If you are interested in establishing a Ukrainian company, our experts have prepared an overview on company formation in Ukraine to provide all the necessary information about local forms of business, registration process and requirements.
Get free access to
Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.
Check out our Newsroom to see what is included!
We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.
Unable to subscribe? ย Try this page.
Limited liability company in the Czech Republic (in Czech: Spoleฤnost s ruฤenรญm omezenรฝm | s.r.o.) is the most common form of business. This company exists independently of its shareholders, and it may be formed either by one person (a natural or legal person) or more persons (the maximum number of persons is not set).
A limited liability company (in Czech: Spoleฤnost s ruฤenรญm omezenรฝm | s.r.o.) is the most common form of business in the Czech Republic. This company exists independently of its shareholders, and it may be formed either by one person (a natural or legal person) or more persons (the maximum number of persons is not set).
| Supreme Body |
General meeting; or Sole shareholder who exercises the powers of the general meeting |
| Statutory Body | One or more managing directors |
| Supervisory Boardย (optional) | Optional body which supervises the managing directors, various documents, and accounts |
The incorporation procedure of a limited liability company in the Czech Republic consists of the following steps:
Adopting the Memorandum of Association / Foundation Deed by the Notary Public
Arranging consent to the provision of the company’s registered office address
Registering the necessary trade licences of the limited liability company in the Czech Republic
Opening a bank account for contribution payments
Registration of the company in the Commercial Register of the competent District Court
The incorporation time of a limited liability company in the Czech Republic is approximately 1 week after receiving the incorporation documentation.
We will prepare all the necessary documents and advise you on the formalities (e.g., notarisation, legalisation).
We will incorporate the company and proceed with all the steps under the powers of attorney granted to us.
Once the limited liability company in the Czech Republic is duly incorporated, we will guide you through all the necessary steps and registrations and help you with them.
Does a managing director of a limited liability company in the Czech Republic have to be of Czech nationality?
No, the managing director can be of any nationality.
Can we incorporate the limited liability company in the Czech Republic remotely or is our personal presence required?
All but one of the steps can be arranged remotely by a power of attorney. The only step that requires personal presence is the opening of a current bank account once the company is duly incorporated.
Is personal presence required for opening a current bank account?
Yes, the personal presence of the person who will be authorised to use the bank account (usually the managing director) is necessary. This is due to European legislation which sets strict conditions on AML and compliance policy.
Who is an Ultimate Beneficial Owner (UBO)?
The beneficial owner is every natural person who directly or indirectly owns more than 25% of participation in the capital or voting rights in the company; or who is entitled to a share of profit exceeding 25%; or who exercises actual control over the company on other grounds. Other grounds may refer to a partnership agreement, for example.
What is the time limit for registering the UBO after the incorporation, and what are the sanctions in case the UBO is not registered or is registered improperly?
The Czech law does not provide a precise time limit for the registration of UBO. However, it states that the registration should be made without undue delay. In practice, this usually means within two weeks after the incorporation.
Companies that fail to register the UBO without undue delay may face the following consequences:
What is a Data Box?
The Data Box represents a secure and state-guaranteed electronic communication portal, which can be used to communicate with authorities, courts or other entities, including private entities. It is a kind of e-mail box established upon the registration of each company. As part of our service, we can manage your Data Box and keep you informed of messages received and other necessary actions. The Data Box interface is only available in Czech.
What is the corporate income tax for a limited liability company in the Czech Republic?
Corporate income tax is levied at a standard rate of 21%. Find out more about taxation in the Czech Republic in our dedicated tax guideline.
What is a contract on performance of the office of a member of the statutory body, and is a company obliged to conclude it with its managing directors?
The essence of this contract is to regulate the rights and obligations of the company and the members of the statutory body in their mutual relationship. In practice, this contract is usually concluded (and recommended by us), but it is not obligatory. If the contract on performance of the office of the member of the statutory body is not concluded, it is established that the members of the statutory body perform their function without remuneration and the relationship between the statutory body and the company is governed by the provisions of the Czech Civil Code.
*This list is not exhaustive
A joint-stock company is another form of business in which share capital consists of shares which are represented by securities. The company may be established by a sole shareholder. It can be formed either through a private agreement to subscribe to all shares or via a public offering.
A branch (in Czech: odštฤpný závod) is a part of a company located in a different country from the parent or founding company. It is an economically and functionally independent part of the parent company, which is registered in the Commercial Register. It has its own registration number, registered office and its own accounts.
Company formation in the Czech Republic is regulated by the Civil Code and Business Corporations Act. Czech or foreign investors entering the Czech market may choose between several corporate forms. There are no limitations for foreign investors when it comes to setting up companies. A foreign natural or legal person may establish any form of company either together with other foreign or Czech persons, or alone as a sole shareholder. In this respect, foreign natural and legal persons enjoy the same rights and bear the same obligations as Czech persons and may not be discriminated against.
Our services for company incorporation in the Czech Republic are designed to simplify the process of starting a business. We offer tailored service packages to meet your specific needs, ensuring a smooth and hassle-free incorporation experience. Get in touch with us to find out more.
A General Partnership is a company in which at least two persons carry out business activities under a common business name and bear joint and several liabilities for the obligations of the partnership with all their property. There is no requirement of a minimum registered capital, nor for the minimal contribution.
A company in which one or more partners are liable for the partnership’s liabilities up to the amount of their unpaid contributions (limited partners), and one or more partners are liable for the partnership’s liabilities with their entire property (general partners).
The minimum contribution of the limited partner should be set in the Articles of Association. Again, there is no requirement of a minimum registered capital.
This is the most common form of doing business in the Czech Republic. The company exists independently of its members, and it may be established either by one (natural or legal) person, or by two or more persons (the maximum number of persons is not set).
According to the Business Corporations Act, the minimum contribution of each shareholder is in the amount of CZK 1.
A Limited Liability Company is liable for the breach of its obligations with all its assets, while shareholders guarantee for the breach of the obligations of the Limited Liability Company only up to their committed but unpaid contributions to the registered capital registered with the Commercial Register.
ESTABLISHING AN LLC IN THE CZECH REPUBLIC HAS NEVER BEEN EASIER
Did you know that LLC is the most common form of business in the Czech Republic? Benefit from our 2024 Limited Liability Company formation guide and learn more about the incorporation procedure, obligations and how we can help you with the establishment process.
The company may be established even by a sole founder. A Joint-Stock Company can be formed by a private agreement to subscribe for all shares, or via a public call for the subscription of shares.
The minimum registered capital required is CZK 2,000,000 or EUR 80,000.
The purpose of a Cooperative is to undertake business activities or to ensure the economic and social or other benefits of its members.
A Cooperative is a community of an indefinite number of persons, but it shall have at least 3 members.
The Business Corporations Act does not set out the amount of minimum registered capital or minimum contribution.
Foreign companies may conduct business in the Czech Republic provided that they have their business or branch offices located in the Czech Republic, registered with the Czech Commercial Register.
No minimum registered capital or contribution is required.
There are other 3 legal forms of business โ entities primarily regulated by EU regulations โ which are legally binding for all EU Member States:
The most important document required when establishing a company in the Czech Republic is the Articles of Association / Foundation Deed adopted in the form of a notarial deed.
Other documents required depend on the specific legal form of the company. Usually, the following documents are also required:
an affidavit of a managing director on their ability to perform on a position of statutory body of the company
a clean Criminal Register extract for non-Czech managing directors
a declaration on registered capital payment
a consent with the provision of a registered office address (from the office landlord)
Incorporation time varies based on company type. For example: the establishment and registration of a capital company could be completed within 7 working days.
In the following table we present an overview of possible setups of shareholders and other company’s bodies in the most used legal forms of business:
| Common setups | Limited Liability Company | Joint Stock Company | Limited Partnership | General Partnership |
| Shareholders | Natural person(s) or legal entity(ies) | Natural person(s) or legal entity(ies) | At least 2 natural persons or legal entities | At least 2 natural persons or legal entities |
| Company’s bodies |
Managing director(s) Supervisory board (voluntary) Sole shareholder or General meeting |
Monistic system: Management board Dualistic system: Board of directors, Supervisory board General meeting |
The statutory body consists of all of the General Partners. The Articles of Association may specify that the statutory body is formed of only some of the General Partners or one of them. | The statutory body consists of all of the Shareholders. The Articles of Association may specify that the statutory body is formed of only some of the Shareholders or one of them. |
ย
Persons who will form the statutory body have to prove their clean criminal history by obtaining and submitting their criminal background check from their country of citizenship.
If the shareholder is a legal person, the proof of its existence (extract from a commercial register) shall be required.
Both corporate income tax residents and tax non-residents are subject to Czech corporate income taxes. A corporation is a tax resident if it is incorporated or managed and controlled from the Czech Republic. Tax residents are taxed in the Czech Republic on their worldwide income while tax non-residents only on their Czech-source income.
The taxable income is calculated on the basis of the accounting profits. As a general rule, expenses incurred on obtaining, ensuring and maintaining the taxable income are tax deductible.
Corporate income tax is levied at a general (standard) rate of 21%. Moreover, lowered corporate income tax rate of 5% applies to basic investment funds while pension funds are subject to a corporate income tax rate of 0%.
The tax period may be a calendar year or a fiscal year. The taxpayer has the obligation to calculate the tax due in the corporate income tax return (self-assessment). The time-limit for corporate income tax return filing is three or six months depending on certain conditions.
Advance tax payments are paid semi-annually or quarterly depending on the amount of the last known tax liability.
Find out more about taxes in the Czech Republic in our dedicated tax guideline.
Czech and foreign legal entities, as well as natural persons engaged in business activities in the Czech Republic, can apply for investment incentives. The supported areas include:
manufacturing industry
technology centres (R&D)
production of strategic products for the protection of life and health
strategic service centers
When meeting the conditions, investment incentives can be provided in the form of:
It is very important for the statutory body to act with due care and diligence when performing their role in a company. If the statutory body fails to comply with due care and diligence, it becomes liable for damages.
Unfortunately, this liability cannot be limited in any way (for example by an agreement with the company etc.).
In order to protect the statutory bodies, insurance companies in the Czech Republic provide a commercial insurance option, meant to insure against damages caused by the decisions of statutory bodies.
Europe offers a solid and attractive market for business opportunities, with long-term political stability, strategic location, competitive tax system, highly skilled workforce and international community. If you are tempted by doing business in Europe, countries such as the Czech Republic, Hungary, Poland, Romania, Slovakia,ย Ukraine and the United Kingdom should definitely rank high on your list of destination.
