IS IT WORTH INVESTING IN POLAND?Poland is one of the best places to start a business. Why is it worth investing in Poland? Check the reasons why investing in one of the largest Polish cities, for example Warsaw, Wroclaw or Krakow, is a good idea.
10 reasons why it is worth investing in Poland:
1. Attractive location
Poland is considered to be the "heart of Europe" – the central location makes it an excellent location for companies directing their business to the eastern and western part of the continent.
2. A developing economy
The Polish economy is one of the fastest growing economies among European countries.
3. Political stability guaranteed by the EU and NATO
Membership in the EU and NATO is a confirmation of historical political stability and commitment to free market principles.
4. Qualified workforce
A large number of universities (about 430) operating in Poland provides easy access to qualified and educated specialists in various fields. Graduates of academic centers are experts in computer science, modern technology and other technical fields. Most young Poles have a good command of foreign languages, and Polish scientists and engineers are specialists valued around the world.
5. Labour costs
Labour costs are much lower compared to other EU Member States.
6. Large domestic market
Poland, which joined the EU on May 1, 2004, as the largest market in Central and Eastern Europe and the sixth most populous European country in a row is now one of the most important member states. The average economic growth for Poland in 2018 was 5.1%, and the total for European countries was 1.9%.
The consumer market in Poland is about 40 million people.
8. Business conditions
The World Bank's reports 'Doing Business 2010-2017' have identified Poland as a country that continuously improves the conditions for ease of doing business.
9. Poland is one of the largest beneficiaries of the EU budget
In 2014-2020, Poland received about 82.5 billion euro from the EU budget for the cohesion policy and 32.09 billion euro for the agricultural policy.
10. Poland is one of the leading countries in the UNCTAD 2014-2016 research on global investment prospects. According to The UNCTAD's World Investment Prospects Surveys, Poland was ranked 13th as the best host for FDI in the world and 4th in Europe in 2014-2016. The UNCTAD's World Investment Report of 2015 ranked Poland as the 20th best host for FDI in the world and 10th in the developing world.
TYPES OF BUSINESS ACTIVITY IN POLANDThe constantly growing number of foreign entrepreneurs conducting business activity makes the Polish investment potential still grow.
The first step to start a business is the choice of legal form. LIMITED LIABILITY COMPANY (LLC)
The activity conducted as a limited liability company (LLC) is a guarantee of separating the company from the shareholders or the sole shareholder. It means that the shareholders are not responsible for the company's possible debts. LLC is the most frequent choice of foreign investors.
Benefits connected with running a limited liability company:
- low operating costs,
- the possibility to start business immediately after signing the articles of association,
- a quick process of registering the company in the National Court Register (KRS),
- limited liability of shareholders,
- low share capital,
- clear rules of conducting business.
A company may be acquired by one or more persons or by another entity – Polish law does not prohibit the acquisition of LLC by another single-member limited liability company. The minimum initial capital is PLN 5,000 and the minimum nominal value of each share is PLN 50. The shareholders have the possibility to contribute the initial capital in cash or in kind.The three bodies that LLC may have are:
1. Management Board.
2. Supervisory Board.
3. General Meeting of Shareholders.
The Supervisory Board is obligatory when the company has more than 25 shareholders and its share capital exceeds 500 000 PLN.
The duties of the management board are:
- representing LLC before third parties,
- responsibility for the company's affairs.
The General Meeting of Shareholders is all shareholders of the company. The Supervisory Board (consisting of at least three members) is elected by a resolution of the General Meeting of Shareholders. Its task is to control the company's operations.The shareholders of a limited liability company do not bear total liability for debts or liabilities of LLC – their liability ends at the amount of the contribution in cash or in-kind contribution to the share capital.
JOINT-STOCK COMPANY/PUBLIC LIMITED COMPANY (PLC)
The liability of shareholders of Public Limited Company is similar to the liability of shareholders of LLC, however, the company's authorities are obliged to fulfill additional tasks and the regulations contained in the Commercial Companies Code are more restrictive. The legal form of PLC is mainly used for searching for PE (private equity) / VC (Venture capital) investors, for business planning IPO (Initial public offering) and by law, when such a legal form is required, for example for banks, pension funds and other financial institutions.
The minimum share capital for a joint stock company is 100 000 PLN, while the minimum nominal value of shares is 0,01 PLN.A joint-stock company may have managing bodies such as:
1. Management Board of the company.
2. Supervisory Board.
3. General Meeting.
The Management Board of PLC and the Supervisory Board act on principles similar to those of the governing bodies in LLC. The shareholders do not bear full responsibility for possible obligations of the company – the shareholders' obligations relate only to the investment made in the amount of the company's share capital.
