How to set up your business in Poland (2014)

How to set up your business in Poland

Introduction

Running a business is a journey. Certainly the most difficult moment of this journey comes with making the decision to start up and taking the first step in escalating the idea to reality. One of the first questions and doubts that come up at this initial stage is “Where should I start my business adventure in order to grow it in the most comfortable, stable and predictable conditions, surrounded by conducive macro economical indexes and supported by competent, hardworking and kind people.” Poland is definitely such a place.

Stating a business in Poland opens up for entrepreneurs one of the largest European markets, where over 38 million potential clients live. Furthermore, Poland’s convenient location in the heart of Europe, with its well-developed transport connections, facilitates the establishment of business contacts with partners from all countries in Western and Eastern Europe. Poland is in a good economic situation and its huge progress in the years 1995-2011 is best illustrated by average GDP increase of 4,8% per year. The stable macroeconomic environment, strong economic foundation,

1. The business plan and development strategies05 Business plan 08 Development strategies

2. Structure – how to set up your business properly 11 Establishingcompanies,branchoffices,agencies11 The procedure of establishment of a company15 Additional costs16 Selected forms of companies17 Limited partnership18 Accountancy Bureau19 Bookkeeping20 Taxes

3. Cash – your business base25 Acquiring capital 26 Banking relationships27 NewConnect IPOs28 Bond issue on WSE Catalyst

4. Responsibilities – how to avoid getting lost 31 Ongoing tax advice32 Tax optimisation33 Optimisation of structures and transactions34 Tax Compliance35 Transfer pricing

Contents

large domestic demand and growth in foreign trade helped Poland not only to avoid a recession in 2009 but also to register the highest growth during the crisis among all EU countries. Foreign investors who plan to start up in Europe often choose Poland as a location for new investments. This information was confirmed in a survey by Bloomberg 2013 where Poland was considered to be the best country for doing business in Central Europe.

In this guide we will provide you with detailed information on particular issues essential to starting and running a business in Poland.

In this guide designed for start-ups and early stage companies, we focus on the four cornerstones of a successful start-up:1. The business plan and development strategies2. Structure – how to set up your business properly3. Cash – your business base4. Responsibilities – how to avoid getting lost

Anna PisarekDirector – establishment of business

The journey of a thousand miles begins with a single step.Confucius

„Anyone can run a small business and anyone can run a large business. The hard bit is getting from small to large.”

3 2

Business plan

A reliable business plan as a tool to make a decision. • Abusinessplanisanexplanationfordecision- makers on how the business idea fits into the economic realities and how the owners want to bring it into life.• Areliablebusinessplanisatooltosupport accurate business decisions which facilitates the understanding of conditions, both internal and those related to the environment around the company. As a decision support tool, a business plan, in addition to the descriptive element, should also contain the financial assumptions in an Excel file, which allows them to verify and analyze the impact of changes in the key assumptions on the expected results and the need for cash. Why prepare a business plan?The best business plan answers the following questions:• Whatdoyouwanttoachieve?Whatisyour uniquesellingpoint?Whywouldcustomers buyfromyou?• Howdoyouintendtoachieveyourgoals? Whatarethekeymilestones?Whatarethe critical success factors/barriers to achieving yourgoal?Whatareyougoingtodoabout them?• Whatfundingisrequiredtoachieveyourgoal? Which milestones will the first fundraising achieve?

If you fail to plan, you plan to fail.The main elements of a business plan are:• Executivesummary–anoverallviewofyour business and its potential.• Backgroundanddescriptionofthebusiness – the rationale behind the business.