Our experts have prepared comprehensive guides to assist your decision-making when doing business in Europe.
Explore our company formation eBooks to understand the basics of establishing a business. Dive into local tax systems and VAT legislation through our detailed guidelines. Stay ahead with our tax calendars highlighting upcoming deadlines. Learn about transfer pricing and documentation methods. Gain valuable insights on employment-related matters from our labour law overviews. Utilize our local salary calculators for 2025.
Expanding into Europe offers significant opportunities, but understanding each country’s unique regulations can be difficult. Our global company registration services are the perfect solution to get you started. We simplify the incorporation process, ensuring your business is established efficiently and in full compliance with local laws. Our comprehensive support includes selecting the appropriate legal structure, preparing and filing necessary documents, obtaining required licenses and providing ongoing company secretarial services. With Accace managing these critical steps, you can confidently focus on your business growth.
In order to set up a company in Romania, you first need to choose the type of business form, to prepare the file and to submit the application at the Trade Register. Note that the most common forms of business in Romania are the Limited Liability Company along with the Joint Stock Company and Branches.
Our services for company incorporation in Romania are designed to simplify the process of starting a business. We offer tailored service packages to meet your specific needs, ensuring a smooth and hassle-free incorporation experience. Get in touch with us to find out more.
The type of business forms available in Romania are summarized below with their specific information: the minimum share capital, the liability of the shareholders/stockholders, the minimum number of shareholders/stockholders.
The most common forms of business used in Romania are the Limited Liability Company along with the Joint Stock Company and Branches.
Companies can be incorporated by natural persons or legal entities and must register to the territorial Trade Register. Certain activities need prior authorization (e.g. credit institutions, insurance brokers, companies which produce, sell firearms and ammunition, pension entities). Certain activities need to be authorized after the registration of the company (e.g. work agent, transportation).
The main document needed for incorporating a company is the articles of incorporation. This document must specify the following:
company form and name and its registered seat
the company’s business (main) activities (certain activities require special permits)
representation of the company, the method of signing in the name of the company
the duration of the company, if founded for a fixed period of time
the identification data of the shareholders, and in the Limited Partnership will be indicated also the shareholders limited
the amount of the equity capital, the method and date of its availability
shareholders representing and managing the company or non-associated directors, their identification data, the duration of the mandate, the powers conferred on them and whether they are to exercise them jointly or separately
details identifying the beneficial owners and how the company control is exercised, if applicable
all other items relevant to the given form of business as required by the applicable laws in force
The types of documents requested by the Trade Register for the company establishment are:
On the incorporation, the company in registered with the Romanian Fiscal Authorities by submitting the registration request with the Trade Register. However, in order to choose the appropriate tax regime, subsequent formalities with the tax authorities are necessary to be performed.
The incorporation procedure of a Romanian company consists mainly in:
The registration of a company is mandatory in Romania.
After submitting the complete file to the Trade Register, the request is usually processed within one working day from the date of registration of the application. Sometimes, the approval of the file may be delayed, because additional documents/information are requested by the registrar who will handle the request.
The same term applies also for approval of mentions (e.g. update of the Articles of Incorporation, revocation of directors, appointing of directors, relocation of headquarter).
A newly registered company must also register with the Social Security Authorities and Labour Authorities (in case it has employees).
In order to voluntarily liquidate and dissolve a company with the Trade Register, the procedure will take longer than the registration of the company, respectively up to 3 months.
This procedure consists in 2 steps. First, the General Shareholder Meeting resolution or the Sole Shareholder decision will be published in the Official Gazette in order to be brought to the attention of the public and, afterwards, the interested parties may submit an opposition to the liquidation request.
Regarding the shareholders of different forms of companies in Romania:
The Joint Stock Company is managed by one or more directors. Joint stock companies, whose annual financial statements are subject to audit legal obligations, are managed at least by three directors.
The Limited Liability Company is managed by one or more directors, appointed by the Articles of incorporation or by General Meeting of Shareholders or the Sole Shareholder.
As a general rule, the role of the director is performed by a natural person, Romanian or foreign citizen. In its current form, Law no. 31/1990 establishes that a legal person can be appointed as director, but it is required to appoint also a natural person, as representative.
The standard corporate income tax rate in Romania is 16% and the standard VAT rate is 19%.
Romanian taxpayers who meet certain conditions (e.g., at least one employee, a turnover of up to 500,000 euros, consultancy and management activities accounting for a maximum of 20% of total revenues, etc.) may qualify for the microenterprise income tax of 1% on turnover.
Romanian taxpayers that are carrying on activities such as gambling and nightclubs are either subject of 5% rate from the revenues obtained from such activities or 16% of the taxable profit, depending on which is higher.
Besides the VAT 19% rate, the following reduced rates would apply:
VAT registration for taxable persons having the place of business activity in Romania should be performed when the annual turnover of EUR 88,500 (RON 300,000) is exceeded.
Voluntary VAT registration before the threshold is exceeded is also possible. The VAT registration procedure is complex, and several types of documents are required. Non-resident taxable persons established in Romania through fixed establishments and non-residents having no actual presence in Romania can register without observing the above threshold. However, a VAT number must be in place before the commencement of the economic activity.
A taxable person not registered for normal VAT purposes in Romania and not required to register is liable to request the special VAT registration in the following situations:
The incorporation of the company, the mentions or the liquidations are tax free as per Law no. 265/2022.
Amounts for publishing the documents (e.g. resolutions, Articles of incorporation) in the Romanian Official Gazette will apply.
The microenterprise regime is optional and may be enjoyed by all companies obtaining revenues below the threshold of EUR 500,000 computed at the NBR exchange rate valid for the last day of the financial year and met several other criteria (e.g. revenues from consulting and management services lower than 20% out of the total revenues, one minimum employee etc.).
The microenterprise tax rate applicable is 1%.
Companies doing business in Romania could benefit from the following incentives:
Companies may benefit of an extra 50% tax depreciation for the eligible R&D expenses and may also apply the accelerated depreciation for these expenses.
The facility refers to the exemption of corporate tax of the profit re-invested in certain types of assets.
For a Romanian company it is mandatory to have a bank account. For opening a bank account, the legal representativesโ personal presence is mandatory at the opening. In the previous years, the banks also accepted a special notarized Power of attorney for another individual, but this practice changed and usually, at the opening, they request the presence of the administrator of the company.
All modifications regarding the statutory information of the companies (change of registered seat, mandate of directors, change of the shareholders or directors etc.) need to be registered at the Trade Register in 15 days as of the amending deed.
All Romanian companies receive, beside the unique registration number and the Trade Register identification number, the unique European identifier (EUID).
Through the system of interconnection of the Trade Register institutions in Europe, documents and information relating to the professionals registered in the Trade Register of each country are made available to the public. It will be possible to obtain information on identification and status of a company in the European Union and to obtain copies of certificates of electronic documents.
Company formation in Poland offers a solid gateway into one of Central Europeโs most dynamic economies. With a growing market, investor-friendly environment, and streamlined registration procedures, Poland continues to be a smart choice for both startups and established businesses looking to expand.
The main types of companies in Poland are Partnerships (Registered Partnership, Professional Partnership, Limited Partnership, Limited Joint-Stock Partnership) and Capital companies (Limited Liability Company, Joint-Stock Company). There are also 2 other alternatives (Branch and Sole Proprietorship), but special conditions apply. If you wish to explore the options, this guide will help you with a solid overview – additionally, our corporate and secretarial services in Poland could be of your interest as well.
Polish law stipulates the principle of freedom of business activity. This means that undertaking, pursuing, and terminating economic activity is free for everyone on an equal basis.
In some cases, running business requires consent of an appropriate authority, e.g., a license or a permit.
This applies to the performance of economic activity in areas of particular importance for the security of the state or citizens, or other important public interest. Granting of a license or a permit may be subject to the fulfilment of specific conditions, for example, no criminal records of board members.
Citizens of the European Union and European Economic Area Member States who want to conduct business activity in Poland may
Set up own sole proprietorship or any commercial company in Poland
Provide cross-border services – without registering business in Poland
Set up a branch or representative office of foreign entrepreneur in Poland
The EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Greece, Spain, Netherlands, Ireland, Lithuania, Luxembourg, Latvia, Malta, Germany, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden, Hungary, Italy.
The member states of the European Economic Area, apart from the EU member states, are Norway, Iceland, and Liechtenstein.
Citizens of the USA and the Swiss Confederation can establish a sole proprietorship, any commercial company, branch, or representative office in Poland.
Citizens of countries that do not belong to the European Union may:
There are no requirements regarding the amount of companyโs capital.
The business name of the Registered Partnership should include the surname or the business name of at least one partner.
In order to establish a Registered Partnership, the founders of the company have to adopt articles of partnership. The articles of partnership shall be made in writing, or else they will be invalid.
Next, the motion to the National Court Register should be prepared. The Registered Partnership is considered established from the date of its registration at the commercial register.
Each partner of a Registered Partnership is liable for the obligations of the company without limitation with all his assets jointly and severally with the remaining partners and the partnership. However, a creditor of the partnership may conduct execution from the partnerโs assets only if execution from the assets of the partnership proves ineffective.
Each partner has the right to represent the company. The right of representation includes all acts in court and out of court and cannot be limited with effect towards third parties. The partner may be deprived of the right to represent the partnership only for significant reasons under a final and court decision.
Management of the affairs of the partnership may not be entrusted to third parties to the exclusion of the partners. Management of the affairs of the partnership may be entrusted to one or several partners under the articles of partnership or under a subsequent resolution of the partners. In such a case, the remaining partners are excluded from managing the affairs of the partnership.
There are no requirements regarding the amount of companyโs capital for company formation in Poland.
The business name of the Professional Partnership should include the surname of at least one partner.
In order to establish a Professional Partnership, the founders of the company must adopt articles of partnership. The articles of partnership shall be made in writing, or else they will be invalid.
Next, the motion to National Court Register should be prepared. The Professional Partnership is considered established from the date of its registration at the commercial register.
Only natural persons qualified to pursue liberal professions, i.e., legal advisers, notaries, doctors etc. can be partners of Professional Partnership.
A partner is not liable for the obligations of the partnership which arise in connection with the pursuit by the remaining partners of the profession in the partnership, or for the obligations of the partnership which arise as a result of acts or omissions of persons employed by the partnership under an employment contract or another legal relationship who have been guided by another partner in the provision of services connected with the objects of the partnership.