The General Meeting of Shareholders created by the company's shareholders performs the duties specified in the company's statute and the Commercial Companies Code. The General Meeting should be convened within six months from the end of a given financial year – the agenda is determined by law.
An enterprise operating under its own trade name is a general partnership – a company belonging to at least two partners. Their rights and obligations are defined in detail in the signed contract of the partnership.Each of the partners bears unlimited responsibility for all obligations of the general partnership.
A limited partnership is associated with unlimited liability of general partners. Limited partners are liable for obligations limited to their contribution to the partnership.
LIMITED LIABILITY PARTNERSHIP
A Limited Liability Partnership is a legal form used primarily by professionals such as doctors, lawyers and tax advisors. It is a type of company run to provide specialist services. The obligation of the company and the liability of other partners does not arise as a result of the partner's professional activity.
PARTNERSHIP LIMITED BY SHARES
It is one of the rarely used types of business activity. Partnership Limited by Shares requires the presence of a shareholder and a general partner. A general partner is a partner with unlimited liability and a shareholder may be a regular partner.
LIMITED LIABILITY COMPANY (LLC)Limited liability company is one of the most popular legal forms of business activity. LLC has many advantages, but it is not free of disadvantages. What advantages and disadvantages does a limited liability company have?
Advantages of LLC:
- relatively low share capital (the initial capital is minimum 50 000 PLN, and the nominal value of the share is minimum 50 PLN – the shares in the company may or may not be equal),
- the process of assigning NIP and REGON numbers (NIP and REGON numbers are assigned automatically by the court within a few days after the registration of the company in the National Court),
- registration of the company via the Internet (LLC can be registered via the Internet - the simplified procedure applies to companies with standard terms and conditions of the signed articles of association),
- limited liability of the company's shareholders (shareholders of a limited liability company are liable for the company's liabilities only up to the share capital)
- a disregarded entity (possibility to conduct large scale operations with limited risk and individual management of company's activities)
- no ZUS (LLC is not obliged to pay ZUS if it has at least two shareholders),
- full accounting (keeping detailed accounting is an opportunity to control settlements with employees and contractors - monitoring payments, debts and tax liability).
- company operating on the basis of a notarial deed (every change concerning the company's functioning requires signing a notarial deed - the exception is contrach company over the internet),
- double taxation (LLC pays CIT, while the company's taxable income paid as dividends requires personal income tax (PIT),
- obligation to keep full bookkeeping (full bookkeeping requires formalisation of the system for recording economic events),
- high cost of bookkeeping (the need to record all economic events and the complexity of tax law for companies requires specialist knowledge and detailed financial services provided by a specialized tax company),
- annual accounts (LLC is required to submit annual accounts to the court and the IRS).
ESTABLISHING AND REGISTERING AN ENTITYThe basic step is the choice of the legal form of activity – among foreign investors the most popular are limited liability companies and joint-stock companies.
Procedures related to the establishment of LLC and PLC
1. The articles of association certified by a notary public:
• preparation of documents and signing of a ready-made contract should take place in the presence of a notary public (the maximum amount of fees for the preparation of a notarial deed of the articles of association including the tax on civil law activities amounting to 0.5% of the original capitalization of LLC is 10 000 PLN plus VAT),
• the standard articles of association can be found on the following website: https://ems.ms.gov.pl, the company can be established online without the need for notarial certification (standard forms of articles of association are available in the system of the Ministry of Justice – in order to establish a company, the shareholders only need to register on the platform and sign the articles of association with an electronic signature).
2. Payment of the share capital to a company bank account:
• a company bank account is one of the basic requirements for establishing a business in Poland (the documents required to open an account may vary depending on the bank chosen),
• the share capital must be paid into the account before the documents are delivered to the court – LLC pays the whole amount of the initial capital, and PLC pays at least 25% of it.
3. Registration in the National Court Register:
• after registration in the National Court Register, the company is automatically assigned a NIP number (tax identification number) and a REGON number (statistical number) used by other state authorities, such as the Social Insurance Institution (ZUS), Tax Office or Statistical Office. The costs associated with the establishment of LLC are 500 PLN for registration in the National Court Register and 100 PLN for publication in the official court bulletin.
4. Registration of the company in the tax office and VAT register:
• a newly registered business entity should submit a NIP-8 form containing supplementary data – the form should be delivered to the head of the tax office within 21 days from the date of registration in the National Court Register (KRS),
• it is the entrepreneur's obligation to register the company for VAT purposes – the company should be registered with the date of the first transaction covered by the tax obligation (the registration application should be accompanied by a confirmation of the company's registration in the National Court Register and information on the company's seat),
• companies conducting commercial activity within the EU should additionally be reported as foreign trade activity. Registration for income tax purposes is free of charge, the entry in the VAT register is a cost of 170 PLN if the entrepreneur wants to receive a confirmation of registration.