• Managementandorganizationalstructure – how your company will be organized and managed.• Marketresearchandthemarketingplan – a comprehensive analysis of market potential and dynamics.• Pricingstrategy–thepricepointchosenwill affect the image of the product or service you are offering, what gross profit per product, and in total, is expected.• Channelsofdistribution–thegeographicarea – whether it is better to sell directly, through retail outlets or wholesalers.• Product/servicepromotion–advertising, personal selling and sales promotion.• Salesmanagement–outlinedetailsofthesales team and track record; what selling methods will be employed; what are the sales volume and activity targets; how long is the sales process; what procedures are in place for handlingcustomercomplaints?• Salesforecasts–asalesforecast,onwhich monthly cashflows and budgets can be based, should be prepared.• Theoperationplan–thissectionshould describe the type and function of the equipment you are buying so that the reader will have a clear image of your operational environment.• Forecastprofitandlossaccountand cashflow – projected results for the business demonstrating initial capital required, break-even point, potential return on investment and over what period.

At Grant Thornton, we understand that a business plan is an integral element of communication with investors and financial institutions in the process of seeking funding

SWOT analysis – critiques the business’ Strengths, Weaknesses, Opportunities and Threats using a balanced score card approach.

Assessment of business profitability – ratio analysis, which shows the effectiveness of the market.

Porter’s Five Forces – views the business from the position of suppliers, buyers, competitors, threat of substitute goods and threat of new entrants and is a particularly good way of portraying the business visually.

1. The business plan and development strategies

5

analysis of resources

market offer

environmentanalysis

costsforecast

analysis and financial

planning

the efficiencyof the company

salesforecast

organization and its suppliers

marketingstrategies

customersand competitors

for the implementation of business ideas and therefore needs to provide its readers with reliable information on the proposed project. Review by an objective adviser on the surroundings conditions, the organization of the business and the current state of its finance can assess the reliability of forecasts and diagnose the key risks to the success of the business. As a result, the beneficiaries are both the co-financing institution and the company itself.

We value close cooperation with you, the client. We believe that the combination of client knowledge of the business with our experience and independent approach allows us to create the best solutions. That’s why we offer services related to the business plan, which aims to determine the profitability of the business investment.

The assessment is based on a business plan, with the financial section presented using

the discounted cash flow model. It may be expanded to include additional market analyses, a market strategy framework, extended SWOT analysis and elementary assessment of business profitability.

Project scope is tailored to the client’s individual needs. It most often comprises the following elements:• Evaluationofthecompany’scurrentsituation (finance, product, market)• Descriptionoftheinvestmentproject• Collectingallthedatanecessarytodevelop the cash flow model, and all other information important to the project (market environment – legal limitations, competitors, potential customers)• Buildingthebusinessplanincludingthe financial model• Projectviabilityassessment• Sensitivityanalysis• Formulatingrecommendations

The work is realized in several stages:• Overviewofprinciplesandconceptsof the business and the scope of information available to the company.• Environmentanalysis(customersand competitors) and the description of resources (organization and its suppliers).• Constructionofprofit–costassumptions, capital expenditure and working capital elements that determine the demand for financing.• Thedevelopmentofbusinessplan documentation and discussing conclusions.

As a result, the client receives a report in the form of a business plan, containing financial simulations, as well as assumptions, sensitivity analysis and investment project assessment.


7 6

Grant Thornton offers a development strategy service that involves supporting groups of companies by identifying areas with potential for boosting the bottom line. Grant Thornton advisers take into account various ways of realising synergies, particularly through centralisation and outsourcing of some functions. We recommend best practices in business operations.

By combining knowledge on the functioning of processes inside businesses with long-term experience in defining business strategies and professional analytical skills, we can develop several variants of optimisation activities and assess their economic viability. As a result of our work, the company’s management can make decisions which will have a positive impact on business value. Depending on the size and nature of the group of companies, the scope of works differs.

It most often comprises the following stages:• Gettingtoknowthebasicsofthegroup’s operations• Determiningthescopeoftheproject• Collectinganalyticaldata,e.g.through visiting businesses comprising the group• Dataanalysis• Developingandpricingpotentialscenarios• Verifyingthepreliminaryfindingsinaseries of meetings with management staff• Formulatingconclusionsand recommendations

Moreover,wecanactivelyparticipatein restructuring chosen processes or assist by providing ongoing monitoring of the implementation of recommended changes.

Development strategies


Companies heading into the future should know their goals and priorities, the chances

of success and the obstacles to their

achievement.