The articles of partnership may provide that one or more partners agree to be liable as a partner of a Registered Partnership.
Each partner shall have the right to represent the partnership individually, unless the articles of partnership provide otherwise. A partner can be deprived of the right to represent the partnership only for significant reasons under a resolution adopted by a majority of three-fourths of the votes in the presence of at least two-thirds of the total number of partners. The articles of partnership may provide for stricter requirements for such a resolution. Such depriving of a partner of the right to represent the partnership is effective from the date of registration of this fact in the commercial register.
The articles of partnership of a Professional Partnership may provide that the management of the affairs and the representation of the partnership be entrusted to the management board.
There are no requirements regarding the amount of companyโs capital for company formation in Poland.
The business name of the Limited Partnership should contain surname or business name of at least one of the general partners. The surname of the limited partner may not be placed in the business name of the partnership or else that limited partner shall be liable to third parties like a general partner.
In order to establish a Limited Partnership, the founders of the company must adopt articles of partnership. The articles of partnership of a Limited Partnership shall be made in the form of a notarial deed.
Next, the motion to National Court Register should be prepared. The Limited Partnership is considered established from the date of its registration at the commercial register.
There are 2 types of partners in a Limited Partnership: general partners and limited partners.
Unless the articles of partnership provide otherwise, the limited partnerโs contribution maybe made in a value lower than this specified amount. However, a decision of the partners to release the limited partner from the obligation to make a contribution shall be invalid.
The Limited Partnership is represented by the general partners, who are not deprived of the right to represent the partnership under the articles of partnership or a final and non-appealable court judgement. A limited partner may represent the partnership only as a proxy.
The affairs of the company are managed by the general partners. A limited partner does not have the right or obligation to manage the affairs of the partnership, unless the articles of partnership provide otherwise.
The minimum capital in a Limited Joint-Stock Partnership amounts to PLN 50,000. The nominal value of the share cannot be lower than PLN 0.01 for company formation in Poland.
The business name of the Limited Joint-Stock Partnership should include the surnames of one or several general partners. The surname of a shareholder cannot be placed in the business name of the partnership or else that shareholder shall be liable to third parties like a general partner.
For establishing a Limited Partnership, the founders of the company must adopt a statute of the company. The statute of a Limited Joint-Stock Partnership should be made in the form of a notarial deed.
Next, the motion to National Court Register should be prepared. Like other partnerships, Limited Joint-Stock Partnership is considered established from the date of its registration at the commercial register.
In a Limited Joint-Stock Partnership there are 2 types of partners: general partners and shareholders.
Affairs of the company are managed by general partners. The statute may provide that management of the affairs of the partnership shall be entrusted to one or several general partners. An amendment to the statute depriving a general partner of the right to conduct affairs of the partnership or granting such right to a general partner who was previously deprived of such right shall require the consent of all remaining general partners.
A supervisory board may be established in any Limited Joint-Stock Partnership. If there are more than twenty-five shareholders, the creation of a supervisory board is obligatory. The members of the supervisory board shall be appointed or revoked by the general meeting.
Under last yearโs amendment to the Code of Commercial Companies, the powers and duties of supervisory boards have been increased, enabling them to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company.
The share capital of a Limited Liability Company shall be at least PLN 5,000. The share capital of the company can be divided into shares of equal or non-equal nominal value. However, the nominal value of a share may not be lower than PLN 50. The shares may not be subscribed for the amount below their nominal value. The amount of contribution shall not be lower than the share capital.
There are no requirements regarding the business name of the Limited Liability Company.
In order to establish a Limited Liability Company, the founders of the company must adopt articles of association. The articles of association should be made in a form of notarial deed.
In contrast to the partnerships, capital companies can start their activity right after execution of the articles of association. Until the date of registration at the commercial register, capital companies are obliged to add to their business name the term โin organizationโ (in Polish โw organizacjiโ). After the registration, the companies obtain legal personality.
Also, the motion to the National Court Register must be prepared. Following documents should be attached to the motion:
The shareholders of the Limited Liability Company can be natural persons, as well as companies. A Limited Liability Company cannot be formed solely by another single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company.
The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by a resolution of the shareholders, unless the articles of association provide otherwise. If the management board comprises several members, the rules for representation should be stipulated in the articles of association. If the articles of association do not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.
The articles of association may create a supervisory board or an audit committee or both. In companies where share capital exceeds PLN 500,000 and where there are more than twenty-five shareholders, the establishment of supervisory board or audit committee is mandatory. The supervisory board (or audit committee) consists of at least three members appointed and dismissed by a resolution of the shareholders. The articles of association may provide a different method of appointment and dismissal of members of the supervisory board. The supervisory board exercises permanent supervision over all areas of the activities of the company. However, the supervisory board does not have the right to give the management board any binding instructions with respect to the management of the affairs of the company. But, last yearโs amendment to the Code of Commercial Companies strengthens the position of supervisory boards by granting them the power to request management bodies to prepare or provide any information, documents, reports, or explanations concerning the company. Whereas the acquisition of new information by the supervisory board from the management boards of companies, will result in the imposition of new obligations on it with regard to the analysis of this information.
The minimum amount of share capital in Joint-Stock Company is PLN 100,000. The share capital shall be divided into shares of equal nominal value. Nominal value of the share may not be lower than PLN 0.01.
The shares subscribed for in-kind contributions shall be paid in full not later than within a year from the date of registration of the company.
The shares subscribed for cash contributions shall be paid prior to registration of the company to the extent of at least one fourth of their nominal value.
If the shares are subscribed solely for in-kind contributions or for in-kind contributions and cash contributions, the share capital shall be paid in prior to registration to the extent of at least one fourth of its amount.
There are no requirements regarding the business name of the Joint-Stock Company.
In order to establish a Joint-Stock Company, the founders of the company must adopt statute of the company. The statute of the Joint-Stock Company should be made in a form of notarial deed.
Establishment of a Joint-Stock Company also requires the consent to the formation of the Joint-Stock Company and the wording of the statutes, as well as to the subscription for the shares. The consents should be adopted in a form of one or more notarial deeds.
Also, the motion to National Court Register must be prepared. Following documents should be attached to the motion:
The shareholders of the Joint-Stock Company can be natural persons, as well as companies. A Joint-Stock Company may not be formed exclusively by a single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company. The shareholders are not liable for the obligations of the company.
There are two kinds of shares: registered shares and bearer shares. The registered shares indicate the shareholder. The registered shares certificate can be issued before making a full payment. The statute can state that the sale of registered shares requires a consent of the company or limits such sale in a different way. The bearer share does not indicate entitled party, which is the holder of the share certificate. Such share cannot be issued before the full payment. Sale of the bearer shares cannot be limited. The change of the ownership of the bearer share requires handing over the share certificate.
Upon the request of shareholder, registered shares can be changed to bearer shares (or vice versa), unless the law or the statute provide otherwise.
The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by the supervisory board unless the statute provides otherwise. The board member can be dismissed or suspended also by the general meeting of the shareholders. The board members can be appointed for maximum 5 years term of office.
If the management board comprises several members, the rules for representation should be stipulated in the statute. If the statute does not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.
Establishment of a supervisory board in the Joint-Stock Company is mandatory. The supervisory board exercises permanent supervision over all areas of the activities of the company.
The supervisory board consists of at least three members (five in case of public companies) appointed and dismissed by the general meeting of shareholders. The statute may provide a different method of appointment and dismissal of members of the supervisory board. Members of the supervisory board can be appointed for maximum 5 years term of office.
The amendment to the Code of Commercial Companies strengthens the position of supervisory boards by granting them the power to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company. However, the supervisory boardโs acquisition of new information from the management boards of companies imposes new obligations on it in terms of analysing this information.
The minimum amount of share capital in Simple Joint-Stock Company is PLN 1. The shares have no nominal value, do not constitute part of the share capital and are indivisible.
The amount of the share capital is not specified in the articles of association. The provisions on amendments to the articles of association do not apply to changes in the amount of share capital.
The contributions shall be paid in full within three years from the companyโs entry in the register.
There are no requirements regarding the business name of the Simple Joint-Stock Company.
In order to establish a Simple Joint-Stock Company, the founders of the company have to adopt articles of the association. The articles of association should be made in a form of notarial deed.
Establishment of a Simple Joint-Stock Company also requires the establishment of company bodies required by the law or the articles of association and making contributions by shareholders to cover the share capital.
Also, the motion to National Court Register must be prepared. Following documents should be attached to the motion:
The shareholders of the Simple Joint-Stock Company can be natural persons, as well as companies. A Simple Joint-Stock Company may not be formed exclusively by a single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company. Shareholders are only obligated to perform the services specified in the articles of association.
Shares are not in the form of a document, and they are registered in the register of shareholders.
It is mandatory to establish a management board or board of directors.
The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by the shareholders, unless the article of associations provide otherwise.
If a supervisory board has been established in the company, the members of the management board shall be appointed, dismissed, and suspended for important reasons by the supervisory board, unless the articles of association provide otherwise.
If the management board comprises several members, the rules for representation should be stipulated in the articles of association. If the articled of association do not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.
The board of directors manages the companyโs affairs, represents the company, and supervises the conduct of the companyโs affairs. It is composed of one or more directors.
Directors are appointed, dismissed and suspended by shareholders for important reasons by a resolution, unless the articles of association provide otherwise.
The articles of association, the rules of the board of directors or a resolution of the board of directors may delegate some or all the activities of the companyโs business to one director or some directors (executive directors). Directors who are not executive directors (non-executive directors) exercise permanent supervision over the conduct of the companyโs affairs.
If the board of directors comprises several directors, and the articles of association do not contain any provisions on this matter, two directors or one director together with a commercial proxy are required to make statements on behalf of the company.
Establishment of a supervisory board in the Simple Joint-Stock Company is not mandatory. However, the articles of association may provide that, in addition to establishing a management board, the company must also establish a supervisory board. The supervisory board exercises permanent supervision over all areas of the activities of the company.
The supervisory board consists of at least three members appointed and dismissed by a resolution of shareholders. The articles of association may provide a different method of appointment and dismissal of members of the supervisory board.
The mandate of a body member shall expire on the date of the general meeting approving the financial statements for the first full financial year following the date of appointment, unless the articles of association provide otherwise for an indefinite period.