5. Hiring employees:
• the entrepreneur who intends to employ employees should:
a) register with the Social Insurance Institution (ZUS),
b) report to the National Labour Inspectorate.
Procedures related to setting up a sole proprietorship
Registration of a one-person business is a simple and quick process, which can be carried out in the relevant city office or voivodeship office.
First of all, it is necessary to submit an application for entry in the register of business activity, and then classify the activity and apply for NIP and REGON number. The next step is to register with the Social Insurance Institution (ZUS) and possibly with the tax office as a VAT payer (VAT-R).Natural persons register their business activity in CEIDG – Central Business Activity and Information Register. The CEIDG-1 form can be found either stationary at the office or online at the website: https://prod.ceidg.gov.pl.
TAXATIONPoland has direct and indirect taxes. Direct taxes include:
- income taxes (PIT, CIT),
- taxes on civil law transactions,
- other taxes related to inheritance, real estate, means of transport, agriculture, etc.
- VAT, which is a tax on goods and services,
- excise tax.
Since the date of Poland's accession to the EU member states, the Polish tax system has been compliant with the applicable EU regulations.Income tax
The Corporate Income Tax Act defines income tax for joint-stock companies and limited liability companies – CIT tax. The standard tax rate is 19% of the tax base, i.e. income from the activity of joint-stock and capital companies. The reduced CIT rate – 9% – applies to small taxpayers, i.e. companies in which the amount of income did not exceed a certain amount and persons just starting their business.
The 19% rate is also calculated on the basis of the tax base:
- share in the company's profits, for example in the form of dividends,
- of business activity after submission of the flat rate tax return.
Personal income tax
An individual becomes a Polish tax resident when Poland is his or her permanent residence. It is assumed that the resident spends at least 183 days in the country during the calendar year.
Persons who temporarily stay in Poland for more than 183 days during the year do not have to be Polish tax residents – the condition is employment in a company with foreign capital participation, in a Polish representative office of a foreign company or in a bank.
A non-resident is a person residing in Poland for a period shorter than 183 days per year. In such a case, only the income obtained herein is subject to taxation in Poland – remuneration for work performed in the country is recognized as Polish income regardless of the place of payment. It is worth knowing that Poland has signed a number of agreements with other countries to avoid double taxation of income.
Income tax is calculated in the amount of 17% (up to 85 528 PLN) or 32% (for the surplus over 85 528 PLN) of the income on account:
- employment contract,
- civil law contract,
- of economic activity,
- rental and lease,
- activities performed in the company, for example, being a member of the management board.
The tax on civil law activities depends on the type of business activity. The deadline for tax payment is 14 days from the date of transaction.
The rates of the tax on civil law transactions are as follows:
- 0.5% (granting a loan to a partnership, increasing the company's share capital),
- 1% (sale of property rights, for example sale of shares).
- 2% (sale of things, for example, sale or donation of real estate).
The VAT is understood as:
- tax on goods and services resulting from their sale, where the seller is obliged to present an invoice and pay the tax amount to the tax office,
- the input tax that the buyer pays to the seller.
VAT rates in Poland:
- 23% – all activities except for those listed below,
- 8% – municipal services, newspapers and magazines, processed food (sauces, soups, sugar), passenger transport, medicines and medical equipment, catering services except for the supply of beverages, construction services related to social housing and some services related to agriculture,
- 5% – food products such as fish, meat, poultry and dairy products,
- 0% – export of goods, international transport and intra-community supply of goods,
- the tax exemption applies to financial services and the supply of goods for tax-free business.
Companies whose annual turnover does not exceed 200 000 PLN are not obliged to make an entry in the register of VAT payers.A company with a turnover exceeding 200 000 PLN per year is obliged to register as a VAT payer. The intention to make intra-community transactions should be reported on the VAT-R form to the head of the tax office before the operation is made (before the delivery or purchase of goods from or to the company operating on the territory of another EU country).
JPK VAT file is a list of all company transactions made in a given month – purchases and sales. An entrepreneur should send the file to the office every month.The JPK VAT file is submitted electronically and should contain not only a list of financial transactions but also an electronic signature of all authorized entities. Confirmation of sending the file is the Official Receipt Confirmation (UPO), i.e. an official confirmation of receipt sent by the office.
The application for sending JPK VAT files together with a manual and a sample JPK_VAT_002.csv file is provided by the Ministry of Finance. A JPK file can consist of several components, for example JPK_KR (accounting books), JPK_MAG (warehouse) or JPK_FA (invoices).