9 8

2. Structure – how to set up your business properly

In the business start-up environment, it is easier and relatively inexpensive to get the corporate and tax structure right at the start. The alternative is to reverse out of an existing structure at a later date which causes expense, disruption to the business and is generally a wasteful use of an enterprise’s resources and time when both of these are in short supply. We recommend focusing on the things and structure that matter right at the start, e.g. the possible exits, expansion opportunities and tax optimization strategy in order to avoid expense at a later date.

The goal of the service is to provide comprehensive support in the process of establishing companies, as well as branch offices and agencies of international entities. Tasks covered by the service include many variants of the clients’ circumstances in the context of international tax law.

The extensive experience and knowledge of Grant Thornton advisers guarantee efficient registration of an entity meeting the client’s real needs.

The gap between success and failure

is quite small – small things matter

A good start is half the work!

Establishing companies, branch offices, agencies

11

The procedure of establishment of a company

Stages of establishing a limited liability company:

Stages of registering the LTD in NCR:

the articles of association

– a notarial deed

Version 1

signing the lease contract

establishment of a bank account

registering for the VAT

application to NationalCourt Registrer – one-stop shops –

application to National Court Registrer, Central Statistical Office,TaxOffice,Social

InsuranceOffice

Version 2

the articlesof associationa notarial deed

signing the lease contract

establishment of a bank account

registering for the VAT

applicationto the Central

Statistical Office

assigning REGONnumber

applicationto National

Court register

registrationform to Social

Insurance Office

applicationto the Tax Office

assigning Tax Identification

number

No. Specification Comments Number of copies

1 The Articles of association – a notarial deed signed by all company partners

Sole shareholder company cannot be set up by another sole shareholder company

3

2 The power of attorney from the shareholders in the form of a notarial deed

If the articles of association are signed by proxy stated by partners

2 (number of copies from each of the partners)

3 Transcript from the trade register attributed to a partner, translated into Polishbyacertifiedtranslatorand bearing the apostille clause

If the partner is foreign legal person 3

4 Current copy from NCR (National Court Register)

If the partner isa legal person from Poland Notary will download printout from NCR service

5 Appointment of the Board of Ltd. Management may be indicated in the text of the articles of association or in the notarial deed agreement covering the articles of association, but separate from the articles.

6 Resolution of the management board / meeting of shareholders consenting to participate in Ltd.

The parent company articles of association may oblige the company to obtain the consent from an appropriate company unit that is supposed to be a partner.


1 Proof of payment to NCR – (PLN 500 for Registration of the Company in the NCR and 100 PLN for publication in MSIG)

1

2 Statement by all board members that contributions to the share capital were fully paid by all the partners

Signed by all members of LTD management board

1

3 List of partners Signed by all members of LTD management board

1

4 Signature pattern of each member of the board

Form of a notarial deed 1 from each member

5 The statement of no criminal record and not performing a public function from board members

Individual signature by LTD board member 1 from each member

6 The statement of the names and addresses of the members of the Board

Signed by all members of LTD management board or proxy

1

7 A statement that not every/one member has a Social Security Number

If the LTD is a sole shareholder company; Signed by all members of LTD management board or proxy

1

8 Statement of the address (and registered office)ofonlymemberofLTD

If the LTD is a sole shareholder company; Signed by all members of LTD management board or proxy

1

9 Statement of the LTD address andregisteredoffice

Signed by all members of LTD management board or proxy

1

10 IDcard/passportcertifiedbyanotary with an apostille and translated into Polishbyacertifiedtranslator

If member is a foreign person 1 from each member

11 The statement of no criminal record If member is a foreign person obtaining the certificate,bearingtheapostilleclauseandtranslatedbyacertifiedtranslatorwillspeed up registration in the NCR

1 from each member

12 The power of attorney with proof of payment PLN 17

If the application is rendered by proxy; stamp duty paid according to the seat of the submission

1 for each place of submission (min. 4)

13 Application forms for NCR Signed by the members of the Board in accordance with the principle of representation or proxy

1 for each form


13 12

Additionally, according to the principle of one-stop shops:

Steps after registration:


1 IdentificationformNIP-2withattachments 1

2 Document of authorization for the use of officepremises–forexample,thelease

Transmitted to and for the purposesoftheTaxOffice

1

3 Agreement to a bank account / bank declaration / Extract accounts

Transmitted to and for the purposesoftheTaxOffice

1

4 Application form RG-1 with attachment RG-RD

1

5 ApplicationformtoSocialInsuranceOffice(ZUS-ZPA)

1


1 Form KRS-Z3 with KRS-ZY Updating the company data in NCR: NIP and REGON

1

2 Update form – NIP-2 Updating the company data in NIP for REGON; not covered by the rule

1

3 Update form – RG-1 Updating the company data in CSO for NIP; not covered by the rule of one-stop shops; as a rule, there is no need to submit, as the CSO by law shouldreceiveinfofromtheTaxOffice

1

4 IdentificationapplicationVAT-R with stamp duty PLN 170

Not covered by the rule of one-stop shops

1

5 Share Register Registration of shareholders to Share register

The scope of the Grant Thornton works consists of: 1. Identifying all the actions necessary to be taken during the process of establishing a company in Poland2. Preparation of a detailed schedule of establishing the company3. Preparation of a list of documents and information to be received by Grant Thornton from the Principal4. Preparation of a draft of the Articles of Association of the company and consulting it with the Principle5. Preparation of necessary powers of attorney for the Grant Thornton staff members6. Conclusion of the Articles of Association of the company in the form of notary deed7. Preparation of documentation necessary to register the company in the National Court Register (resulting in assignment of the KRS number)8. Preparation of an application to register the company for statistical purposes in the Statistical Office (resulting in assignment of the REGON number)9. Preparation of an application to register the company for a tax identification number in the Tax Office (resulting in assignment of Tax Identification Number)10. Preparation of an application to register the Company for employment purposes in the Social Insurance Office11. Submission of aforesaid documents and monitoring of the process of registration of the company in aforesaid institutions12. Registering the NIP (Tax Identification Number) and REGON (statistical number) in the National Court Register 13.RegisteringthecompanyfortheVAT14. Consulting all legal and tax issues connected with the project

Additional costsThe additional costs of establishing a limited liability company in Poland are, in particular:• RegistrationofthecompanyintheNational Court Register – PLN 500• ObligatorypublicationinMonitorSądowy i Gospodarczy (Court and Business Gazette) – PLN 100• RegistrationforVAT–PLN170• NecessaryCertifiedtranslations–approx. PLN 80 – 100 per page• Stampdutiesonpowerofattorney–PLN17 per submitted copy of power of attorney


15 14

Selected forms of companies


Selected Forms of Companies Registered partnership Spółkakomandytowa

Limited liability company Limited partnership

Limited liability company

it is not a separate legal form, and itsspecificityisdescribed in the following section

minimum capital – – PLN 5 000

minimum number of shareholders

2 2 1 (sole shareholder company)

taxation of company profits

– – 19%

taxation ofassociatesprofits

according to the 19% flatrateorby a progressive 18% and 32%

according to the 19% flatrateorby a progressive 18% and 32%

dividend taxed by19%flatrate

responsibility of shareholders

solidarity and subsidiary of the company, the full responsibility of all partners

the general partner is responsible in solidarity and subsidiary with company and without restriction;limited partner is responsible to the amount of partnership

lack of responsibility of partners, however liability may extend to the members of the Board

company representation

each shareholder has the right to represent the company unless otherwise indicated in the contract

general partner represents the company

members of the Board in accordance with the principle of representation as is set out in the articles of association

A limited partnership enables you to combine the benefits of securing the partners’ personal assets (to a similar extent as in the case of a limited liability company) with cost-effective taxation (flat-rate tax of 19%), which makes it an optimal form of business activity for small and medium-sized enterprises.

The appeal of limited partnerships is reflected in the growing number of entities operating within such a framework. Limited partnerships are established for new business undertakings. In the case of entities already in operation, it is possible to change their legal form to a limited partnership.