If the articles of association provide the appointment of a member of the body for a term of office, it shall be counted in financial years, unless the articles of association provide otherwise. In such a case, the mandate of the body member shall expire on the date of the general meeting approving the financial statements for the last year of the body memberโs term of office, unless the articles of association provide otherwise.
The amendment to the Code of Commercial Companies grants the supervisory board the power to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company. However, the supervisory boardโs acquisition of new information from the management boards of companies imposes new obligations on it in terms of analyzing this information.
Currently, an application for company registration can be submitted in the National Court Register online only. It is not possible to submit a paper application. However, there are two methods of applying for registration with the National Court Register:
Registration of a company via Internet, in the S24 system, is a good form for the companies established by one person or those that have only standard provisions in their articles of association.
In the S24 system, it is possible to conclude an agreement and register:
The main condition for establishing a company in the S24 system is that all persons signing the articles of association and participating in its registration should have a qualified electronic signature, a trusted signature (ePUAP) or an electronic personal signature.
It is possible to use S24 portal after creating an account. To log in, it is necessary to provide login and password. Each person who will sign the registration application (each of the management board members
listed in the articles of association that is not suspended, or theirs representative), and shareholders or their representatives should have an account.
The system will notify which documents are needed and will guide through all stages of their preparation. S24 provides most of the model documents, but not all of them, for example, a declaration of the status of a foreigner should be prepared independently.
After correctly completing the previous steps, the S24 system will automatically transfer applicant to the electronic payment system.
After payment, the application will be sent to the registry court competent for the companyโs seat. The court should verify an application within one day from the date of receipt. However, the verification time may be extended if the court asks for additional documents, e.g., if the shareholder is a foreign company (then a translated excerpt from the foreign companyโs register along with an apostille may be required).
Advantages:
Disadvantages:
In addition to the registration of the company in the National Court Register, the following data should also be reported:
Foreign entrepreneurs can conduct business activity on the territory of Poland trough a branch. A branch can only conduct such activity which coincides with the scope of business activity of foreign entrepreneur. According to Polish law, the branch is considered a part of mother company, not an independent entity. However, the branch may hire employees on its own behalf.
The branch operates under the same business name as the mother company.
To the business name should be added the form of business of the mother company translated into Polish (e.g., LTD = spรณลka z ograniczonฤ odpowiedzialnoลciฤ ) and the term โoddziaล w Polsceโ (in English: branch in Poland).
The branch can start conducting business activity after the registration in the National Court Register. The following documents should be attached to the registry motion:
In addition to the registration of the company in the National Court Register, additional data must be submitted to the tax office, such as bank account numbers, information on the special status of companies, the expected number of employees or place of business, and detailed contact details. Applications must be made within the:
The sole proprietorship is an alternative for establishment of a company. In this case natural person conducts business activity on his/her own behalf. Such entrepreneur is solely liable for obligations connected to business activity without limitation.
Natural persons who conduct business activity are registered in the Central Registration and Information on Business (CEiDG). The entrepreneur can register in CEiDG, tax office and social insurance institution (ZUS) with a single application. Such application can be submitted electronically by CEiDG website, sent by post to a selected municipal office or filed in person in selected municipal office.
Together with the application, the entrepreneur shall provide a statement that he owns legal title to the real estates, with addresses already entered into the register (i.e., correspondence address and all addresses of conducting business, including main address of business and addresses of branches โ if there are such). The legal title can be for example a property sales agreement or a lease agreement.
Such legal title is not attached to the registry motion, but the ministry responsible for economic affairs may request the entrepreneur to provide it within 7 days from receiving the request. If the entrepreneur will not provide it or changes the addresses in the register, the ministry can decide on erasing the entrepreneur from the register.
All types of companies must be register at the commercial register held by district courts. The duration of the registration procedure depends on the relevant court. The procedure in Warsaw currently lasts approximately 2-3 weeks.
The court fee for registration of the company in the National Court Register amounts to PLN 600 or PLN 350 in case of registration via S24 platform.
In connection with the amendment of the provisions of the Polish Code of Commercial Companies, the rights of groups of companies were introduced to the Polish legal order.
A group of companies within the meaning of the new regulations should be understood as a parent company and a company or subsidiaries that are capital companies and follow a common strategy to pursue the common interest of the group of companies.
In order to establish a group of companies, the partners or shareholders of a subsidiary should adopt an appropriate resolution specifying the parent company in its content. A resolution is passed by a majority of three-fourths of votes. However, it is possible to determine in the articles of association or the companyโs articles of association a number of votes higher than the statutory number of votes necessary to adopt such a resolution.
Participation in a group of companies is disclosed in the National Court Register, and the application of the provisions of the law on groups of companies is possible only after disclosing this information in the register.
The amendment to the Code of Commercial Companies, in force since last year, gave new powers and duties to supervisory boards of companies belonging to the group. When supervising a subsidiary, the parent companyโs supervisory board may request the management board of a subsidiary participating in a group of companies to provide books and documents and to provide information for supervision. However, in the absence of a supervisory board in the parent company, its competencies will fall to the management board (or the board of directors in the case of a simple joint-stock company).
In 2023, a new amendment to the Commercial Companies Code came into effect in Poland. The primary objective of this amendment is to incorporate into Polish law the Directive (EU) 2019/2121 of
the European Parliament and of the Council dated November 27, 2019. This directive amends Directive (EU) 2017/1132 concerning cross-border conversions, mergers, and divisions of companies.
The law, enacted on August 16, 2023, amends the Commercial Companies Code and certain other statutes, marking another crucial step in implementing the so-called “company law package” to deepen integration within the European Union’s single market.
In light of the implementation of regulations regarding new types of cross-border operations for companies, significant changes have been introduced concerning domestic types of company transformations. These changes expand the range of possible forms of reorganization. The aim of these modifications is to prevent the reverse discrimination of Polish entities participating in company transformation processes at the national level compared to entities participating in such processes at the cross-border level.
e-Deliveries (โe-Dorฤczeniaโ) is a service that allows for sending and receiving correspondence electronically, with an effect equivalent to a registered letter with acknowledgment of receipt.
Entrepreneurs registered in CEIDG (Central Register and Information on Economic Activity) and in National Court Register are required to have an e-Deliveries (โe-Dorฤczeniaโ) mailbox.
Entrepreneurs are required to have an e-Deliveries(โe-Dorฤczeniaโ) mailbox based on the following timelines, depending on the registration date of the company in CEIDG or National Court Register:
Withholding tax of 20% is levied on income from interest, copyright or related rights, rights to inventive designs, trademarks, and decorative designs, disclosing the secret of a recipe or production process, for the use or right to use an industrial device. The taxation may be diminished by application EU Directives or double taxation treaties.
Withholding tax of 19% covers payment of dividends, also in this case tax burden may be diminished by application of EU Directives or double taxation treaties.
For the following payments โpay and refundโ mechanism is applicable:
Under this mechanism WHT rate needs to be withheld at a standard rate (19% and 20% respectively) and may be refunded on the later stage upon taxpayerโs/tax remitterโs application if according to Double Tax Treaty or EU Directives lowered rate or WHT exemption would be applicable.
In order not to apply pay and refund mechanism a tax remitter should obtain an opinion on WHT preferences or submit a statement.
Polish minimal income tax was supposed to be implemented from 2022, however it has been postponed until 2024. For the first time taxpayers will be obliged to calculate and pay minimal income tax for 2024 by the end of March 2025.
The regulation applies to corporations incurring a loss or whose share of income in revenue is less than 2%. Taxpayer will have the right to choose the way of calculating the tax base:
Tax rate is 10%.
Exempt will be i.a:
It applies to capital groups whose total consolidated annual revenue, as shown in the group’s consolidated statement, amounts to a minimum of EUR 750 million, in at least two of the four tax years immediately preceding the tax year.
Polish GloBE Act implement three taxes.:
In this form of taxation, the companyโs profit is not taxed as long as it remains in the company and is allocated for investment.
Estonian CIT tax is available to a certain catalogue of entities. Estonian CIT tax rules may be applied by joint-stock companies, limited liability companies, limited partnerships, limited joint-stock partnerships, and simple joint-stock companies. There are some additional requirements in terms of investorsโ structure (natural persons only) and minimal employment (3 employees).
If the entrepreneur decides to apply the Estonian CIT regulations, they will be applied for the next 4 tax years. If the entrepreneur does not resign from the flat-rate income tax during this period, the tax period based on these rules will be automatically extended by another 4 tax years.
Holding company is a Polish entity with unlimited tax obligation, not benefiting from CIT exemption, running real business activity, having at least 10% of shares in companies with seat in countries other than tax heavens, not part of a CIT group.
Special method of taxation for holding companies assumes the CIT exemption of 95% of the amount of dividends received by the holding company from subsidiaries and under certain conditions full CIT exemption for profits from the sale of shares or stocks in subsidiaries.
If advisory, royalties, debt financing, remuneration for transfer of functions, risks etc. costs exceed 3% of taxpayerโs costs, tax on transferred income may be due. Subsequent requirements concern:
A company is treated as resident if it has its legal seat or place of effective management in Poland.
Resident companies are taxable on their worldwide income, including capital gains. The taxable income is computed based on the accounting profits and is adjusted for several items as described in the tax law. Revenues are divided into two sources – business activity and capital gains.
Tax settlement period for a corporate income tax is tax year. Standard tax year is 12 months, it can be similar to calendar year but also may be changed. Tax advances are paid throughout the year on a monthly or quarterly basis and reconciliated annually.
The taxpayer has to calculate and report revenues, tax deductible costs and tax due in the annual tax return (self-assessment). The deadline for filing the return is by the end of the third month following the end of the tax year.
Tax advances should be calculated and paid by the taxpayer generally on a monthly basis. Quarterly payments are possible, in the first year or if gross sales did not exceed EUR 2,000,000 in the previous year. Basis for calculation are current taxable revenues and tax-deductible costs. In certain cases, a taxpayer may pay simplified advances monthly, being as a rule 1/12 of a tax paid in the tax year preceding the previous year (current year โ 2).
As a rule, expenses incurred in connection to obtaining, ensuring and maintaining taxable income are fully deductible, unless they are listed as non-deductible items. Some items are deductible only up to a limit set by the law.
Tax losses may be carried forward up to 5 tax years. During each year the company cannot utilize more than 50% of the loss incurred in a given year. Alternatively, a taxpayer may utilize PLN 5 M of loss from a given year at once, whereas remaining part of loss will be settled compliant with general provisions. Loss from one source (business activity/capital gains) must be utilized within the same source.