JPK VAT – penalties
The penalties for tax crimes and violations are quite severe, so it is worth avoiding mistakes that may adversely affect the company's operations. The basis for imposing a penalty on the entrepreneur is primarily failure to submit the JPK VAT file, but also late submission of the file and a number of other errors.
The penalty for incorrect preparation of the JPK VAT file is up to 2 800 PLN. Failure to send the file within the specified time limit is a possibility to receive a penalty of up to 120 daily rates set individually by the court. The best solution is to order an experienced tax company to keep accounts. An entrepreneur who keeps accounting on his own should invest in professional software which will enable immediate implementation of changes in tax law.
THE ANNUAL TAX REPORT FORMSPIT-16A
The form is intended for entrepreneurs using a tax card. The method requires the use of the PIT-16 and PIT-16A form, which contains information about health insurance premiums paid and deducted from the tax card. The PIT-16A declaration should be submitted by January 31 of the following tax year.
Entrepreneurs accounting for the flat rate tax fill in the PIT-28 form. The print takes into account income from running a small business or car rental. The deadline for submitting the PIT-28 return is 31 January of the following tax year.
PIT-36 is a form designed for people who, regardless of their source of income:
- conduct non-agricultural activity taxed on general principles (tax scale),
- they receive income from the proceeds:
- rental, sublease, lease, rental and similar agreements settled on general terms,
- sources of income located outside the country,
- the winnings are taxed on a general basis.
The PIT-36L form is a form that is filled in by taxpayers accounting for the flat-rate tax, i.e. companies or unusual types of agricultural production. The document does not allow for combining different sources of income and full-time work requires additional completion of the PIT-37 form. The deadline for submitting the PIT-36L is April 30 of the year following the end of the tax year.
PIT-37 is a form designed for taxpayers who settle on general terms, i.e. according to the tax scale, and receive only income paid by the employer. The income included in PIT-37 should come from providing work for companies based in Poland. The date of submitting the settlement is 30 April. PIT-38
The PIT-38 printout takes into account the capital gains from the purchased shares and the income from the sale of shares on the stock exchange, company shares or financial derivatives or the rights attached to them. Declarations for the previous tax year should be submitted by 30 April of the following year.
FIXED ASSETS, INTANGIBLE ASSETS, AMORTIZATIONFixed assets are buildings, commercial premises, machinery and equipment or means of transport that meet the following conditions:
- are owned or co-owned by the entrepreneur,
- are complete and fit for use on the date of acquisition,
- the expected period of their use is longer than one year,
- their value exceeds 10 000 PLN,
- are used for the company's purposes or put into operation under a lease or leasing agreement.
Fixed assets register is a company document in which such data as:
- company name / name and surname of the entrepreneur,
- address and NIP number of the company,
- the year for which records are kept,
- the asset number and date of its acquisition,
- date of release for company use,
- indication of a document confirming the purchase,
- detailed indication of a tangible or intangible asset,
- symbol of CFA fixed assets classification,
- initial value of the fixed asset,
- depreciation rate,
- value of improvement,
- updated initial value,
- depreciation value for a given tax year,
- date of liquidation,
- cause of liquidation.
Depreciation is the settlement in time of funds spent on the purchase of a specific fixed asset.
An entrepreneur may make a one-off depreciation if the value of assets does not exceed PLN 10,000 or the value of assets under de minimis aid does not exceed PLN 100,000 or EUR 50,000 (in the case of small companies and taxpayers who have just started operating in a given tax year).
The regulations regulate the issues of one-off depreciation of fixed assets allowing for depreciation in the amount of PLN 100,000 for new fixed assets from groups 3-6 and 8 of KŚT. Such solution does not apply to intangible assets, as well as to fixed assets from groups 1-2 KŚT (buildings, premises, civil engineering objects) and group 7 KŚT (means of transport).
Valuation of fixed assets for depreciation purposes
The basis for calculating the depreciation of a used fixed asset is its initial value – the valuation should be carried out in accordance with the provisions of the balance sheet and tax law, which determine the initial value of assets on the basis:
- purchase price (fixed assets purchased in Poland and abroad),
- production costs (own production),
- market value.
Types of depreciation of fixed assets
1. Linear depreciation
The most popular method of depreciation of fixed assets. The entrepreneur assumes that the consumption of company assets will be the same throughout the life of the fixed asset. On this basis fixed depreciation write-offs are established.
2. Degressive depreciation
The method taking into account changes in the depreciation value over time - the entrepreneur assumes that the depreciation value changes due to changes in the profitability of assets due to their useful life. Degressive depreciation applies to machines and means of transport, with the exception of passenger cars and fixed assets from groups 3-6 and 8 of the COST.
3. Natural depreciation
The natural method of depreciation is based on the physical wear of the fixed asset. The entrepreneur assumes that the wear and tear of the asset is identical for each unit of work and the depreciation depends on the amount of work done in a given period of time.
