase 2) if:

  • the case is complex; or
  • the transaction raises competition concerns; or
  • a market survey is required.

The statutory time limit for issuing a clearance decision is suspended if the PCA requests additional information and/or documents (for the time necessary to comply with the PCA's request).

When a proposed concentration threatens to significantly limit effective competition, the PCA informs the parties in writing of its objections to the concentration. The PCA may, in order to enable clearance to be given, accept a party's proposed commitments (remedies), eg, divestment.

The PCA may impose a fine on an undertaking taking part in a concentration (in the case of acquisition of control and/or assets – only on the buyer) of up to 10% of its turnover for a breach of the stand-still obligation or a failure to notify the transaction. 

Like EU competition law, the Polish Act on Competition and Consumer Protection prohibits agreements/concerted practices between undertakings (or associations of undertakings) that have as their object or effect the elimination, restriction or other infringement of competition (Article 6). The non-exhaustive statutory list of infringements includes, in particular:

  • price fixing;
  • limiting or controlling production/sales/investments;
  • market sharing;
  • imposing onerous/discriminatory contract terms;
  • restricting access to the market; and
  • collusive tendering (between tender participants or with the awarding entity).

The PCA also has the right to apply EU competition law directly (Article 101 TFEU), if the infringement affects trade between EU member states.

The PCA may impose a fine on undertakings and individuals for involvement in anti-competitive agreements (except in the case of bid-rigging, which is a criminal offence). An undertaking may be fined up to 10% of its turnover generated in the year preceding the year in which the fine is imposed. The PCA may also impose a fine of up to PLN2 million (approximately EUR470,000) on management who allow the undertaking, through their deliberate actions or omissions, to conclude a prohibited anti-competitive agreement.

Under Polish law, leniency (immunity or reduction of a fine) is available for both horizontal and vertical agreements.

An agreement that violates competition law is invalid in its entirety or in the anti-competitive part. The PCA may also enforce abandonment of the practice or order the offending undertaking to remedy its effects.

Like EU competition law, the Polish Act on Competition and Consumer Protection prohibits abuse of a dominant position within a relevant market (Article 9). The abuse may consist, in particular, of:

  • imposing unfair prices or trading conditions;
  • limiting production, market sale or technical development;
  • applying onerous/discriminatory contract terms to third parties;
  • preventing the development of competition; and
  • market sharing.

A dominant position is held by an undertaking if it enables it to prevent effective competition in the relevant market and to act independently of competitors, contracting parties and consumers to a significant degree. In Poland there is a presumption of a dominant position if an undertaking has a market share exceeding 40%. However, this presumption may be challenged by the undertaking involved.

The PCA may impose a fine for abuse of a dominant position only on undertakings (not individuals). An undertaking is liable to a fine of up to 10% of its turnover in the year preceding the year in which the fine is imposed.

Any legal transactions that constitute abuse of a dominant position are invalid in their entirety or in the relevant part. The PCA may also enforce abandonment of the practice or order the offending undertaking to remedy its effects.

Patents protect inventions that are new, have an inventive step and are capable of industrial application. An 'inventive step' means that the invention is not obvious to a person skilled in the given field, whereas 'capability of industrial application' means that based on the invention, a product may be obtained or a method used in any industrial activity. Patent protection lasts up to 20 years (subject to payment of annual maintenance fees).

To obtain a patent, the following must be filed with the Patent Office: the application, containing a motion, a description of the invention, claims and an abstract of the invention. If statutory requirements are met, the Patent Office issues a relevant decision, provided that the fee for the first protection term is paid. When a patent is granted, this is entered in the patent register.

Claims concerning an infringement of a patent are heard before a court in civil proceedings. The patent holder may demand cessation of the infringement or the surrender of any unlawfully obtained benefits. If the infringement is culpable, the patent holder may also demand reparation of damage in accordance with general principles or by payment of a sum of money in the amount of a licence fee or other relevant remuneration that would be due and payable to the patent holder for consenting to use of the invention. Additionally, the patent holder may demand that the ruling concerning the infringement be made public.

A trade mark is any mark capable of distinguishing the products (or services) of one entity from those of another, which can be presented in the trade-mark register in a manner that enables determination of the scope of protection in a clear and precise manner. In particular, each of a word (including a name), a picture, a letter, a digit, a colour, an object (eg, the shape of a product or its packaging) or a sound may potentially constitute a trade mark.

Upon registration, a trade mark receives a protection right lasting ten years. The term of protection may be extended for subsequent ten-year periods, provided that the fee is paid. However, a protection right over a trade mark expires (and the trademark is eligible for invalidation) if the registered trade mark is not in genuine use within five years of the date of the decision granting protection.

To obtain a protection right, a relevant application, describing the trade mark and listing the products (or services) it covers, must be filed with the Patent Office. The Patent Office examines the content of the application and the capability of registering the trade mark, but at this stage it will not examine any potential conflict with prior trade-mark registrations or other third-party rights. If the statutory requirements are met, the Patent Office publishes notification of the application in the Patent Office Bulletin. Within three months of the date of publication, third parties may file an opposition to a trade-mark application on the basis of their earlier trade marks or other rights. If the opponent is successful in their opposition proceedings, the Patent Office may grant only partial protection or refuse protection.