An obligation to keep accounting books exclusively in electronic form and to send the structured information contained therein to the Polish tax authorities every year โ specifically through the JPK_CIT structure.
JPK_CIT reporting introduces two new structures:
Compared to the existing JPK_KR structure, the new JPK_KR_PD structure imposes an obligation to collect and report new data such as:
JPK CIT is applicable according to the following schedule for tax years starting after:
Certain territory of Poland is considered as a Special Economic Zone, however, the intensity of public aid is different and depends on the region. General rule is that depending on the volume of investment, number of employees and additional local requirements, the taxpayer may benefit from tax exemption. Conditions are established for each taxpayer by a special agency responsible for Special Economic Zone which after application procedure issues a decision granting exemption in the particular case.
Polish CIT act provides for special taxation regime encouraging investments into new technologies. Main tool is special Research and Development (R&D) relief based on which taxpayer can additionally deduct expenses on R&D, including development of prototypes and pilot projects, demonstration, testing, and validation of new or improved products, processes or services whose main purpose is to improve the technical encoding products.
Polish Investment Sphere is a kind of tax relief for new investment based on the decision on support in Polish Investment Sphere (dedicated for industrial sector and sector of innovative services).
Another tax benefit dedicated to the investor is so called IP Box. Based on the IP Box provisions, income derived from intellectual property can be preferentially taxed with 5% tax rate.
Remaining preferences in the CIT Act are i.a.:
Tax relief for robotization
Tax relief for consolidation
Tax relief for trial production of a new product and its market placement
There are also other tax benefits for various economic sectors and legal forms.
If you are interested in establishing a Ukrainian company, our experts have prepared an overview on company formation in Ukraine to provide all the necessary information about local forms of business, registration process and requirements.
The Join-Stock Company is a business entity with a charter capital divided into a certain number of shares of the same value. The joint stock company not later than after six months since an emission of shares had been registered must provide Shareholders with shares (certificate of the shares).
The Join-Stock Company is not liable for the obligations of the shareholders.
The company may be created by establishment, merger, division, separation or transformation of the business (business) companies, public (state), municipal (public) and other companies in the corporation.
Full name of the company in the Ukrainian language must contain the business type (public or private) and legal form (joint stock company).
Joint stock companies are divided into:
The Limited Liability Company is the company which has the capital divided into shares, as determined by the constituent documents.
The maximum number of participants in a Limited Liability Company is not declared.
An Additional Liability Company is the company with an authorized (share) capital divided into shares, as determined by the constituent documents.
The members of the company are liable for its obligations by their contributions to the charter (share) capital, and at the failure of these amount additionally by their property. This amount is the same for all participants and it is relevant to the contributions of each participant.
The maximum liability of members is detailed in the constituent documents.
The General Meeting is the supreme governing body of the Joint Stock Companies, Limited Liability and Additional Liability Companies.
The executive bodies of the company, which provides management of its current activity, are board or other bodies, defined by statute. In a Limited and Additional Liability created by the executive body: Collegial (management) or sole (Director). Directorate headed by General Director. Members of the executive body may also be persons who are not members of the partnership.
The General Partnership is a company, whose members are engaged in joint business activities and liable for the partnership’s obligations with all their property.
The name of the company must contain the names (names) of all its participants, the words “full partnership” or contain the name (title) of one or more members with the addition of the words “and company” and the words “full partnership”.
A Limited Partnership is a company, where one or more members do business on behalf of the partnership and is/are responsible for the company’s obligations with all their assets. There are one or more members whose liability is limited by contribution in property companies (investors) and who do not participate in the activities of the company.
If the Limited Partnership involves two or more participants with full responsibility, they are jointly liable for the debts of the company.
Administration of the Limited Partnership can be made only by participants with full responsibility.
Administration of the General Partnership must be agreed with all participants.
A citizen recognized as an entity if it exercises the entrepreneurial activity with the state registration as an entrepreneur without legal entity status.
Foreign business entities that want to do business in Ukraine can open a branch of a foreign entity. For this, the foreign entity must fill in an application and submit it to the Ministry of Economy of Ukraine (or other Ministry depending on the type of business activity of the foreign entity), together with a request for registration of the representation composed in any form, where should be noted:
| The form of business |
Minimum capital (approx. in EUR) |
Number of shareholders |
|
| English | Ukrainian | ||
|
Public joint-stock company |
ะัะฑะปััะฝะต ะฐะบััะพะฝะตัะฝะต ัะพะฒะฐัะธััะฒะพ (ะะะข) |
200 amounts of minimum salaries on the date of registration: As of 01/01/2024 – UAH 1,420,000. (approx. EUR 34 700) As of 01/04/2024 – UAH 1,600,000. (approx. EUR 39 000) |
1 or more |
|
Private joint-stock company |
ะัะธะฒะฐัะฝะต ะฐะบััะพะฝะตัะฝะต ัะพะฒะฐัะธััะฒะพ (ะัะะข) |
200 amounts of minimum salaries on the date of registration: As of 01/01/2024 – UAH 1,420,000. (approx. EUR 34 700) As of 01/04/2024 – UAH 1,600,000. (approx. EUR 39 000) |
1 or more |
|
Limited Liability Company |
ะขะพะฒะฐัะธััะฒะพ ะท ะพะฑะผะตะถะตะฝะพั ะฒัะดะฟะพะฒัะดะฐะปัะฝัััั (ะขะะ) | NS | ND |
|
Additional Liability Company |
ะขะพะฒะฐัะธััะฒะพ ะท ะดะพะดะฐัะบะพะฒะพั ะฒัะดะฟะพะฒัะดะฐะปัะฝัััั | NS | ND |
|
General Partnership |
ะะพะฒะฝะต ัะพะฒะฐัะธััะฒะพ (ะะข) | NS | ND |
|
Limited Partnership |
ะะพะผะฐะฝะดะธัะฝะต ัะพะฒะฐัะธััะฒะพ | NS | ND |
|
Individual/entrepreneur |
ะคัะทะธัะฝะฐ ะพัะพะฑะฐ-ะฟัะดะฟัะธัะผะตัั | N/A | ND |
|
Representative office |
ะัะตะดััะฐะฒะฝะธััะฒะพ ัะฝะพะทะตะผะฝะพะณะพ ััะฑโัะบัะฐ ะณะพัะฟะพะดะฐััะฒะฐะฝะฝั | N/A | 1 (not a shareholder, mother company) |
NS=not stated, ND=not declared
A Join-Stock, Limited and Additional Liability Company are established and are operating under the constituent documents, while the General and the Limited Partnership are operating under the foundation agreement.
The documents must contain at least the following information:
The founding contract of a General Partnership must include in addition to the conditions specified above also the following:
The founding contract of a Limited Partnership, in addition to the above conditions, must include:
The company acquires legal personality from the date of its registration. Under normal conditions, the incorporation time (registration procedure time) lasts 24 hours.
The state registration is conducted in the order prescribed by law for state registration of legal entities.
The company may open current and deposit accounts in banks and enter into contracts and other agreements only after its registration. Agreements concluded before the company registration deemed to be concluded with this company, only if it is approved after registration.
For registration of the legal entity the following documents are needed:
Ukraineโs standard CIT rate is 18%. Special rates apply to insurance and gambling activities.
ECT rate is 9%. It is a special tax regime for the residents of Diia City*
Rates for legal non-resident entities vary from 0% to 20% based on income type. Tax rates and taxable profit for permanent establishments are the same as for residence in Ukraine.
The standard PIT rate is 18%. This rate also applies to the taxable income received from abroad.
Standard VAT rate in Ukraine is 20% and is imposed on domestic sales of goods and/or services, imported goods or services.
A reduced rate of 7% is applied to supply and import of registered medicines and specific medical goods. For export of goods and other services defined by law, 0% rate applies under special conditions.
Provision of services to a non-resident are subject to 20% VAT or it can be considered as an outside the scope of VAT, depending on the place of supply.
*Related deadlines for taxpayers you may find in our 2024 Tax calendar for Ukraine.
The corporate law and company formation in Hungary is governed by the Civil Code which incorporates the fundamental regulations and mandatory rules for all economic entities and also governed by the Act on Public Company Information, Court Registration Proceedings and Dissolution Procedures โ โRegistration Actโ โ which provides a flexible and expedient legal regime.
The Hungarian Civil Code determines four different corporate forms that may serve for investors as a basis to carry out business activity in Hungary. In addition to those 4, there are two other forms with which investors can establish Hungarian presence. All of these forms can exclusively be established and operated by foreign owners and management:
A Limited Liability Company is established with a predetermined amount of initial capital that is HUF 3,000,000 provided by its Founders.
The liability of its members is limited to the provision of the companyโs initial capital. As a general rule, members are not otherwise responsible for the companyโs liabilities, meaning that the private property of the members cannot be touched by the liabilities of the company, except few cases which are specified by relevant legislation.
Members of a Limited Liability Company may not be solicited by public invitation. The capital contribution of members is provided in the form of core deposits. The capital contributions of members may differ in terms of value, however, the amount of each contribution may not be less than one hundred thousand forints. Each member shall have one core deposit. The membersโ rights and their title to the companyโs assets are represented by quotas (business share) in the company. Business shares shall come to existence upon the companyโs registration. The business shares of members shall be consistent with their respective capital contributions.
No securities may be issued in respect of the business quotas. A Limited Liability Company could operate even having one member (as a single-member Limited Liability Company).
Wish to open a LLC in Hungary? Get it done through our eShop.
This is the most strictly regulated corporate form, which shows similarity to the German AG or to the English Plc.
There are two types of stock companies:
Private Limited Company (Zártkörลฑen mลฑködล részvénytársaság; Zrt.)
Public Limited Company (Nyilvánosan mลฑködล részvénytársaság; Nyrt.)
A stock company is particularly suitable to large business entities with several investors, but it is also possible to establish such entity as a single-person company.
A Private Limited Company in Hungary shall be founded with an initial capital consisting of a predetermined amount. The minimum of the share capital of a Private Limited Company may be HUF 5,000,000, while in the case of a Public Limited Company it is HUF 20,000,000.
The amount of cash contributions at the time of foundation may not be less than thirty per cent of the share capital. The liability of its members is limited to the provision of the nominal or issue value of the shares.
At foundation of a company limited by shares, it is compulsory to establish Private Limited Company, later the company may transform into Public Limited Company.
Shares may be:
In a Hungarian Limited Partnership, the members of the partnership agree to make available to the partnership the capital contribution necessary for its activities.
