Market, legal and administrative conditions for running a business in Poland
In Poland, you may run a business in forms similar to those found in other European countries. Among the available forms of business, a distinction can be made between the following:
- Commercial companies, that is, forms of cooperation of at least two persons, with the exception of a limited liability company and a joint-stock company, which may be established by one entity to make a profit. A company is established through the adoption of articles of association, under which the partners undertake to pursue a common goal by making contributions or taking other joint actions. The operation of commercial companies is regulated by law and the company’s articles of association adopted by partners or shareholders.
Commercial companies are divided into:
– capital companies (limited liability company and joint-stock company);
– partnerships (registered partnership, professional partnership, limited partnership, limited joint-stock partnership).
- Branch of a foreign entrepreneur — through a branch, a foreign entrepreneur may conduct economic activity in Poland to the extent they conduct it in the country of their registered office.
- Representative office of a foreign entrepreneur — representative offices which a foreign entrepreneur has in Poland allow the entrepreneur to conduct activity limited exclusively to the extent of their advertising and promotion.
- Sole proprietorship (including civil-law partnerships).
The method of taxation makes a significant difference between conducting economic activity in the form of a partnership and a capital company.
- In a partnership (excluding a limited joint-stock partnership), only the partners of the partnership, but not the partnership itself, are treated as taxable persons. Thus, only income earned by the partner is subject to the taxation. Depending on whether the partner is a natural person or legal person, they will be subject to the personal income tax (PIT) or corporate income tax (CIT).
- Income of a capital company (and a limited joint-stock partnership) is subjected to taxation twice—first time at the level of the company as the taxpayer of the corporate income tax and then—at the level of a partner who earns a dividend.
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