Starting A Business In Poland Explained

Poland is a country that offers great opportunities for entrepreneurs. There are many reasons why people would want to start a business there, including its growing economy and skilled workforce.

Here, we tell you everything you need to consider before starting your business. From the economy, to local hiring laws and more. Let’s get into it…

 

Why Is Poland An Attractive Place To Start A Business?

 

Perfectly placed for a European hub, Poland is an exciting place to start a business.

Part of this is that Poland offers a relatively low cost of living compared to Western Europe. Warsaw, Kraków, and Wrocław are among the more expensive cities, while smaller cities and rural areas are more affordable. According to Numbeo, the cost of living for a single person in Poland is less than $800 a month.

Living expenses like rent, utilities, and groceries are also generally lower than in many EU countries, making it an attractive place to live and work.

 

Poland’s Economy

 

Poland’s economy is growing, but at a slightly slower rate than other economies.

Following a boom in 2022, the economic growth slowed considerably in 2023, primarily due to high inflation which peaked at nearly 11%. Despite this, the economy is recovering. The World Bank is forecasting economic growth to rise to 3% in 2024 and 3.4% in 2025.

However, Poland still faces challenges when it comes to growth. Geopolitical tensions, particularly the ongoing war in Ukraine, continue to disrupt supply chains and increase energy costs.

Additionally, increased government spending is likely to increase the country’s debt, raising some concerns about its future.

 

Considerations Around Hiring Polish Employees

 

Before starting a business, it’s important to get to know local employment laws. There are two main types of contracts for hiring Polish employees: fixed-term and open-ended.

The standard workweek in Poland is 40 hours, with a maximum of 8 hours per day. Overtime is regulated and requires additional pay or compensatory time off.

Poland has a national minimum wage, which is adjusted twice a year. Employers must contribute to social security, covering healthcare, pensions, and other benefits. Employees are also entitled to additional benefits like paid vacation, sick leave, and parental leave.

Polish labour laws prioritise employee rights. Termination procedures are strict. Trade unions are common and play a significant role in workplaces.

Regular inspections by the National Labour Inspectorate mean that businesses have to stay compliant with labour laws, and there can be severe penalties for non-compliance.

 

 

Who Can Start A Business In Poland?

 

The rules around starting a business in Poland depend on where he owners of the business is from.

• EU, EEA, USA, and Swiss Citizens: Can choose any legal form of business in Poland, including sole ownership businesses, partnerships, or companies.
• Citizens Of Other Countries: Must have valid legal stay in Poland that allows them to open a business. They can start certain types of businesses like limited partnerships or companies, but may not be able to set up as sole traders. The type of legal stay needed is one of the following:
  • A permanent residence permit
  • An EU long-term resident permit
  • Temporary residence permit for business
  • Refugee status
  • A valid Pole’s Card (Karta Polaka)

 

What Are The Types Of Business in Poland?

 

Before you set up a business in Poland, it’s important to figure out what structure you want to employ.

Options include:

• Sole Trader (Jednoosobowa Działalność Gospodarcza): This is the simplest way to set up a business. There is no initial capital needed, registration is free and can be done online and the owner is solely responsible for all taxes and debts.
• Commercial Companies: Include limited liability companies (LLCs), joint-stock companies, and partnerships. These are usually more difficult to set up and require more admin.
• Branch: Foreign businesses can open a branch to perform business activities in Poland, however this is limited only to countries that have signed ratified international agreements with Poland.

 

Is Registering A Business In Poland Difficult?

 

Poland has a relatively easy registration process, often described as a one-stop shop. Through the Biznes.gov.pl portal, entrepreneurs can complete most applications online, including registering with the National Court Register (KRS) or the Central Registration and Information on Business (CEIDG), depending on the type of business they want to open.

For foreign investors, the Limited Liability Company is the most common business structure. It provides limited liability protection and requires a minimum share capital of PLN 5,000 (around €1,100).

To establish your business, you’ll need documents such as the Articles of Association, identification for founders, and proof of registration fees. While the fees are relatively low, they can vary depending on the business structure.

 

How Do Taxes Work In Poland?

 

In Poland, the standard rate for corporate income tax is 19% on taxable profits.

However, startups can benefit from a reduced rate of 15% if their annual revenue is below €1.2 million in their first year.

The standard VAT rate in Poland is 23%, applicable to most goods and services. There are also reduced rates of 8% and 5% for essential items like food, medicine, and books. VAT registration is mandatory if your annual turnover exceeds PLN 200,000 (around €45,000).

Social security contributions need to be paid by both employers and employees, with rates changing depending on income level. However, given that foreign taxes can be difficult to manage, talking to a local tax advisor is definitely the best way to go.

 

Setting Up A Business In Poland

 

Setting up a business in Poland can be an exciting experience. First, look at the laws and agreements between the country you have citizenship in. Then, think carefully about the type of business structure you want to employ, and why.

Finally, if in doubt consult a professional to guide you through the process. You’ll want to make sure it’s done right from the start to set yourself up for success!