Depreciation – rates
The amount of depreciation is determined based on the classification of fixed assets (CFA). All depreciation rates are included in Appendix 1 to the PIT and CIT Act.
What is CFA – classification of fixed assets?
The classification of fixed assets is a systematized list of possible fixed assets used to establish depreciation rates and conduct statistical research. The new CFA classification entered into force on 1 January 2018 – the current depreciation rates for fixed assets can be found here. Depreciation and company costs
Depreciation of a fixed asset is not a company cost if:
- the value of a passenger car exceeds the current limit - for non-electric cars: 150 000 PLN, and for electric cars: 225 000 PLN,
- the purchase of the fixed asset was financed entirely from the grant received,
- the fixed asset was used free of charge.
COMPANY’S CAR1. The car as a fixed asset
The car may be entered in the company's fixed assets register. A company vehicle used for business purposes should be properly valued – usually it is assumed that the initial value of the car is its purchase price.
The invoice for the purchase of the car should be issued to the entrepreneur's data, and the purchase cost must include the cost of the vehicle and the cost of its transport. In case of importing the car, its cost will also include customs and excise duty.
The vehicle qualifies as a company car after preparing and signing a special declaration of carriage for business purposes only: „I declare that on .................... I have transferred the ............... passenger car for business purposes. Number of car registration.........., Vintage ..... Engine ..........., vehicle mileage .......... km. The starting value of the car is ......... zł, determined on the basis of VAT invoice / purchase agreement no. ............... dated .............”.
The car as a business cost
Depreciation is calculated each month and then deducted from income tax. For car depreciation, the linear method is most often used – the vehicle is depreciated evenly throughout its life cycle. A car loses its value every month after it has been entered in the fixed assets register.
For new cars classified as EC 741, the basic annual depreciation rate is 20%, which means that the vehicle is depreciated over 5 years. A used car is a vehicle that has been used by the previous owner for at least 6 months – in this case, the annual depreciation rate is 40% (depreciation lasts 2.5 years).
The entrepreneur should remember the limit set for the depreciation of company cars. The limit is 150 000 PLN for non-electric passenger cars and 225 000 PLN for electric passenger cars. The value of a car exceeding the set limit is not a cost surplus – depreciation should be calculated only on the indicated limit.
VAT for cars being a fixed asset
An entrepreneur may deduct the whole amount of VAT if he provides the tax office with a VAT-26 return with information about using the vehicle for business purposes only. Otherwise, the purchase of a car allows only half of the input tax to be deducted.
Income tax on cars being a fixed asset
The amendment to the Personal Income Tax Act as of January 1, 2019 has eliminated the register of passenger cars used by companies. Entrepreneurs may include in tax deductible costs only 20% of the value of expenses related to the operation of a private car in the company. The remaining 80% of expenses are not considered as tax deductible costs. A rented car entitles to deduct 75% of the amount on the invoice for fuel, car wash, car parts, repair or insurance of the vehicle.
Sale of a company car as company revenue
Funds from the sale of a company car are classified as "other income" and tax must be paid on them, taking into account possible deduction of costs. The entrepreneur should pay 60% of the value of the vehicle if the car was depreciated at 20% and was sold after two years of use.
If the car has been fully depreciated, it is considered that there is no tax deductible cost and the entrepreneur only pays the tax due on the actual selling price. The sale of a company car is subject to VAT – the sales invoice should include the 23% tax.
Withdrawal of a company car for own use
If the entrepreneur does not sell the car within 6 years from the withdrawal of the vehicle from the register of fixed assets, the car will not constitute income for the enterprise. However, the sale of the car will mean that it will have to be included in the operating income regardless of whether the company is still operating.
Selling a car withdrawn from the company for the entrepreneur's own use within 6 years gives the right to tax the undepreciated initial value of the vehicle. Additionally, the entrepreneur should pay VAT.
Partial or total deduction of VAT obliges to pay the tax at the moment of withdrawal of the car from the business. If the entrepreneur has not deducted the VAT on the purchase of the car, he does not have to pay the due tax on the withdrawal of the car from the business.
Donation of a company car
The donation does not constitute an income of the donor and the tax obligation applies only to its beneficiary. The donation may be tax-free – for a spouse, child, parents, stepfather, siblings, stepfather or stepmother, it does not require payment of tax if it is reported to the tax office within 6 months from the date of its transfer.
If the value of a donation from a given person within the last 5 years does not exceed 9 637 PLN or if the donation agreement is in the form of a notarial deed, the beneficiary is not obliged to report it to the tax office.
