Investment and commercial law Starting a business in Poland - key legal and tax considerations for foreign investors

Poland remains one of the main expansion destinations for companies from the DACH region and other EU countries. The article presents practical legal and tax aspects of choosing the appropriate form of doing business in Poland, with particular focus on the limited liability company (sp. z o.o.).

Why Poland?

For many years, Poland has been one of the most frequently considered destinations for expansion by companies from the DACH region and other EU Member States. From an investor’s perspective, what matters is not only the relatively competitive level of tax burden but also the geographical location, large domestic market, well-developed infrastructure, and access to qualified employees. For many businesses, Poland is now not only a sales market, but also a production, service or logistics base for operations in Europe and beyond.

In practice, Poland’s attractiveness results from a combination of several factors: a moderate level of corporate income tax (CIT), a VAT system aligned with EU regulations, a broad network of double tax treaties with other countries and available investment incentives, such as special economic zones and tax reliefs.

For companies whose shareholders are natural persons, an interesting alternative may be the so-called Estonian CIT, i.e. a model in which taxation is deferred until the moment of profit distribution.

Business in Poland – is it always necessary to establish a company?

Entering the Polish market does not always require immediately establishing a Polish company. Some activities may be carried out on a cross-border basis, especially at the stage of market testing, providing services from abroad or supplying goods to Poland, provided that the operating model does not yet create a permanent economic presence in the country, for example, in the form of a fixed place of business, office, warehouse or personnel carrying out activities in Poland.

In this context, it is essential to analyse the risk of creating a permanent establishment for tax purposes and the obligations related to VAT. These two areas often determine whether the activity may continue to be carried out exclusively from abroad or whether a local structure is already required.

In addition, in many cases, especially when conducting regulated activities, i.e. activities requiring entry in additional registers or obtaining relevant permits, the regulations require that the activity be carried out by an entity registered in Poland.

Forms of doing business in Poland – a brief overview

As a rule, a foreign entrepreneur has several options for operating in Poland, in particular:

• providing services on a cross-border basis, for example, directly from Germany; in this case, it should always be verified whether a so-called permanent establishment (CIT) and a fixed establishment for VAT purposes arise in Poland,
• establishing a branch of the German company,
• establishing a Polish company.

It is worth noting that a branch of a foreign entrepreneur is subject to registration in the Polish business register, the KRS, and constitutes a form of business activity carried out by the foreign entity without creating a separate legal person. A sp. z o.o., on the other hand, is an independent legal entity and is often chosen by foreign investors for its limited liability and operational flexibility. As a law firm, we generally advise against establishing foreign branches in Poland. This is an impractical structure which offers no significant benefits and entails numerous difficulties resulting from unclear regulations concerning branches of foreign entrepreneurs.

In practice, the choice of form depends on the scale of the activity, employment plans, expected liability, financing model and whether Poland is to serve only as a sales market or as an actual operational centre. In practice, the vast majority of our clients decide to conduct business in Poland through a Polish sp. z o.o.

Sp. z o.o. – the most common form of business in practice

In the Polish legal and business environment, the limited liability company remains the standard form for foreign investors. It is a separate legal entity with a minimum share capital of PLN 5,000, and at least one management board member and one shareholder are required for its operation.

This structure is well recognised by business partners, banks and public authorities, while also allowing the operational activity in Poland to be separated from the parent company. Moreover, a sp. z o.o. is relatively similar to the German GmbH or even the British Ltd. This makes it comparatively easy for foreign investors to operate a Polish sp. z o.o.

From a tax perspective, a limited liability company (sp. z o.o.) is an independent taxpayer of corporate income tax (CIT). The company’s income is generally subject to a 19% tax rate, while small taxpayers and newly established companies may apply a reduced 9% rate for revenues up to a specified threshold.

In practice, this means that the company’s profits may be taxed at two levels: first, the company itself pays tax, and then, when profits are distributed in the form of a dividend, the dividend may be taxed. A dividend paid by a Polish sp. z o.o. is generally subject to 19% withholding tax (WHT), although in practice exemptions or preferences under EU law or relevant double tax treaties concluded by Poland with other countries may apply.

For a foreign investor, it is crucial to analyse the ownership structure, the status of the payment recipient and the possibility of applying any tax exemptions at an early stage, because proper planning may significantly affect the effective tax rate and the company’s financial liquidity.

The method of financing the Polish company is also important, i.e. the way in which the new company will be provided with initial capital.

Share capital, share premium, additional payments or debt financing from the shareholder or parent company may lead to different legal and tax consequences. This is therefore also an issue worth considering at the outset.

Another interesting aspect is the remuneration and taxation of the management board of a Polish sp. z o.o. In this respect as well, Polish regulations provide several options which in practice often result in foreign management board members choosing to receive remuneration from the Polish sp. z o.o. This may lead to lower personal taxation compared with remuneration paid exclusively by the parent company in the investor’s home country.

Company formation and operational launch – practical aspects

The establishment of a sp. z o.o. usually begins with agreeing the wording of the articles of association and a visit to a notary. During this stage, numerous documents and statements are collected, which must be submitted by the new management board and/or the shareholders of the newly established company. Once the required documents have been collected, the company is registered with the KRS, the Polish equivalent of the commercial register or Companies House.

The following operational matters then need to be arranged:

• bank account,
• tax registrations, including the application for VAT registration,
• notification to the register of beneficial owners, the Polish equivalent of the Transparenzregister,
• organisation of accounting,
• preparation of the employment model and document circulation.

Despite the many formalities, a well-organised process of opening a company in Poland can be completed in approximately 1 to 1.5 months, sometimes faster, depending on how important the time factor is.

A particularly important topic for 2026 is KSeF, the National e-Invoicing System. The mandatory model is being introduced in stages: from 1 February 2026 for taxpayers with gross sales exceeding PLN 200 million, from 1 April 2026 for other businesses, and from 1 January 2027 for the smallest entities issuing invoices of up to PLN 10,000 per month. This means that preparing the operational setup in Poland should now include not only accounting and tax matters, but also system readiness for e-invoicing and the adjustment of internal processes.