Limited Liability Company In Poland, 2024

Approximately 95% of foreign investments in Poland are carried out as LLC's. The popularity of this business structure and investment form in Poland is certainly due to the limited liability it provides to shareholders. However, this is not the only reason. In this article, I will present the key benefits and drawbacks of setting up an LLC in Poland, besides explaining how to register a Limited Liability Company in Poland.

Why shall you register a Limited Liability Company in Poland?

Registering a Limited Liability Company in Poland can offer several advantages:

• Strategic location: Poland is centrally located in Europe, providing access to a large consumer market.
• Growing economy: Poland has seen consistent economic growth, making it appealing to foreign investors. GDP growth in 2024 is 2.6% and is expected to reach 4.1% in 2025.
• Business-friendly environment: Poland offers low corporate tax rates, a skilled workforce, and strong infrastructure.
• Access to EU markets: LLCs in Poland can benefit from being part of the EU single market. Poland is the fifth-biggest consumer market in the EU (38 million Poles)!
• Government support: The Polish government provides incentives and support for foreign investors.
• Lowering employment cost: Poland has favorable tax conditions and lower labor costs compared to other European countries.
• Qualified workforce: Poland has a skilled and flexible workforce, making it easier for companies to find suitable employees.
• Low unemployment rate: at level 5.3% in mid-2024 and 5% in 2023.
• Flexible employment regulations: Polish employment laws are relatively flexible, simplifying personnel management.

Overall, registering an LLC in Poland can provide you with access to a growing market, a skilled workforce, a supportive business environment, and more, making it a favorable choice for many businesses looking to expand their operations.

But... what is a Limited Liability Company (LLC)?

According to Article 151. The Commercial Companies Code of 15 September 2000, the definition of a Limited Liability Company in Poland is:

So LLC in Poland is an entity separate from partners.

Among the most important characteristics of the LLC in Poland, we can include:

• has legal capacity,
• has judicial and procedural capacity,
• can acquire rights and incur obligations in its name,
• can sue and be sued in its name,
• can be for-profit, but not necessarily (non-profit),
• can be formed by one or more persons, but cannot be formed by another single-member Limited Liability Company,
• the entity, not the sharehodlers, bears liability for any liabilities and debts of a LLC.

Benefits of a Limited Liability Company in Poland

Limited liability of shareholders of LLC in Poland

The primary benefit of a Limited Liability Company in Poland comes from its name. We are referring, of course, to limited liability, which presents a significant advantage for shareholders. Their responsibility for the company's financial obligations, debts, or insolvency is confined to the extent of their contributions. This implies two critical points for shareholders:

1. the money or tangible assets that the shareholders have contributed to the company become the property of the company. In case of debt or bankruptcy, they can be used to cover part of the debt.
2. partners will not be liable with their assets (money, real estate, cars, etc.) for the company's debts.

Limited Liability of Directors in a Polish Limited Liability Company

Limited liability can also serve as an advantage for board members of a Limited Liability Company in Poland. On one hand, their position may seem unappealing: according to Article 299 of the Commercial Companies Code, it is the board members who collectively share liability for the company's financial difficulties. For instance, if the company incurs a debt of 200,000 PLN and its assets allow for only 150,000 PLN to be paid, the board of directors is accountable for the remaining 50,000 PLN, collectively and individually. Consequently, if one board member is insolvent while the other possesses adequate assets, the creditor can recover the entire outstanding 50,000 PLN from the solvent board member.

However, there's a caveat: a member of the board of directors of an LLC in Poland can also be completely absolved from liability for the company's debts. This exemption is stipulated in Article 299 § 2 of the Commercial Companies Code:

Low Minimum Share Capital and Establishment Costs for an LLC in Poland is

One of the significant benefits of selecting a Limited Liability Company in Poland is the minimal initial expenses involved. The required minimum share capital is 5000 PLN, with each share having a minimum value of PLN 50. It's noteworthy that both the entire share capital and individual contributions can be made in kind (in-kind contributions).

Moreover, since the process of LLC registration in Poland is straightforward and swift, it typically doesn't incur high costs, particularly if done online. We'll delve into that shortly.

Firstly, let's examine the expenses associated with the incorporation of an LLC in the traditional. These encompass, alongside the share capital contribution, fees for notarizing the Limited Liability Company agreement. The notary's charges vary based on the company's share capital, ranging from PLN 160 to PLN 1,500, in addition to fees for issuing extracts of the notarial deed. Initial costs also comprise fees for registration with the National Court Register and the PCC tax, which amounts to 0.5% of the share capital.

You can avoid notarial expenses by establishing an LLC in Poland via the S24 portal. Consequently, the initial establishment costs are restricted to the capital contribution, the reduced KRS registration fee (PLN 250 instead of PLN 500 in S24 mode), the payment operator's processing fee, and the PCC tax (0.5% of the share capital).

The option to register an LLC in Poland online

As discussed earlier, registering an LLC in Poland via the S24 portal offers a significant advantage. This streamlined process allows for registration in just a few minutes, without physical office visits. Simply complete the registration application and make the necessary payments online.