2. Private car used for business purposes
An entrepreneur using a private vehicle for business purposes may include 20% of the operating costs incurred as a deductible cost. Operating costs include costs related to fuel, car parts, car wash, insurance or car repair.
3. Company car and operating lease
A leased car is used on the basis of a vehicle rental agreement – it is not the property of the company, therefore it is not subject to depreciation. The entrepreneur is obliged to pay leasing instalments indicated on the VAT invoice.
A car used for both business and private purposes entitles to deduct 50% of VAT. Deduction of 100% tax applies only to cars used exclusively for business purposes confirmed by the VAT-26 declaration. Failure to submit the form to the tax office means that 75% of the operating and leasing costs can be taken into account and 50% of the tax deducted.
4. Company car purchased for credit or financial leasing
A car purchased on credit or a car purchased under financial leasing is the property of the company and can be depreciated. Interest can also be deducted each month.
The entrepreneur can deduct 50% of the VAT if the company car is also used for private purposes and 100% of the tax if the vehicles are only for business purposes.
STOCKTAKING – INVENTORY AT THE END OF THE YEARThe inventory prepared by the entrepreneur should contain such data as:
- company name/name and surname of the owner,
- date of the document,
- the next number of the census sheet,
- detailed product description,
- unit of measure,
- quantity of goods at the time of the census,
- price per unit of measurement,
- the value resulting from multiplying the quantity of goods by their unit price
- total census value,
- clause: "The census is completed on the item...",
- signatures of persons participating in the inventory and the signature of the company owner.
The entrepreneur is obliged to make an inventory on 31 December and 1 January – the document is prepared only once and the inventory prepared at the end of the year is also valid on the first day of the following year.
The amount of costs incurred by the company in a given tax year, which constitute tax deductible costs, depends on the initial and final value of the inventory indicated in the annual census.
THE COST OF STAFF EMPLOYMENTEmployment Contract
The company's balance sheet is a summary of information about the initial and final value of the company's condition – the remuneration of an employee employed under an employment contract is only 60% of the employer's costs.
The employer deducts from the employee's gross monthly salary:
- advance payment for income tax (17%),
- insurance rates (approx. 13.7%).
The gross remuneration of an employee is not the only cost of the employer – the average cost of employing an employee on an employment contract is about 20.74% of the gross remuneration amount. The employer is obliged to cover costs such as:
- medical examinations performed by an occupational doctor,
- training in occupational health and safety (BHP),
- safety measures and work clothes,
- workstation equipment.
The cost of employment depends on the employee's employment status:
- in the case of persons whose fee-for-task agreement is the only source of income, the employer's costs will be the same as in the case of employment under an employment contract - gross salary and social security contributions,
- in the case of persons employed at the same time in another company under an employment contract, if the remuneration is lower than the minimum amount of remuneration, the employer pays gross remuneration and all social security contributions,
- in the case of persons who are simultaneously employed in another company on the basis of an employment contract, if the remuneration is higher than the minimum amount of remuneration, the employer employing the employee on the basis of a civil law contract pays only social security contributions,
- in the case of employees under 26 years of age employed on the basis of a fee-for-task agreement, the only cost to the employer is the gross salary.
This type of contract does not oblige the employer to pay social security contributions – the only cost is the employee's gross salary.
The obligation to pay ZUS contributions arises when the employee has an employment contract and the employer who is a party to the contract also becomes a party to the employment contract and when the recipient of the work commissioned for the civil law contract is the employer.
SALARIES AND SICK LEAVEThe sickness benefit applies:
- employees with an employment contract,
- employees for whom the employer pays a voluntary sickness insurance contribution.
The period of sickness benefit payment depends on the age of the employee – usually 33 days of sick leave per year. Employees over 50 years of age receive the benefit payment from the employer for 14 days during the year. After this time, the obligation to pay the sickness benefit lies with ZUS. Electronic Sick Leave
Electronic Sick Leave (e-ZLA) is a document issued by doctors from January 1, 2016 - until the end of 2017 sick leave was also issued in a paper version.
The electronic form of exemption is to facilitate the circulation of documents. The condition for issuing e-ZLA is having an active profile in PUE ZUS service.
Registration on the platform can be done here by selecting one of the available options:
- for entrepreneurs,
- for companies,
- for private individuals.
Electronic sick leave is an element of the system allowing access to the data of the insured patient and his employers, and in the case of sick leave due to the obligation to take care of family members, also of individual family members. All data is verified with the applicable regulations by a computer system which checks the date of incapacity for work and the statistical number of the disease.
The e-ZLA electronic release issued by a doctor does not require independent delivery to the employer – the document is sent to the company electronically and the employer has the possibility to check the correctness of the released sick leave. The ZUS PUE profile also allows you to send ZUS Z-3 form to ZUS.