The minimum number of members is two, of which at least one โ the general partner โ bears joint and several liability and while at least one other partner โ limited partner โ is not liable for the obligations of the partnership, unless the relevant legislation provides otherwise.
Only the general partners may manage the partnership and represent the partnership in its dealings with third parties. The profit distribution is generally proportional to the capital contributed, but the parties are free to agree otherwise. It is against the law, however, to exclude any partner from the distribution of profits.
In a General Partnership, the members of the partnership agree to make available to the partnership the capital contribution necessary for its activities, the liabilities of its members are joint and several for the partnershipโs obligations.
No minimum initial capital requirement is set forth by law. By law, every member is entitled to represent the partnership unless its articles of association state otherwise.
The partnership must have at least two members. Individuals may also become members of a General Partnership, however minor persons and individuals already bearing a joint and several liability in another company are excluded.
The active participation of the partners in conduct of the partnershipโs business is legally required. No minimum capital is required to found and operate a General Partnership.
There are two other forms foreign investors might choose in Hungary to establish their presence.
Through a Representative Office, foreign investors can perform normal liaison functions, including assisting with contract negotiation, advertising and exhibiting products and other forms of marketing on behalf of the parent company; but the office is not allowed to pursue core business activities. This form can be useful if the foreign undertaking intends to familiarize itself with the local business conditions before embarking on an investment.
The other form to establish a presence in Hungary can be done via a Branch Office, which is an organizational unit of a foreign company, being authorized to carry out independently normal business activities.
Companies formed and registered under Hungarian law may undertake obligations
and acquire rights in their own name.
As a general rule, companies may freely pursue activities; however, a license of the competent authority is required for certain activities. Thus, for example, banks can only be founded and operated as a company limited by shares and with license of establishment issued by the Central Bank of Hungary.
Companies can be founded by natural or legal entities, Hungarians and foreign nationals alike.
The founders of a company must first sign the companyโs constitutive document after which an attorney-at law (a member of the Hungarian bar) must countersign and file it to the competent Court of Registration with the other documents necessary for the foundation of the company. The company is established by the courtโs act of registration. A companyโs fundamental corporate data (instrument of incorporation) and its internal regulations are set forth in its constitutive document, i.e. (i) articles of association, or (ii) deed of foundation, or (iii) statutes depending on the corporate form.
company name
registered seat
a list of the company’s founding parties, with their respective addresses
the company’s business (main) activities (certain activities require special administrative permits)
the amount of the equity capital, the method and date of its availability
representative of the company, including decision on whether they perform the company management according to service contract OR labour relationship
Most documents at a company establishment will be prepared and countersigned by the attorney-at-law according to the will of the founder(s).
The list of the essential documents depends on the company form but followings shall be highlighted at establishment by a foreign person, or entity:
Looking for a company seat in Hungary? Get it sorted on our eShop.
The registration of business associations is a must in Hungary.
The Companyโs constitutive document must be drafted and countersigned by a Hungarian registered attorney-at-law. Incorporation procedure must be initiated by request.
The registration request must be filed with the competent Hungarian Court of Registration within 30 days from the conclusion of the constitutive document.
Company registration proceedings is fully electronic.
If the applicable laws require any official license for the establishment of the company, it must be attached to the request form and the request form must be submitted within 15 days as of the receipt of the official license.
When the registration court receives the application for registry, a certificate is issued for the company with the companyโs name, address, temporary tax and statistical number and the number of reference of the registration. After receiving the above certificate, the company may commence to operate in the form of a pre-incorporated company. This means that the company may operate as an incorporated company but special provisions regarding personal liability of the founder(s) apply. A pre-company may pursue business activities but is not allowed to conduct business activities requiring an official license. Upon registration by final decision of the court of registry the business association shall cease to function as a pre-company, and all transactions concluded in that capacity will be treated as if they were concluded by the business association.
Protect your brand and get your trademark registered too on our eShop.
Companyโs supreme decision-making entity in Hungary is the supreme body.
In case of General Partnership the supreme body is the Meeting of the Members, where all the members have the same value, and only members may be managing director of the General Partnership.
In case of a single-member company the only member practises the rights of the supreme body. In matters falling within the supreme body’s competence the founder or the sole member shall take decisions in writing, and such decisions shall take effect when communicated to management.
In case of Limited Partnership the supreme body is the Meeting of the Members, and only the general partner(s) – with unlimited liability – may be the managing director of the Limited Partnership.
In case of Limited Liability Company the supreme body is the Members’ Meeting and the members entitled to dividend in the proportion of their quotas (business share). Not only members, anybody may be managing director of a Limited Liability Company.
In case of a Company Limited by Shares the supreme body is the General Meeting and the executive body is the Board of Directors.
Foreign and Hungarian persons also may be Member (Shareholder) and executive officer (managing director) in a company, but there are some general restrictions towards these people which must be satisfied independently from the nationality of a person.
Executive officers may not acquire any share in the capital of a business association โ except for the shares of public limited companies โ which is engaged in the pursuit of the same economic activity, as its main activity, as the business association in which they hold an executive office.
In the event of accepting a new executive office, within fifteen days of accepting such office the executive officer shall notify any other company in which he already serves as an executive officer or a supervisory board member.
With the exception of everyday dealings, an executive officer and his close relatives may not conclude any transactions falling within the scope of the main activities of the business association in his own name and on his own behalf.
The person who has been disqualified by a Registry Court of Hungary, according to the binding legislation, cannot be member or executive officer.
Members, executives of those companies which:
would not be eligible to be member or executive officer of another company due to the above stated reasons.
The examination of the above stated restrictions shall be done at the establishment of the company.
Get an extensive consultation for your taxes โ book it on our eShop.
The registration request must be filed with the competent Hungarian Court of Registration within 30 days from the conclusion of the constitutive document.
Companies can be incorporated in two ways: simplified or standard electronic filing.
The Court of Registry shall make decision within 1 working day from the submission of the application and the concerning documents. In present procedure the companies must use a standardised template for the constitutive documents.
Only Limited Liability Company, Limited Partnership, General Partnership and Private Limited Company can be established by the simplified procedure. Public Limited Company cannot be incorporated by the simplified procedure.
In course of standard electronic filing, the companies are not bounded by the standard templates for constitutive documents; content of it may be freely determined by the founders according to the relevant laws. The Court of Registry shall make decision within 15 working days from the submission of the application and the concerning documents.
Branch Offices and Commercial Representation Offices should also be registered by the Court of Registration and may start their activities only after the registration. The time of registration may take up to 15 days.
Businesses in Hungary are subject to corporate income tax. The corporate tax rate is 9% of the positive tax base.
When determining taxable income for the corporate income tax, the relevant legislation allows for calculating with amortisation.
Accounting is done on a net value basis: depreciation increases corporationยดs pre-tax earnings, while amortization under the tax law reduces corporationโs earnings before taxes.
In certain cases, the tax law allows for amortization or permits accelerated depreciation (e.g. immaterial assets, leased equipment).
All losses can be carried forward and used up within 5 years following the given tax year. Losses can be offset against future positive tax bases, up to max 50% of the given tax base.
Losses shall be used up with FIFO method.
Tax credits reduce corporate income tax and can also reduce taxable corporate income.
Duty on company registration of the different corporate forms in Hungary are as follows:
Duty on company registration of Private Limited Company is HUF 50,000 in case of simplified electronic filing and HUF 100,000 in case of standard electronic filing.
Duty on company registration of a Branch Office or a Representative Office of a foreign enterprise is HUF 50,000.
The registration of Limited Liability Companies, General Partnerships and Limited Partnerships shall be exempt from duties.
Publication fee of company registration is HUF 5,000 for Private Company Limited in standard electronic filing.
In any other cases (for General Partnership, Limited Partnership and Limited Liability Company regardless the form of filing, and Private Company Limited, in case of simplified electronic filing) payment of publication fee is not needed.
Failure to comply with deadlines stated by relevant legislation could result in a penalty amounting from HUF 50,000 to HUF 900,000.
The Hungarian Investment and Promotion Agency supports high value-added investment projects with a one-stop-shop service including a VIP treatment and comprehensive information about available subsidies for investment projects.
The maximum available aid intensity decreases if the investment is a large investment (exceeding EUR 50 million):
The incentive package may consist of the following elements:
Key investment sectors: Automotive; Electronics; Information and Communications Technology; Shared Services Centres; Renewable Energy; Medical Technology; Life Science; Food Industry; Logistics.
A newly registered company must also register with the local municipality, Hungarian Tax Authority, Central Statistical Office and Social Security Authorities.
Simultaneously with the submission of the registration application, the court registers companies with the Hungarian Tax Authority (for VAT and income tax purposes) and with the Statistical Office through an online system.
According to the binding registration, a bank account shall be opened in 15 days from the tax registration of the company.
For opening a bank
According to the binding registration, a bank account shall be opened in 15 days from the tax registration of the company.
For opening a bank account, personal presence of the executive officer is mandatory in most cases.
Slovak or foreign investors entering the Slovak market may choose between several corporate forms. The fundamental law that regulates company formation in Slovakia is the Slovak Commercial Code. The Commercial Code regulates the corporate forms and business (entrepreneurial) activities that are defined as systematic activities conducted independently by an entrepreneur (either an individual or legal entity), in their own name and under their own responsibility for the purpose of making a profit.
Foreign persons may conduct entrepreneurial activity in the territory of the Slovak Republic under the same conditions and to the same extent as Slovak persons, unless stipulated otherwise by law. A foreign natural or legal person may establish any form of company either together with other foreign or Slovak persons or alone as a sole shareholder. In this respect, foreign natural and legal persons enjoy the same rights and bear the same responsibilities as Slovak persons and may not be discriminated against.
Our services for company incorporation in Slovakia are designed to simplify the process of starting a business. We offer tailored solutions to meet your specific needs, ensuring a smooth and hassle-free incorporation experience. Get in touch with us to find out more.
Corporate forms introduced by the Slovak Commercial Code are:
Slovak: โverejnรก obchodnรก spoloฤnosลฅโ or the abbreviation โv. o. s.โ or โver. obch. spol.โ
A General Partnership is a company in which at least two persons carry out business activities under a common business name and bear joint and several liabilities for the obligations of the partnership with their entire property. There is no requirement of a minimum registered capital.