Grant Thornton advisers provide comprehensive support in the process of designing an appropriate structure based on the limited partnership model, as well as in the process of changing the legal form. Our extensive experience based on numerous completed projects provides a foundation for making the right choice from among the available variants, and also facilitates implementation.

The scope of services offered by Grant Thornton includes:Establishment of a limited partnership• comprehensivediagnosisofallmaterial circumstances of the client’s situation in order to determine the optimal solution in terms of the ownership structure and implementation process• draftingandagreeingwiththeclientthecontents of the limited partnership operating agreement and, potentially, the general partner’s agreement• determiningtheprinciplesofrepresentation of the limited partnership (general partner’s responsibilities, scope of powers of attorney, signing powers)

Limited partnership• definingtheprinciplesgoverningthetransfer of funds to partners, taking into account their involvement in the activities of the limited partnership• comprehensiveservicesrelatedtotheregistration process of the limited partnership and general partner in the National Court Register, tax office, social insurance institution, statistical office, etc.

Changing legal form to a limited partnership• identificationofallmaterialaspectsofthechange in legal form• recommendationregardingtheapproachto changing the legal form• preparationfortheprocessofchangingthelegal form (identification of the necessary steps and obligations, determining how to interpret transactions taking place during the change process for tax purposes, including identification of potential risks)• developmentofadetailedschedulefortheprocess and optimal delegation of tasks related to individual activities• draftingthenecessaryformalandlegaldocuments relevant to the process (with content agreed with a notary public)• comprehensiveservicesrelatedtotheregistration process with the National Court Register, tax office, social insurance institution, statistical office, and other institutions• assistanceinrelationswithbusinesspartners (including but not limited to banks and financial institutions, public administration bodies and registry courts)• consultationsregardinghowtoreflectthechange in legal form in accounting records.

17 16

Your accountant knows almost as much as you do about your

business. Therefore it is crucial for you to have confidenceinthe people you work

with.

Accountancy Bureau


In Poland, accounting is legally regulated in the Accounting Act of September 24, 1994. (Journal of Laws of 2002 No. 76, item. 694, as amended). Formal guidelines for company accounting are provided in the Act, for example;• acceptedaccountingprinciples(policies)• bookkeepingonthebasisofaccounting documentation• valuationofassetsandliabilitiesand determination of profits or losses• preparationoffinancialstatements• collectionandstorageofaccounting and other documentation; and others.

Supporting the accounting function in startups as well as micro and small enterprises, we fulfill your obligations related to bookkeeping, payroll calculation and accountancy and tax reporting.

Our accountancy bureau provides comprehensive accounting services for businesses, including business registration, legal and tax assistance and bookkeeping in compliance with the Polish Accounting Act. We support our clients in daily settlements as well as in filling tax returns.

The scope of services provided by Grant Thornton’s Accountancy Bureau include the following accounting and payroll services for SMEs:• Businessregistration• Legalandtaxassistanceduringbusinessregistration• Businessaddressrental• Bookkeepingservicescompliantwith the Polish Accounting Act• Payrollcalculation• Taxreturns,statementsforZUS,GUS, NBP, PFRON and Intrastat• BasicHRadministration• Administrativesupport:transfers, invoicing, business travel accounting• Financialstatements• Standardreports

We lift your burden of accounting duties, always ensuring effective and comprehensive accounting services. Cooperation with Grant Thornton will give you the time to grow your business and build confidence that your books are in order.

Tax law and accounting law constitute two independent branches of Polish law, which due to a common area of regulation, include common solutions in some parts. Tax revenues, costs and income are calculated based on accounting records, but due to material differences between the tax law and balance sheet law, they are not equivalent to accounting revenues, cost and income.

Accounting principles cover commercial companies and partnerships and all other legal entities, as well as individuals, civil partnerships of individuals, general partnerships of individuals and professional partnerships, if their net proceeds from sales of goods and services for the previous financial year amount to no less than EUR 1.200.000. • Undertakingsareobligedtoapplythe accepted accounting principles, giving a true and fair view of their property and financial standing as well as financial results.• Themanagerofanundertakingbears responsibility for the performance of the accounting obligations.• AccountbooksarekeptinboththePolish language and currency (not English).• TheFinancialstatementconsistsof: a balance sheet; a profit and loss account; supplementary information, comprising an introduction to the financial statements as well as notes; statement of changes in equity and cash flow.