No ZUS PUE profile
The lack of a registered employer profile on the ZUS PUE platform excludes the possibility of delivering sick leave by e-mail. The doctor should provide the patient with an e-ZLA printout, which should then be delivered to the employer.
PIT-11 – THE DEADLINE FOR SUBMISSIONPIT-11 allows you to settle your income tax – the form should be supplemented with information about your income and collected advance payments for income tax.
According to art. 39 par. 1 of the PIT Act, the PIT-11 form should be prepared and delivered to the tax office by the end of February of the year following the end of the tax year. Failure to meet the indicated deadline may result in imposing a financial penalty on the entrepreneur.
The employer should prepare the PIT-11 at the request of an employee who is no longer an employee of the company (the cooperation was terminated by notice, by mutual agreement of the parties, disciplinary) or retired in a given year. The PIT-11 form should be delivered to the tax office within 14 days from the date the employee submits a written request to prepare the document.
Failure to provide the office with the annual tax calculation on the PIT-40 form may result in receiving information about PIT-11 (art. 39 sec. 1 of the PIT Act). If an employee was on maternity leave for the entire tax year and did not receive any employee benefits during that period, the employer is not obliged to prepare a PIT-11.
The deadline for preparing the PIT-11 and delivering the document to the tax office is 28 February of the following tax year.
SUSPENSION OF OPERATIONS IN POLANDRunning a business is a risk of losing a company's financial liquidity – a period of low income can happen in any company.
Polish legislation does not require absolute closure of a company. An entrepreneur with a low income due to seasonality of his business and a temporary lack of orders resulting in a lack of funds necessary to cover current costs may suspend the company's activity. The rationale for such action may also be a change of owner, illness of the entrepreneur, going abroad or other random event – it is the entrepreneur who decides to temporarily suspend the activity.
Who has the possibility to suspend the business activity?
- an entrepreneur who runs a sole proprietorship,
- an entrepreneur who does not hire employees.
- the entrepreneur is not obliged to pay any advance income tax,
- the entrepreneur does not pay insurance premiums
- the entrepreneur must submit VAT returns within the prescribed time limits.
- suspension of the company's activity means discharge from the Social Insurance Institution (ZUS) – after 30 days from the date of payment of the last health contribution the entrepreneur loses the right to health services,
- the period of suspension of the company's activity is not included in the entrepreneur's years of work.
The minimum period of suspension of business activity is 1 month, while the maximum period of suspension is 24 months.The date indicated in the application for suspension of business activity should be the date not earlier than the date of submission of the document – it is the date of commencement of the suspension of business activity, which lasts until the moment of resuming the activity.
How to suspend the business activity?
The application for the suspension of business activity should be submitted to CEIDG - Central Register and Information on Business Activity. The application to CEIDG is at the same time an application for entry in the register – in order to suspend the activity, box 1.3 should be checked.
Detailed information on submitting the application for suspension of business activity is available in Polish and English here.
What activities can an entrepreneur perform when his activity is suspended?
Suspension of the activity means that the entrepreneur does not have the right to run the company's activity and obtain income therefrom. When the activity is suspended there is no possibility to depreciate fixed assets. Services previously performed in the course of business can be performed on the basis of a service contract.The Act on the Freedom of Economic Activity during the period of suspension of business activity indicates the activities that can be performed by the entrepreneur during the suspension of activity.
What can an entrepreneur do?
- the entrepreneur may perform activities necessary to maintain and secure sources of income (paying rent, media),
- the entrepreneur may handle dues and liabilities arising before the date of suspension of business activity,
- the entrepreneur may dispose of property and equipment (for this purpose a VAT return must be submitted),
- the entrepreneur may take part in court, tax and administrative proceedings related to the conducted business activity,
- the entrepreneur can fulfill the obligations regulated by law (for example, submit an annual tax return),
- the entrepreneur may submit to fiscal control on the conditions provided for persons conducting business activity.
The application to resume the business activity requires the submission of a form to be removed from the CEIDG-1. The entrepreneur who does not submit the application to resume the activity within the next 24 months is removed from the register of entrepreneurs.
Is it possible to prolong the suspension of the activity?
Polish law does not provide for the possibility of extending the period of suspension of the company's activity. An entrepreneur who wants his activity to remain suspended may resume the activity and then suspend it again using the CEIDG-1 application.
SEARCH FOR COMPANIESThanks to the Polish Ministry, it is possible to search for a company listed in the national online register – here.
What are you looking for?
1. Proprietary Companies (The Limited Liability Company – LLC, Joint-stock Company / Public Limited Company - PLC) or Private Companies (Limited Partnership - LP, Partnership Limited by Shares) – Using the KRS number, other identification number or data related to the location of LLC/PLC on the website you can search for a company online. Additionally, the register of insolvent debtors allows to check if the potential contractor is nobody's debtor.