Slovak: โkomanditnรก spoloฤnosลฅโ or the abbreviation โk. s.โ or โkom. spol.โ
A company in which one or more partners are liable for the partnership’s liabilities up to the amount of their unpaid contributions (limited partners), and one or more partners are liable for the partnership’s liabilities with their entire property (general partners). The minimum contribution of the limited partner is in the amount of EUR 250.
Slovak: โspoloฤnosลฅ s ruฤenรญm obmedzenรฝmโ or the abbreviation โspol. s r.o.โ or โs.r.o.โ
This is the most common form of doing business in Slovakia. The company exists independently of its members and it may be established either by one person, a natural or legal person (with statutory restrictions described hereunder), or by two or more persons (up to 50).
According to the Commercial Code, minimum registered capital of EUR 5,000 is required. The minimum contribution of each shareholder is in the amount of EUR 750. The Commercial Code also requires that at least 30% from each contribution of the shareholder, but altogether at least 50% of the minimum registered capital stipulated by the Commercial Code shall be paid before the application for the registration of the company is filed with the Commercial Register.
A Limited Liability Company is liable for the breach of its obligations with all its assets, while shareholders guarantee for the breach of the obligations of the Limited Liability Company only up to their committed but unpaid contributions to the registered capital registered with the Commercial Register.
As of February 1, 2023, the shareholders may establish a limited liability company in addition to the standard method of incorporation also by using a simplified method, which consists in filling in a special electronic form for the drafting of the memorandum of association.
The simplification also consists in the elimination of one of the steps prior to the registration of company in the Commercial Register, which is the obligation to apply to the Trade Licensing Authority for a trade licence. On the other hand, it is important to mention that the registered court shall be obliged to verify the integrity of the executive director. The regime for verifying the integrity of executive director is set more strictly for the incorporation of a company established by simplified method compared to the regime set in the Trade Licensing Act, as in this case absolute integrity is required, i.e. an executive director cannot be legally convicted of any criminal offence or have his/her convictions expunged.
Due to the fact that this is a simplified method of incorporation, the law stipulates certain limitations, resp. conditions according to which it is possible to use this method of incorporation over the standard method.
These conditions especially relate to:
With this method of incorporation, the shareholders are largely bound by the pre-prepared wording of the memorandum of association within the electronic form, from which they cannot deviate.
Slovak: โakciovรก spoloฤnosลฅโ or the abbreviation โa. s.โ or โakc. spol.โ
The company may be established by a sole founder (provided that the founder is a legal entity) or by two or more founders. A Joint-Stock Company may be formed by a private agreement to subscribe for all shares, or by a public call for the subscription of shares.
The minimum registered capital is of EUR 25,000.
Slovak: โjednoduchรก spoloฤnosลฅ na akcieโ or the abbreviation โj.s.a.โ
The Simple Joint-Stock Company is a new corporate form, introduced in Slovakia in 2017. It represents a lean version of Joint-Stock Company with minimum registered capital of EUR 1 and minimum nominal share value of Cent 1.
Simple Joint-Stock Company can provide greater flexibility comparing to Limited Liability Company or Joint-Stock Company in relation to unlimited number of shareholders (although the Simple Joint-Stock Company cannot be formed by public call for subscription of shares), minimum registered capital, or the possibility to issue several different types of shares with different rights of shareholders (e.g. more voting rights or greater profit share).
However, it is presumed that this form of company should cease to exist within following years and be replaced by LLC.
Slovak: โdruลพstvoโ
The purpose of a Co-operative is to undertake business activities or to ensure the economic and social or other benefits of its members.
The Co-operative bears liability for obligations of the Co-operative with its entire property, however the members do not bear liability for the obligations of the Co-operative.
Minimum registered capital of EUR 1,250 is required. The Co-operative can be established by minimum of 5 natural persons or 2 legal persons.
The Co-operative can provide certain level of anonymity to its owners (members) comparing to the other corporate forms, as the owners (members) are not registered within the Commercial Register, only listed internally within the Co-operative.
Slovak: โpodnikโ or โorganizaฤnรก zloลพka podniku zahraniฤnej osobyโ
Foreign persons may conduct business in Slovakia provided that they have their business or branch offices located in Slovakia, registered with the Slovak Commercial Register, from the day of its registration.
However, there are exceptions from the obligation to establish business or branch offices located in Slovakia for persons established in EU or EEA member states stipulated within the free movement of services guaranteed by the EU in Treaty on the Functioning of the European Union.
As of February 1, 2023, in addition to the standard method of establishment of an enterprise or an organizational branch of a foreign company with its registered office in an EU or EEA state, there is introduced a simplified method of their establishment.
It is not possible to use this simplified method in all situations, but only if the conditions stipulated by law are fulfilled. The simplification consists in the elimination of one of the necessary steps prior registering an enterprise or an organizational branch of a foreign company in the commercial register, which is the obligation to apply to the Trade Licensing Authority for a trade licence certificate.
Consequently, on the basis of data from the information systems of public administration authorities, the Trade Licensing Authority shall issue a trade licence immediately after the registration of the enterprise or organizational branch of the foreign company in the commercial register. Registered persons may use this method of establishment only if they seek to register an object of business which is included in the relevant list according to the law.
The last but not least, it should be underlined that even in this simplified method of establishment it is necessary to verify integrity of a head of the enterprise or the organizational branch of the foreign company. In addition, foreign company has a bank account only at a bank, which has its registered office in one of the EU or EEA member states.
As of February 1, 2023, the registered court is obliged to notify to the commercial register or other register in which the foreign legal entity is registered or in which the foreign legal entity is obliged to file documents the registration of data or the deletion of data on the enterprise or on the organizational branch of a foreign legal entity with its registered office in one of the EU or EEA member states, through the system of interconnection of registers.
Legal forms of business entities primarily regulated by EU regulations, which are legally binding for all EU Member States:
A Limited Liability Company (in Slovak: spoloฤnosลฅ s ruฤenรญm obmedzenรฝm) is the most used corporate form and is therefore dealt with in detail in the following parts.
The procedure consists of the following phases:
It is important to stress that a limited liability company acquires legal personality status upon its registration in the Commercial Register.
The incorporation time is approximately 3 weeks after the receipt of duly executed establishment documentation.
The citizens of the EU or EEA (except Slovak citizens) who will form the statutory body have to prove their integrity by obtaining and submitting the criminal record from the state of citizenship or residency (if residing for longer than 6 months in other country than country of their citizenship).
The non-EU or non-EEA citizens, in order to become members of the statutory body, shall have a residence in Slovakia.
Under Slovak law, the company shall have registered seat in the territory of Slovakia. The document proving the seat (confirmation with the seat in the premises) is the obligatory annex to the Registration application.
A Limited Liability Company may be established by a sole shareholder or by more shareholders, in both cases it is irrespective of whether they are a legal or a natural person. In respect of one shareholder there are the following restrictions:
The maximum number of shareholders is limited to 50.
The registered capital must be at least of EUR 5,000 with a minimum contribution of EUR 750 of each shareholder. Contributions can be monetary or non-monetary, while an official appraiser must value a non-monetary contribution.
At least 30% of each shareholderโs monetary contribution, and in cases of non-monetary contributions at least 50%, must be paid up before the application for the registration of the Limited Liability Company is filed at the Commercial Register. The contributions do not have to be paid to the bank account and for the purposes of registration, the person administering the contributions will issue an affidavit declaring that the respective contributions have been paid up. If the Limited Liability Company is founded by a single entity, the registered capital must be paid up in full.
A general meeting is composed of all shareholders and decides on all major issues as the appointment and dismissal of the executive directors, modification of the statutes and Memorandum of Association/Foundation Deed, increases and decreases of the registered capital.
The statutory body of the Limited Liability Company is formed by one or more executives (executive directors). Only a natural person can be appointed as an executive director. In the event that there are several executive directors, each of them is entitled to act individually on behalf of the company unless stipulated otherwise in the Memorandum of Association/Foundation Deed.
Establishment of a supervisory board is optional. If it is established, the supervisory board must be composed of at least three members appointed by the shareholdersโ meeting.
The activity would be regarded as an unauthorized trading if the person systematically, independently, on own behalf, on own responsibility, for the purpose of earning profits, without holding a trade licence performs an activity subject to craft, regulated or unregulated trades or licenses.
The fine for unauthorized trading ranges from EUR 1,659 to EUR 3,319. Unauthorized trading can be also considered as an offence under the Slovak Criminal Code.
The Slovak tax system comprises the following taxes:
The tax rates applicable for income derived in 2024 are:
Moreover, an additional tax of 5% is to be paid by the representatives of constitutional bodies (e.g. the President, Members of Parliament) on their employment income.
Certain types of income are not aggregated but are subject to a final withholding tax of 19%, 10% or 7% in the case of dividends paid out by domestic company.
Corporate income tax is levied at a rate of 21%. However, since January 1st, 2021, taxpayers with taxable revenues not exceeding EUR 60,000 per tax period (note: in 2020 the threshold was EUR 100,000; between 2021 โ 2023 the threshold was EUR 49,790) are entitled to apply reduced tax rate of 15%. This is the final tax burden on 2024 corporate profits in some cases because dividends paid out of 2024 profits are not taxed in the hands of shareholder if the shareholders are corporate and based in other than non-cooperating state.
Starting from the 2024 tax period, the minimum corporate tax (commonly known as tax licenses) has been reinstated in the tax legislation, following its abolition from 2017 to 2023. Legal entities are required to pay a minimum corporate tax of between EUR 340 and EUR 3,840 based on the amount of taxable income. Only a limited number of exceptions from the payment of the minimum tax are allowed, such as companies in bankruptcy, companies in their initial taxable period, non-profit organizations, etc.
Export of goods and services is zero rated.
Intra-Community supplies of goods are zero rated under certain conditions.
Excise duties are levied on mineral oil, beer, wine, spirits, electricity, coal, natural gas and tobacco products.
Levied on motor vehicles and trailers in categories L, M, N, and O if registered in Slovak Republic and used for business purposes.
Special taxes cover special duty paid by regulated industries and special levy on non-life insurance premium. Further, in 2023 and 2024, companies operating in the oil, gas, coal and refinery sectors shall pay a special solidarity contribution.
Moreover, there are local taxes to be paid, e.g. real estate tax.
For more details about taxation in Slovakia, download our free 2024 Tax Guideline!
Investment incentives are serious arguments in favour company formation in Slovakia. As an EU member country, Slovakia must ensure compliance with EU rules. In general investment incentives (or state aid) are linked to the region where the investment takes place and the European Commission has determined which regions are entitled to receive aid and the amount of aid each of those regions may receive. The connection with a certain region is one of the fundamental characteristics of the incentives and their provision shall serve to support not only foreign, but also Slovak investments.