Bookkeeping• Accountbooksshouldbeopenedwithin 15 days of the date operations commence, which is the date of the first event producing effects of a property-related or financial nature.• Accountbooksshouldbeclosednolater than 3 months after the date ending a financial year. The Financial statement should be drawn up as of the account books closing date.• SubmissionoftaxreturnsCIT-8should be submitted to the tax office no later than 3 months after the date ending a financial year.• TheAnnualfinancialstatementof an undertaking is subject to approval no later than 6 months from the balance sheet date.• Themanagershouldsubmittheannual financial statement to the tax office within 10 days of the date of the approval of the annual statements.• Themanagershouldsubmittheannual financial statement to the Court Register within 15 days of the date of the approval of the annual statements.• Insomecasesthemanagershouldpublish theannualfinancialstatementin“Monitor SądowyIGospodarczy”within15daysof the date of the approval of the annual statements.• Approvedannualfinancialstatementsshould be stored permanently.• Accountbooksshouldbestoredforatleast 5 years.

19 18


TaxesThe structure of the taxation system in Poland is similar to the majority of European countries and includes 10 tax titles. The majority of them are regulated by separate acts. The general material part and the procedure part of the tax law were set in the Act – Tax Code.

Income taxes:• Corporate income tax (CIT) Taxpayers: legal persons, organizational units without legal personality, partners in partnerships who are legal persons, tax capital groups. Tax rates – the basic tax rate equals 19% of the tax base. Taxation period, tax payment the tax year is a calendar year. taxpayer shall calculate and pay tax monthly by the 20th day of the month following the month of earning the income. Tax losses – a loss incurred by a taxpayer during a tax year may be offset against the income generated in the following five tax years, provided that the amount of loss offset in any single year may not exceed 50% of that loss.• Personal income tax (PIT) – is a complex structure including different categories of revenues and income of taxpayers (including revenues from business activities, employment contracts, sale of property rights, dividends received, etc. Taxpayers – all natural persons achieving revenues from sources located on the territory of Poland are taxpayers of personal income tax. Tax rates – in the case of income achieved by natural persons conducting business activities, such persons can select: taxation based on tax brackets progressive tax scale, differentiating the following income thresholds, i.e. 18% and 32%. opodatkowanie19%stopąpodatkową

taxation based on a 19% tax rate (however in the case of selecting flat-rate taxation, the taxpayer loses the right to taxation jointly with a spouse and the right to relief and deductions). It is only for natural persons conducting a business activity. Taxation period, tax payment the tax year is a calendar year. taxpayer shall calculate and pay tax monthly by the 20th day of the month following the month of earning the income. Tax regulations provide for the possibility to select a simplified taxation form including tax card and lump-sum tax on recorded revenues.

Turnover taxes:• Tax on goods and services (Polish value added tax) Polish regulations generally stay in accordance with the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. Tax on goods and services is imposed on: supply of goods and provision of services against payment within the territory of the country; exports and imports of goods; intra-community acquisition of goods against payment within the territory of the country; intra-community supply of goods. Taxpayers – include legal persons, organizational units without legal personality and natural persons operating a sole proprietorship, irrespective of the purpose or effects of activities.