2. Civil Partnership or Sole Proprietorship – by means of a website available in Polish and English the entrepreneur can be found in the Central Information Register: https://prod.ceidg.gov.pl.
3. Status of the entity in VAT – checking the status of the entity in VAT is possible thanks to website: https://ppuslugi.mf.gov.pl/_/.
4. VIES VAT number validation – website: https://ec.europa.eu enables checking the validity of the company's VAT number assigned by any Member State on the list. The website is available in several languages.
VIRTUAL ACCOUNTINGManaging company's accounts does not require leaving home – financial services are facilitated by the Internet and virtual accounting. Internet services enable financial management, making payments and communicating with customers. You can run your business and deal with accounting from any place in the world, either by yourself handling the finances of your company or by outsourcing this task to a professional tax company.
What are the benefits of virtual accounting?
Managing company's finances is a very important and delicate issue, therefore the choice of the right tax company should be well thought out. It is worth to cooperate only with proven, reputable accountants who will take full care of the financial development of the business. The only thing an entrepreneur needs is a device with access to the Internet – modern tools are available on the network, which greatly facilitate business. Virtual accounting does not require leaving your home or office to discuss important financial issues – the whole process takes place remotely, allowing you to quickly and conveniently deal with the financial aspects of doing business. The complexity of such a solution is chosen by both small business owners and entrepreneurs running their businesses in large cities such as Warsaw, Wroclaw, Poznan or Krakow.
Virtual accounting provides access to various types of accounting services - from the start of business to daily accounting services and financial consulting. A great advantage is also a program for issuing invoices, a comprehensive tool that greatly facilitates the functioning of the company.
This form of bookkeeping is particularly useful in the case of small companies, where entrepreneurs have to cope with excessive duties and lack of time.Virtual accounting allows you to manage your company's finances from the smartphone screen – most accounting platforms offer mobile versions of websites to meet the expectations of your customers. Virtual accounting is an ideal solution, but the problem may arise if there is an error in accounting: who is responsible for the mistake? Stationary accounting offices have insurance against such an error. In the case of virtual accounting, it is worthwhile to carefully analyze the terms of the concluded contract beforehand – the platform will not always be responsible for the mistakes made.
How to conduct accounting in order to combine the advantages of both its forms - traditional and virtual?
It is enough to follow a few tips:
- order your bookkeeping using an online program,
- store documents in the "cloud",
- if necessary, use the tax company's help desk,
- manage finances without meetings with the accountant – only via the Internet,
- save time using the expertise of a specialist who takes care of optimal tax reduction, represents the company in the authorities and presents possible solutions to possible problems,
- settle accounts with contractors on an ongoing basis by ordering the issuance of invoices to the accountant,
- with the help of an accountant, take care of the company's finances and the correct balance of accounts.
3 REASONS TO CONSIDER A CHANGE OF ACCOUNTANT
The most important issues when setting up your own business are accounting and monitoring the financial results of your company. A good accountant is the basis without which running a business will be very difficult and sometimes even impossible.How to find the best accountant for your company?
The choice of an accountant should be based on the professionalism and competence of the candidate. Experience is a guarantee of protection against errors that can negatively affect the functioning of the company, therefore the accountant must understand the nuances and various aspects of tax law. Practical use of the secrets of law should maximize the benefits for the company – unfortunately, the mere fact that an accountant performs his duties properly is not enough. A person responsible for financial issues must provide comprehensive financial services, taking into account both everyday activities and effective tax protection.
Tax settlement and what next?
The ideal accountant is a person who not only adjusts his services to the market segment in which the company operates, but also individually adjusts to the needs and expectations of the business partner. Such comprehensive services supported by qualified staff and many years of experience can only be provided by a specialized tax company.Cooperation with a tax company is a cooperation based on partnership bringing mutual benefits.
It is worth noting the scope of services provided by a tax company. Some companies limit themselves to basic accounting services without the possibility to adjust the offer to the individual needs of the company.
Quality and trust are the basis
The condition of cooperation between an entrepreneur and an accountant is trust. Trust in business is based on entrusting financial issues and relying on the qualifications of the accountant, in return the accountant should provide financial service to the company at the highest level. High quality of services minimizes the risk of making mistakes, which may have unpleasant consequences for both parties.
Proven, reputable tax company is a guarantee of flexible approach to the client taking into account the individual needs of each company. An experienced accountant also means time saved on tracking changes in tax law and taking care of the correctness and order of accounting documents. The difference between an accountant and a competent accountant is significant, therefore it is worth choosing a tax company that will take care of the company's development in a comprehensive way, not limiting itself to filling in tax returns.