Claims concerning an infringement of a protection right over a trade mark are heard before a court in civil proceedings. In addition to the remedies available in the case of infringement of a patent, the trade-mark holder may demand that the infringing party ceases placing a mark identical or similar to the registered trade mark on packaging, labels and tags, or ceases offering, marketing, importing, exporting and storing such packaging, labels and tags.

Industrial design is a new and original appearance of a product or part thereof resulting from the features of its lines, contours, shape, colours, texture and/or materials of the product itself and/or its ornamentation. The right conferred by registration of an industrial design is granted for 25 years, divided into five-year periods.

To register an industrial design, an application containing an illustration of the industrial design must be filed with the Patent Office. If the industrial design meets the statutory requirements for granting protection, the Patent Office issues a decision granting protection.

Claims concerning an infringement of a right conferred by registration of an industrial design are heard before a court in civil proceedings. The remedies are the same as in the case of an infringement of a patent.

Copyright protects any manifestation of human creative activity of an individual nature in any form, regardless of its value, purpose or manner of expression. Copyright consists of economic rights and moral rights. Economic rights entitle the copyright holder to use and dispose of a work and receive remuneration for the use of it, and these rights may be transferred or assigned. Moral rights entitle the author to sign the work with his/her name, decide on its first publication and protect its integrity. Unlike economic rights, moral rights cannot be transferred, assigned, licensed or waived.

Economic rights are generally protected until 70 years after the death of the author of the work, whereas moral rights lasts indefinitely.

Copyright protection does not depend upon a registration process or satisfaction of any formal requirements. Once the work is established (and not necessarily completed), it automatically receives protection.

In the event of an infringement of economic rights, the author may demand cessation of the infringement, remedy of the results of the infringement, damage compensation and the surrender of any unlawfully obtained benefit. Additionally, the author may request publication of an announcement in the press or payment of an appropriate sum of money to the copyright holder.

There is no special regime for the protection of software. Basically, it is subject to copyright law. Therefore, once software can be considered a 'work', it obtains copyright protection.

Databases that are collected in a way requiring, in terms of quality or quantity, substantial investment of effort to compile, verify or present their content are protected by the Act on the Protection of Databases. Such protection does not depend on registration and lasts for 15 years. Regardless, databases may be protected by copyright, if they can be considered a 'work'.

Business secrets are protected under the Polish Act on Combating Unfair Competition. A business secret may be violated if unlawfully disclosed, used or obtained. In the event of violation of a business secret, the entrepreneur may demand cessation of the violation, removal of the effects of the violation, a relevant statement, redress of damage, the surrender of any unlawfully obtained benefits, or the award of an appropriate sum of money for social purposes associated with supporting Polish culture or protecting the national heritage. In addition, the entrepreneur may demand the ruling concerning the violation of the business secret be made public.

Data protection issues are principally regulated by the EU General Data Protection Regulation (Regulation 2016/679 – the GDPR).

Local acts supplementing the GDPR are:

  • the Personal Data Protection Act of 2018;
  • the Act Amending Certain Acts in Relation to Ensuring Compliance with Regulation 2016/679;
  • the Act on the Rules of Obtaining Information of a Clean Criminal Record of Persons Seeking Employment and Persons Employed in Financial Sector Entities;
  • the Labour Code (which regulates the processing of employees' data).

It is worth noting that local employment laws provide for stricter rules than those of the GDPR as regards the scope of data and admissibility of monitoring.

In particular, except for the financial sector, where a specific act applies, and some specific positions in other sectors (where, by law, the employee must have a clean criminal record), background screening of employees and candidates (especially as regards any criminal record) is substantially restricted.

Local law does not modify the applicability rules of the GDPR. The geographical scope of application stems directly from the GDPR.

The local data protection agency is the President of the Data Protection Office (Prezes Urzędu Ochrony Danych Osobowych). The main role of the Data Protection Office is to control and monitor the processing of personal data, review complaints of data subjects, conduct inspections, issue decisions and impose fines, oversee accreditation, grant certifications and issue interpretations and guidelines.

Clifford Chance, Janicka, Krużewski, Namiotkiewicz i wspólnicy sp.k.

ul. Lwowska 19
00-660 Warsaw

+48 22 429 9646
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Law and Practice in Poland


Clifford Chance, Janicka, Krużewski, Namiotkiewicz i wspólnicy sp.k. opened in 1992 and is the Warsaw office of the global law firm, Clifford Chance. It combines local expertise with the depth and range of resources offered by Clifford Chance as a single, fully integrated, global partnership across five continents. The firm's clients include corporates from all the commercial and industrial sectors, governments, regulators, trade bodies and non-profit organisations. The corporate/M&A department in Warsaw has over 30 lawyers (including three partners) who handle complex cross-border M&A transactions, as well as corporate restructurings, and the team has a proven track record advising across all sectors and practice areas in some of the largest and most innovative transactions in the region. The lawyers are also highly active in private equity deals, and have a strong background in banking, litigation and real estate.