Forms of conducting business activity in Poland

27 | 01 | 2017

Piotr Kopeć

Forms of conducting business activity in Poland

Polish law stipulates the principle of freedom of business activity. Business activity in Poland may be conducted in different forms. In conformity with Polish Law, in particular with The Code of Commercial Companies that regulates the main categories of commercial companies, the possible forms of business activity are listed below.

Individual business activity.

Small-scale business activity. This type of enterprise is usually owned and run by one individual. It is a simple and inexpensive to form. It needs to be registered in Central Business Activity Record and Information (CEIDG). All the profits and the losses implied by this kind of business accrue to the owner. Income of a person conducting individual business activity is subject to personal income tax (PIT).

Registered Partnership.

A registered partnership is a partnership which operates a business under its own business name and is not another commercial company. Each partner shall be liable for the obligations of the partnership without limitation with all his assets jointly and severally with the remaining partners and the partnership. The articles of association shall be made in writing, or else they shall be invalid. It shall be registered in National Court Register (KRS). The partnership does not pay income tax on the income it earns. The partners pay either personal income tax (PIT) or corporate income tax (CIT).

Professional Partnership.

A professional partnership is a partnership created by partners for the purpose of pursuing a profession in a partnership which operates a business under its own business name. The partnership may be formed for the purpose of pursuing more than one profession, unless a different law provides otherwise.Persons qualified to pursue the following professions may become partners in the partnership: advocate, pharmacist, architect, civil engineer, auditor, insurance broker, tax adviser, stock broker, investment adviser, accountant, physician, dentist, veterinary doctor, notary, nurse, midwife, legal adviser, patent attorney, property appraiser and sworn translator. It shall be registered in National Court Register (KRS). Every partner has to pay taxes separately and is liable for the obligations of the partnership.

Limited Partnership.

A limited partnership is a partnership whose purpose is to operate a business under its own business name, at least one partner of which is liable to the creditors for the obligations of the partnership without limitation (the general partner) and the liability of at least one partner (the limited partner) is limited. The articles of association of a limited partnership shall be made in the form of a notarial deed. It shall be registered in National Court Register (KRS). Each of the partners has to pay taxes separately.

Limited Joint-Stock Partnership.

A limited joint-stock partnership is a partnership whose purpose is to operate a business under its own business name, at least one partner of which is liable to the creditors for the obligations of the partnership without limitation (the general partner) and at least one partner is a shareholder. The statutes of a limited joint-stock partnership shall be made in the form of a notarial deed. This type of partnership requires a minimum share capital of 50,000 PLN. It shall be registered in National Court Register (KRS). The partnership pays corporate income tax (CIT at a rate of 19%) on the income it earns.

Limited Liability Company.

This is the most common form of economic activity. A limited liability company may be incorporated by one or more persons for any purpose allowed by law unless the law provides otherwise. The share capital of the company shall be at least 5,000 zlotys. The articles of association shall be made in the form of a notarial deed. Limited Liability Company. Limited Liability Company is represented by a the Board Directors. The shareholders in Limited Liability are not liable for the company’s obligations, they bear a risk up to the value of shares contributed. The Board shall consist at least of one person. Rules of representation can be freely formed in the Articles of Association of the Company. It shall be registered in National Court Register (KRS). It is a separate legal entity, it is taxed by Corporate Income Tax (CIT).

Joint-Stock Company.

The Joint-Stock Company is a legal entity designated to developing business at a large scale. A joint-stock company may be formed by one or more persons. A joint-stock company may not be formed exclusively by a single-shareholder limited liability company. It is a legal entity with a separate legal personality from its stockholders. The share capital of the company shall be at least 100,000 zlotys. Polish Joint Stock Company is represented by a the Board Directors. The Board shall consist at least of one person. Rules of representation can be freely formed in the Articles of Association of the Company. The supervisory board will exercise permanent supervision over all the areas of the company`s operations. It shall be registered in National Court Register (KRS). Joint-stock company is a separate legal entity, it is taxed by Corporate Income Tax (CIT).