Practical guide for Ukrainian businesses entering the Polish market

The current events in Ukraine forced many companies and citizens to flee the country and look for a new location for settling down and continuing their business activities. As a neighbouring country, Poland offers a number of advantages and benefits for newly established companies and the measures introduced by the local government are making the administrative burden a lot easier on Ukrainians. In this publication, we are offering a practical guide for Ukrainian businesses entering the Polish market, and provide a practical guide on all the necessary steps and obligations they should consider.

Incentive plans for Ukrainian businesses in Poland

At the moment, the Polish government has not announced any preferential rules for companies relocating from Ukraine. However, there are numerous universal incentive programs to invest in Poland.

• Polish Investment Zones (PSI/SSE): Special Economic Zone is an investment incentive that under certain conditions provides foreign investors a number of privileges like tax exemptions, reliefs and bonuses for projects contributing to the competitiveness and innovation of local economies.
• Research and Development (R&D): the Polish CIT act provides for a special taxation regime encouraging investments into new technologies. The main tool is a special R&D relief based on which taxpayers can additionally deduct expenses on Research and Development.
• IP Box: Another tax benefit dedicated to the investors is the so-called IP BOX, according to this regulation an income derived from an intellectual property can be preferentially taxed with a 5% tax rate.
• Relief for robotization: The new tax relief is available to any company, regardless of size or business profile, that purchases and installs e.g. an industrial robot. As a result of the robotization tax relief, the taxpayer will additionally deduct up to 50% of these costs from their income.

There are also other tax benefits introduced for different economic sectors and various legal forms.

Relocating a business from Ukraine to Poland

There are no legal provisions directly addressing the transfer of a company from Ukraine to Poland, however, the company registration process in Poland is relatively quick. There is also the possibility to register the company online and we can support you in the incorporation process.

Company formation in Poland

Freedom of business activity

In Poland, there is a general rule of freedom of business activity, which means that in most cases anyone can set up a company and run it in the form they choose.

Some activities require registration in a specific legal form or reserve the form to persons with specific competencies.

Optimal form of conducting business activity

A one-person business, i.e. the sole trader is the simplest form of running a business (made available for Ukrainian citizens by the newest regulations). The following apply to a sole trader business:

• It does not require a minimum amount of capital
• Company registration in Central Registry and Information about Business Activities (CEIDG) may take up to 30 days – however, it usually takes around 7 days for the entire process
• Business activity can be launched on the day of submitting the application for entry

However, entrepreneurs often have to choose a limited liability company.

Companies and partnerships are a more complex forms of conducting business activity. The process of setting up a partnership or a company includes more formal procedures, such as:

• All types of companies have to be registered at the National Court Register (KRS)
• The duration of the registration procedure depends on the relevant court (the procedure in Warsaw currently lasts approximately 2 weeks)
• After meeting certain conditions, it is possible to register a company online within 24 hours

Various forms of pursuing business activity may be appropriate depending on intended business goals. When choosing the most advantageous form of business, all legal aspects that affect its functioning should be considered.

Minimum capital and minimum financial contributions

• Registered partnership – no requirements
• Professional partnership – no requirements
• Limited partnership – no requirements
• Limited Joint-Stock Partnership – the minimum capital is PLN 50,000
• Limited Liability Company – the minimum capital is PLN 5,000
• Joint-Stock Company – the minimum capital is PLN 100,000
• Simple Joint-Stock Company – the minimum capital in is PLN 1

Registrations required to run a business in Poland

The entrepreneur is obliged to:

• Register in the Central Registry and Information about Business Activities (CEIDG) or in the National Court Register (KRS)
• Register for VAT
• Obtain the tax identification number (NIP) and statistical number (REGON)
• Register for ZUS (social security) in case of employing people

In some cases, it is possible to run a specific business only after obtaining a permit from appropriate public institutions.

In these cases, it may be necessary to obtain a license, concession, permit, or entry in the register of regulated activities. Applications in this matter should be submitted after the registration of the company.

Additional obligations for entrepreneurs include reporting commercial law companies that are subject to mandatory entry in the National Court Register (KRS) in the Central Register of Beneficiaries (with the exception of partnerships and public joint stock companies). The application must be made within 7 days of entering the company into the KRS register. The application to the Central Register of Beneficiaries must be signed with a qualified electronic signature or a signature confirmed by the e-PUAP trusted profile.

Requirements on foreign investors in Poland

Citizens of the countries outside the European Union and the European Economic Area, like Ukraine, may start and conduct a business activity under the same principles as Polish citizens – if they have a permanent residence permit, an EU long-term residence permit or a temporary residence permit, issued for a specific purpose, for instance in relation to university studies.