Tax base Tax rate in 2013 Over Up to

PLN 85 528 18% minus PLN 556.02

PLN 85 528 2.45PLN 14 839.02+32% of surplus over PLN 85 528

RegistrationforVATpurposes – before starting anyVAT-ableactivity,taxpayersareobligedto submitaVAT-5registrationformtothehead of a competent tax office. Small entrepreneurs (whose sales value for the previous tax year did not exceed PLN 50.000) or entities performing VAT-exemptactivitiescanfiletheregistrationform, but are not obliged to do so. VATrates–ThebaseVATrateisa23%rate. Additionally, there are preferential 8%, 5%, 0% rates and the so-called exempt rate – “zw”. The tax base – in the case of intra-community acquisition of goods is the amount to be paid by the purchaser. The tax base includes: taxes, customs duties, charges and other similar duties related toacquisitionofgoods,exceptforVAT;additional costs, such as commission, packing, transport and insurance charged by the supplier to the entity making the intra-community acquisition. Documentation duties – taxpayers are obliged tosubmitVAT-7returnsbythe25thdayofthe next month or after informing the head of the competent tax office in the case of quarter periods – by the 25th day of the month following each quarter (except for small taxpayers, whose turnover did not exceed EUR 1.200.000, submitting quarterly VATreturns).Taxpayersmakingintra-community acquisitions or supplies of goods and services are obliged to submit summary information for monthly or quarterly periods, by the 15th day of the month following the month or quarter during which tax was chargeable. Additionally, taxpayers are obliged to draw up INTRASTAT information for monthly periods, by the 10th day of the month following the month during which the transactions took place. • Excise duty – The Polish Excise Duty Act determines taxation of excise duty goods and passenger cars, organisation of excise duty goods turnover and marking goods with excise stamps.

Other taxes have significantly less fiscal meaning:• Tax on civil law transactions – is levied on: sales agreements and agreements on the exchange of goods and property rights, loan agreements, donation agreements, annuity agreements and agreements on the dissolution of co-ownership, establishment of mortgages, establishment of usufruct for consideration and servitude for consideration, irregular deposit agreements, company deeds; amendments to the aforementioned agreements if they increase the tax base; decisions of courts and settlements if they have the same legal effects as civil law transactions subject to taxation.• Real estate tax – is imposed on land, buildings and their parts, structures or their parts related to conducting business activities.• Road vehicle tax – is levied on trucks, buses, truck- tractors and ballast tractors, trailers and semi-trailers with the weight and purpose defined in the Act.• Inheritance and donations tax• Agricultural and forestry tax• Gambling tax

Social security contributions Social security contributions comprise employer and employee social security contributions. Employees (insured persons) are subject to the following mandatory social insurance schemes:• retirementpensioninsurance• disabilitypensioninsurance• sicknessinsurance• insuranceinrespectofaccidentsatwork

Contributions for the above-mentioned insurance schemes are deducted from the amount which is used as the basis for the calculation of contribution rates, i.e. revenue in the meaning of legal provisions on a natural person’s income tax, attained by an employee during a calendar month for work performed within the framework of an employment relationship.

21 20


Social security contribution

Contribution as a percentage of the calculation base

Financing by

Employer Employee

Pension 19.52 9.76 9.76

Disability 8.00 6.50 1.50

Sickness 2.45 2.45

Industrial injures 0.67 – 3.86 0.67 – 3.86

Total in 2013 30.64 – 33.83 16.93 – 20.12 13.71

Social security contributions for a retirement pension and disability pension are made by the employee and by the employer only up to an annual cumulative earnings limit. In 2013 the limit is PLN 111 390. The remaining social security contributions (2.45% to be paid by the employee and 0.67% - 3.86% to be paid by the employer) are made irrespective of the earnings amount.

Moreover,thereisacontributiontotheLabour Fund and Guaranteed Employee Benefit Fund, which are to be financed by the employer. The contribution amounts to 2.45% and 0.10% of gross remuneration.

People eligible for social insurance are subject to health insurance amounting to 9 %. Theregistrationform(ZUSZUA)issubmittedby the contribution payer within 7 days of the commencement of social insurance liability totherelevantbranchofZUS.Themonthlyminimum wage in 2013 amounts to PLN 1 600.

3. Cash – your business base

Contributions are financed by the insured persons and the contribution payer:

22

Acquiring capital


The goal of the service is to support the client in raising the financing necessary for business development.

Grant Thornton advisers determine capital needs and identify the available capital acquisition options, selecting those which best meet the client’s expectations and their business circumstances.

