Poland is one of the biggest countries in Central Europe. Poland’s map also shows that it shares its boundary with Kaliningrad Oblast (Russia) and Lithuania in the north, Belarus and Ukraine in the east, Slovakia in the south, the Czech Republic in the south-west, and Germany in the west.
Poland is considered to be one of the most attractive investment locations not only in Europe but worldwide. It has been one of the fastest developing countries in the EU in recent years. In 2017 it was ranked by the World Bank as the 27th easiest country in which to do business.
Polish Limited Liability Company — Sp. z o.o. (spółka z ograniczona odpowiedzialnością) is the most popular format for small and medium-sized companies in Poland.
Polish Limited Liability company is a legal entity with a separate legal personality from its shareholders. The share capital of the company needs to be at least 5000 PLN (around €1200), and a nominal value of a single share can’t be lower than 50 PLN.
A Polish LLC can be found by at least one shareholder and the contributions to the capital can be made in cash or in kind. The shareholders in a Polish limited liability company are only liable to the extent of their investment in the legal entity.
Main features of a Polish limited liability company (sp. z o.o.) are:
- 100% Foreign Ownership: Foreigners can own 100% of the shares in a Polish LLC.
- Limited Liability: Shareholders’ liabilities are limited to their capital investment.
- One Shareholder: The minimum number of shareholders is one to form an LLC in Poland.
- One Director: Only a minimum of one director is required to form the LLC.
- annual accounts have to be prepared and held at company offices
The main taxes applicable to an LLC in Poland include the corporate income tax rate, the capital gains tax, and the VAT. Although the 19% corporate income tax is the basic corporate income tax rate in Poland, the reduced rate of 9% is available for taxpayers with income in the current tax year lower than PLN equivalent of EUR 1.200 000.
Benefits for company formation in Poland include:
- a huge domestic market with over 38 million consumers
- widespread English language use, particularly amongst younger people
- a strong, dynamic economy
- access to the emerging markets of Eastern Europe
- a stable political situation, with EU and NATO membership
- increasing transparency – Poland is in the top 30 of Transparency International‘s Corruption Perception Index
The Polish government encourages foreign investments by offering a wide range of incentives for entrepreneurs who decide to start a business in Poland. The country is a signatory to a Treaty for the Prevention of Double Taxation with more than 100 countries all over the world.
Poland joined the EU VAT regime in 2004 and is part of the EU single market economy. The standard VAT rate in Poland is 23%. However, reduced rates of 8% and 5% apply to certain products such as food, books, newspapers and a limited number of other services. In addition, there are a couple of services such as financial and postal services that are exempt from Polish VAT.