Foreigners who are not citizens of the above-mentioned countries or who do not have a residence permit enabling them to set up a business on the same terms as Polish citizens may:

• Operate in the following form of companies:
  • Limited partnership
  • Limited joint-stock partnership
  • Limited liability
  • Simple joint stock company or joint stock company
• Join or acquire shares or stocks in such companies
• Set up a branch of a foreign entrepreneur in Poland, if ratified international agreements signed with Poland do not exclude such a possibility.

Pursuant to the Act on assistance for Ukrainian citizens, if a Ukrainian citizen has legally entered Poland in the period from February 24, 2022, and declares their intention to stay in Poland, their stay is considered legal for a period of 18 months from February 24, 2022.

In connection with the Act that came into force, Ukrainian citizens whose stay in the territory of the Republic of Poland is considered legal under this Act may undertake and conduct economic activity in the territory of Poland on the same terms as Polish citizens, provided that the Ukrainian citizen has been registered in advance in the PESEL register.

When the stay of the entrepreneur (Ukrainian citizen) ceases to be legal, they will be deleted from the Central Register of Economic Activity. However, they still will be able to conduct business on the terms set out above for citizens of countries outside the EU and EEA or those who do not have a residence permit.

Sanctions

Conducting a business activity without the required notification to the business activity register, an entry in the regulated activity register, or without the required license or permit is subject to the penalty of restriction of liberty or a fine.

The legislation provides for exceptions where there is no need to register an activity, e.g. due to a low level of revenues.

Key taxes for businesses in Poland

Corporate income tax

• Standard CIT: 19% of the tax base
• Reduced CIT: 9% of the tax base (in the case of small taxpayers or taxpayers starting business)

Value-added tax

• Standard VAT: 23%
• Reduced VAT:
  • 5% on basic foodstuffs e.g. certain fruits and vegetables, bread, dairy products, meat and meat products, cereal products: flour, groats, pasta, certain beverages, books in print and on disk, tape and other media, and specialty magazines
  • 8% on certain processed food products, goods related to agricultural production, health care, services related to culture, sports, recreation, personal services, passenger transport, for delivery, construction, renovation, modernization of buildings
  • 0% on applied for medical and health products, temporary applicable to basic food, gas and fertilizers based on anti-inflation act.

Personal taxation of employees relocated from Ukraine to Poland

Personal income tax rate

• 0% on annual income up to PLN 30,000
• 17% on annual income up to PLN 120,000 minus the amount reducing the tax PLN 5,100
• 32% plus PLN 15,300 on annual income exceeding PLN 120,000

Contributions paid by the employer

• Old-age pension insurance: 9.76%
• Disability pension insurance: 6.50%
• Accident insurance: 0.67 – 3.33%

The amount of health insurance premiums starting in 2022 depends on the form of taxation of a person.

Contributions paid by the employee

• Old-age pension insurance: 9.76%
• Disability pension insurance: 1.50%
• Sickness insurance: 2.45%

The amount of health insurance premiums starting in 2022 depends on the form of taxation of a person. Official calculator is available on the website of ZUS.

Polish legislative measures in relation to Ukraine

On March 12, 2022, the Act on assistance to Ukrainian citizens in connection with an armed conflict in the territory of Ukraine entered into force, and its provisions apply retroactively from February 24, 2022. Further legislation updates are currently discussed by the Government.

Pursuant to the above-mentioned law, the stay of Ukrainian citizens who came to the territory of Poland from the territory of Ukraine from February 24, 2022, will be considered legal for 18 months from February 24, 2022, if the Ukrainian citizen declares his intention to stay in the territory of Poland (i.e. until August 24, 2023).

Ukrainian citizens who legally reside in Poland are allowed to undertake and perform an economic activity, based on the same rules as applicable to Polish citizens. The existence of this power will be subject to the prior registration of a citizen of Ukraine in the PESEL register.

During the period of legal stay, both a citizen of Ukraine benefiting from temporary protection introduced by the act and not benefiting from this protection, and legally residing in Poland, is entitled to work in the territory of Poland, if the employer (via the domain: praca.gov.pl) within 14 days from the date of commencement of work by a citizen of Ukraine, shall notify the labour office competent to the registered seat or place of residence about this fact.

Read more about the Polish legislative measures in our latest article.

Need help with entering the Polish market? Book us for a free consultancy!

We have years of experience in supporting businesses to grow in Poland. Benefit from our free 1-hour long market entry consultancy that includes:

• Brief analysis of your needs based on the information provided
• Country-specific aspects that may be important to your investment
• Basics of local tax, accounting and legal rules in Poland

We can provide full-range support to Ukrainian companies planning to enter the Polish market and help with navigating the country-specific statutory requirements – starting from advisory on choosing an optimal form of conducting business activity and taxation to a smooth incorporation process.