Limited Liability Company in Poland – CIT

A limited liability company pays corporate income tax (CIT), and the rate depends on various factors.

If the company's gross revenues are below EUR 2 million in the tax year, the CIT rate is 9%. This rate also applies if the net revenues are under EUR 2 million or – if the company is a start-up in its first tax year.

For companies with a turnover exceeding EUR 2 million, the CIT rate is 19%.

There's a 5% CIT rate for companies creating intellectual property or conducting research and development projects, which can significantly reduce their tax burden.

If companies reinvest their profits, instead of paying dividends, they can avoid corporate income tax altogether under certain conditions. This is known as Estonian CIT, with a 0% tax rate. To qualify, companies must meet criteria such as:

• employing more than 3 full-time workers,
• having only individual shareholders,
• deriving most revenue from regular business activities,
• informing the tax office about their status.

LLC registration in Poland

The process for establishing a limited liability company in Poland should start with choosing an entity that will help you through the process. Our law firm not only guarantees you full-scope advice but will also furnish you with relevant forms and see to it that you gather all the documents required to register your company in Poland. And what are the documents needed to establish an LLC?

Documents required for LLC registration in Poland

To set up a Limited Liability Company in Poland, you will need:

• identification document: e.g., passport or identity card in the case of individual shareholders,
• company excerpt: e.g., a certificate of creditworthiness (or good standing certificate) with details of authorized signatories – in the case of company shareholders,
• Notarial power of attorney (POA) to register the Limited Liability Company: to avoid a visit to Poland,
• notarized translations of the above documents (except the identity card),
• legalization (or apostille) of the above documents (except ID card).

Mandatory requirements for opening Limited Liability Company in Poland

In addition to determining what documents will be needed to register an LCC in Poland, other mandatory requirements will also need to be met. Our legal firm is capable of furnishing you with suitable legal representation throughout the procedure, and a legal agent can manage certain aspects on your behalf via a power of attorney.

• Owners: The company is allowed to have one shareholder without any limitations on the overall count or the citizenship of those who establish it.
• Administration: The company is required to have a management board consisting of at least one individual. Additionally, if the company has over 25 shareholders or if its capital surpasses 500,000 PLN, it must establish a Supervisory Board comprising a minimum of three members.
• Funds: The total capital, composed of contributions provided by shareholders, amounts to 5,000 PLN and must be fully paid before the company's registration, whether in cash or assets.

We welcome all individuals considering the establishment of an LLC in Poland to reach out to us. Our services extend beyond providing legal representation in court for companies; we also offer consultations at every phase of the company formation process.

The procedure of LLC incorporation in Poland

The process of registering an LLC in Poland involves the following steps:

1. Fill out the LLC form

LLC formation in Poland begins by determining the key features of your upcoming company. Typically, this is carried out with the assistance of a specialized attorney through the completion of a designated LLC establishment form. This process involves deciding on:

• The name of your future company – booking the company name in Poland is unnecessary
• The minimum share capital must be at least 5000 PLN.
• The value of each share is typically set at 50 PLN.
• Who will be the shareholders in the LLC and their respective ownership percentages?
• The authorized signatory usually comprises 1 to 3 individuals.
• The rules of representation commonly involve either one person acting alone or two persons acting jointly.
• The objectives and scope of business for the LLC, are defined in Poland by PKD codes.
• Any other customized regulations desired by prospective shareholders.

2. Do the paperwork

Fulfilling paperwork involves gathering documents, as detailed in the preceding section titled "Documents required for LLC registration in Poland".

3. Write and sign the Articles of Association

The third step in establishing a limited liability company in Poland is creating the Articles of Association. You can do this in two ways:

• Online, using the S24 portal.
• In-person, signing documents at a notary public's office.

The online option is for people or businesses with a Polish Trusted Profile or an e-signature (eIDAS regulation). The in-person method is slower and doesn't allow for the fast online setup.

4. Send the LLC form to the National Court Register (KRS)

The next step is to apply for registration of a limited liability company with the National Court Register (KRS). You can do this through one of two portals:

• If you are setting up an LLC remotely, in the S24 system, you apply the KRS during this process.
• If you are setting up an LLC traditionally, you will submit the application to the KRS using the Court Registry Portal (PRS).

In both cases, you will need to provide such information about the new LLC as:

• Articles of Association,
• resolutions appointing directors,
• proof of share capital payment (only in PRS),
• various other declarations (director appointment consents, address statements, statements from foreigners, etc.).

5. Open a bank account

To get your company up and running, you'll need to open a bank account with a Polish bank. While it's not strictly required for a Polish company to have a local bank account, it's practically necessary. Only a local Polish bank account offers these advantages:

• Ability to handle special tax and social security payments.
• Registering the account in the Polish Tax System, allowing for tax-deductible payments.

6. Make sure you do any required reports

After the LLC is registered in the National Court Register, the new directors must complete some post-registration tasks, which usually include:

• Reporting the beneficial owner to the CRBR/UBO register within 2 weeks.
• Paying the PCC tax and submitting the relevant tax return within 2 weeks, unless the tax was already collected by the notary public.
• Submitting the tax information form (NIP-8) to the relevant tax office within 3 weeks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.