In general, there are four categories of projects that can be supported by the investment incentives for company formation in Slovakia:
Each category has specifically defined conditions which shall be met in order to apply for the investment incentives. The incentives are provided in general in the form of:
The provision of the state aid is governed in particular by the European Union law that forms the basic legal framework also for the Slovak authorities.
Legally recognised corporations in Europe take on many forms. We decided to shed some light on useful legislation insights, general incorporation requirements and characteristics of a LLC or Limited Liability Company in Europe.
Moreover, we decided to compare the legal aspects of LLCs in the Czech Republic, Hungary, Poland, Romania, Slovakia and Ukraine to provide a comprehensive yet clear overview of the requirements in the region.
Dive into the general features of LLCs, such as the basic characteristics of founders, minimum capital nature and limits, types of contributions and payment deadlines, guarantees required by shareholders, incorporation time, obligation of VAT registration, and much more.
CZECH REPUBLIC
Natural persons or legal entities
No. of founders: Unlimited
HUNGARY
Natural persons or legal entities
No. of founders: Unlimited
POLAND
Natural persons or legal entities
No. of founders: Unlimited
ROMANIA
Natural persons or legal entities
No. of founders: up to 50
SLOVAKIA
Natural persons or legal entities
No. of founders: up to 50
UKRAINE
Natural persons or legal entities
No. of founders: Unlimited
CZECH REPUBLIC
Minimum capital: CZK 1
Minimum contribution: CZK 1
Type of contribution: Monetary / non-monetary
HUNGARY
Minimum capital: HUF 3,000,000
Minimum contribution: HUF 100,000
Type of contribution: Monetary / non-monetary
POLAND
Minimum capital: PLN 5,000
Minimum contribution: PLN 5,000
Type of contribution: Monetary / non-monetary
ROMANIA
Minimum capital: RON 1
Minimum contribution: RON 1
Type of contribution: Monetary / non-monetary
SLOVAKIA
Minimum capital: EUR 5,000
Minimum contribution: EUR 750
Type of contribution: Monetary / non-monetary
UKRAINE
Minimum capital: Not specified
Minimum contribution: Not specified
Type of contribution: Monetary / non-monetary
*2 – 4 weeks at the notary
*after submitting documents to a state register
CZECH REPUBLIC
CZK 6,000
HUNGARY
No fee for the court procedure
POLAND
PLN 600
(PLN 350 in case of registration via S24 platform)
ROMANIA
From February 2017, the Trade Register fees for incorporation have been removed, only Official Gazette publication fees are applicable
SLOVAKIA
EUR 150
UKRAINE
No state fee for registration
First of all, the definition of the permanent establishment and the establishment of business should be clarified. Unfortunately, there is not a unified glossary amongst the Hungarian laws which can serve as a base for some precise descriptions in laws. In the lack of such glossary, there is no other solution, but to respect the separate legislationsโ own terminology in case of all regulation. In most cases, the legislations include the definitions in respect of the most important notions occurring in them, where not, there is a need to consider whether any other act considers to be the former background in law and if it includes the definition of the notion in question. If not, the secondary legislations will remain.
So the permanent establishment and establishment of business concepts should not be (just) examined in corporate law perspective but also from corporate income tax and value added tax point of view as well.
According to point 33, paragraph 4 of the Act LXXXI of 1996 on Corporate Income Tax (hereinafter referred to as Act on CIT) permanent establishment is a permanent business location, device or equipment, where and/or with which the taxpayer is engaged in business activities in whole or in part, regardless of the title under which the taxpayer is using it.
The term of permanent establishment includes especially the place of management, representative established with domestic seat, the office, the factory, the facility, the workshop, the mine, the oil or gas well, or facilities used for natural resource exploration, exploitation. The legal definition clearly highlights that the permanent establishment does not depend on the title of use, which is may be owned by the undertaking, but it can be rented as well.
Consequently, if the foreign company is in the possession of an office in Hungary, or has even just a rented, hidden work desk where it carries on business activity with the purpose to achieve corporate profit, this fact alone rises a permanent establishment and causes corporate income tax registration and payment obligations on behalf of the foreign company.
Of course, all rules must be applied in the light of international conventions. Thus, if there is a tax treaty to avoid double taxation between the state of foreign company and Hungary, then the contained provisions of permanent establishment should be applied. Here we note that the wording of permanent establishment recommended by the OECD Model Convention is almost completely identical to the one included in the Act on CIT.
According to point 2, paragraph 259 of the Act CXXVII of 2007 on Value Added Tax (hereinafter referred to as Act on VAT) permanent establishment is a geographically isolated area established outside of the headquarters established to economic activity for an extended period of time, where other conditions required for the stand-alone continuation of the economic activity โ independently from the seat – are actually available. Thus if the company is in the possession of above mentioned physically existing place, then it will have registration obligation (also) according to the Act on VAT, i.e. a tax number should be requested in Hungary.
However the VAT is specialized in the sense that there are cases when the foreign company must obtain for a tax number in Hungary, despite the fact that there is no permanent establishment from VAT point of view. The reason is that VAT liability can not only arise in connection of permanent establishment, but simply regard the nature of single transactions (due to the place of performance).
We note that even the structure of the tax numbers can be different depending on the fact if they were requested in connection with permanent establishment determined by the Act on VAT or Act on CIT (or both). While the last two digits of tax number requested by taxpayers only having permanent establishment under Act on VAT, is in each case “51” (KAIG), the tax number of taxpayers having permanent establishment under Act on CIT, contains the site code of the relevant territorial tax authority. However, in the last case only if the permanent establishment exists physically and not only due to the so-called โvirtual permanent establishmentโ because of dependent agents.
It is evident that both the Act on VAT and the Act on CIT and all the tax treaties define the cases when a foreign company should apply for a tax number in Hungary.
After done, we could stopโฆ we might think. Unfortunately, no. This picture is tinged (overshadowed) by the Act XXIV of 1988 on the investments of foreigners in Hungary (hereinafter referred to as โInv. of for. in Hun.โ).
Point c, paragraph 2 of the Inv. of for. in Hun. aligns, which cases are specified by the law. Accordingly, foreignersโ economic establishment in the territory of Hungary means the facilities, premises, office, shop or other places, equipment or means of fixed equipment used to perform economic activity carried out effectively and durable, independently, commercial scale โ regularly, to achieve profits beside economic risk-taking.
Under the law, determined in point 1, paragraph 3, foreigners may carry out independent, business-like economic activity in the territory of Hungary only in one of the following forms:
Accordingly, in principle economic activity can be performed only in form of any type of establishment prescribed by the law.
However, the same paragraph (2) includes some exceptions to the general rule.
In case the foreigner does not employ employee inland (which exposure is valid also for the employment of foreign employeesโ secondment or posting to Hungary), then the following activities can be carried out without the obligation of creating a Hungarian form of business:
Under certain conditions it is possible to continue economic activity without permanent establishment, however the conditions are even limited. As mentioned above, if the activities carried out by a foreign company in Hungary cannot be categorized into any of the activities listed above , then in principle the foreign company must be settled in Hungary, regardless of whether it has an employee in Hungary or not.
Of course, this legislation should also be applied in accordance with the relevant international conventions, as stated in paragraph 6. Thus if it is provided otherwise by the applicable international treaty or the general effective, directly applicable legal act of the European Union, the provisions contained therein should be valid.
Therefore, the permanent establishment defined by the relevant tax treaty on avoiding double taxation must be examined in each case, because it is feasible that although according to the Inv. of for. in Hun. settlement obligation arises for the foreign firm, the activity performed does not create a permanent establishment in Hungary according to the tax treaty. But more interesting is the case when according to the tax treaty permanent establishment arises for the foreign company, since in this case it also must be examined whether according to the Inv. of for. in Hun. also arises permanent establishment obligation. It cannot be stated that if a foreign company has a permanent establishment under the tax treaty in Hungary, then its activity will consider as durable and long lasting performed also according to the Inv. of for. in Hun. In fact, even if it is considered as durable and long lasting performed, further investigation is needed as the activity could belong to one of the exceptions. However, the assessment is complicated by the general interpretation, which according to if an activity causes permanent establishment according to the tax treaty, then it cannot be treated as temporary and is to be considered as sustained and regular according to the Inv. of for. in Hun. as well. Assuming, but not allowing the correctness of this interpretation, we realize the contradiction that applying related rules of the tax treaty and Rules of Taxation, there is a theoretical possibility to fulfill the corporate income tax obligation in the possession of a tax number but without the presence according to the Hungarian company law, however, due to the strict rules of the Inv. of for. in Hun. such cases are virtually inconceivable. As a typical example letโs imagine a construction which exceeds one year. In this case the majority of the tax treaties of Hungary considers the building site as permanent establishment which is then automatically considered as a permanent establishment by economic reasons also according to the Inv. of for. in Hun, and it does not belong to the exceptions. But even if it would belong to the exceptions, it is hard to imagine that the foreign company does not delegate at least one employee to Hungary to supervising the work and ensure the quality.
Thus the case when according to the tax treaty permanent establishment arises but according to the Inv. of for. in Hun. not, beyond the exception cases, is only be imaginable if the latter act does not consider the activity as systematic, durable and long lasting continued. However, this cannot be stated safely in any cases and because of this there is no common practice regarding the treatment of such cases, therefore it cannot be always clearly decided in connection of continuing the specific activity whether the permanent establishment in Hungary of the foreigner is needed or not. Moreover, it raises the question whether our national legislation is in line with the EU principle of free movement of the services or not.
The above shows that the three legislations define separate definitions of permanent establishment. However, while the Act on CIT and the Act on VAT allows the continuation of the activities after tax registration but without having permanent establishment, the Inv. of for. in Hun. includes clear rules on what activities can be performed only in the possession of tax number, without having establishment according to the (company) law.
If you like our writing, please share it. Please feel free to contact our tax advisors in further permanent establishment related issues.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and approximately 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 60 jurisdictions with more than 7,000 professionals, we support over 80,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 800,000 pay slips globally.
Sign up and get free access to our expert knowledge and valuable insights. You can unsubscribe from our mailing list anytime. Check also how we handle your data: Privacy policy | GDPR statement.
Already subscribed? Confirm your e-mail address below and receive your PDF directly in your inbox.