We provide advisory services on acquiring financing from the following sources:• Handlingissuesofbonds,convertiblebonds, senior bonds and floating securities on WSE CATALYST• Handlingprivateplacementsandsupport in public share issues preceding flotation on NewConnect or the regulated WSE market• Werepresentourclientswhenseeking financing from venture capital / private equity / mezzanine funds• Wesupportourclientsinmeetingswithbanks related to applications for investment loans or project finance

Grant Thornton specialists have extensive experience in acquiring financing for businesses. The services we offer are comprehensive and

effective – thanks to our competence and in-depth knowledge of capital raising methods we help you achieve results which were hitherto beyond your reach.

The service comprises the following stages:• Gettingtoknowthebusiness• Developmentoftheprojectexecution strategy, including choosing the method of capital acquisition• Developmentofthefinancialmodel• Developmentofbusinessvaluation (in the case of share issue)• Drawinguptenderdocumentsand distributing them to investors• Draftingappropriateinvestmentagreements• Negotiationswithinstitutionsandinvestors• Closingthedeal–recapitalizationofthe client’s business.

With Grant Thornton service quality is guaranteed – we will do our best to obtain financing for you on the best terms possible. Moreover,ourexpertsminimisetheriskofproject failure due to a lack of interest in the project among potential investors. And seen as our services are comprehensive, the costs of acquiring capital can be reduced.

25 24

Example schedule for the introduction of NewConect.

Decision concerning the strategy of capital raising

Surveys among investors – distribution of teaser

Distribution of offering materials to interested investors

Meetings with investors and negotiations

Shares allotment and cash inflowtothecompany

Preparation of registration document

Fulfillmentofformalprocedures for NDS and WSE

Debut/First day of tradin

Banks are the traditional source of funding for established businesses. Where banks lend to new businesses, borrowers are required to provide significant collateral such as security over personal assets. Banks may also seek undertakings from borrowers such as bank covenants. Banks expect to understand the business, usually requesting a detailed business plan. At the moment obtaining bank finance is slow so it is critical the business plan ticks all the boxes.

Banks are having a tough time too. They may be more cautious and concerned with bad debt, so will need greater persuasion to lend you money. In many areas, new lending will be severely restricted. The banks will focus increasingly on the quality of their loan book, and their key concern will be loan recoverability.

That’s why you should treat your banker as a partner in the business. You need your banker to believe in you and your product as much as you do. You need to get them as excited as you are.

This service is addressed to companies seeking bank financing for their operations and development. As part of the service, Grant Thornton advisers draw up a report describing your planned undertaking in the context of your company’s key business areas and the business sector in which it operates. The document is then

Banking relationshipssent out to banks to determine project financing options and choose the best offer. Our experience enables us to draw up the report in such a way that it highlights the issues of importance to a financial institution and contains all the necessary information. Data provided in the form required by banks facilitate the bank analysts’ job, which in turn accelerates the process of obtaining financing for the company.

The report developed by the Grant Thornton advisory team covers the following scope:• Descriptionoftheplannedproject• Companydescription–businessprofile• Companydescription–legaland organisational aspects• Analysisofthebusinesssector• Thecompany’spositioninginthesector• Financialforecastsdevelopedby the company, covering the planned debt repayment period• Breakdownofbankingproductsusedby the company

The basic version of the service does not include a verification of the company’s financial forecasts. By cooperating with Grant Thornton, you will receive a professionally written report and save time in obtaining bank financing.

NewConnect is a platform for financing and secondary trading organized by the Warsaw Stock Exchange. It is based on the form of the Alternative Trading System (ATS), characterized by simplified requirements in comparison to admission to trading on a regulated market.

NewConnect is primarily dedicated to companies in the early stage of development, with a high potential of growth, seeking capital to raise from several hundred thousand PLN to several million PLN, representing the most innovative sectors of the economy.Raising funds through NewConnect is associated with a number of benefits:• simplifiedformalitiesandproceduresforadmission• lowcostofdebutandlisting• relativelylowcostofraisingcapital.

Presence on the NewConnect market provides a range of benefits associated with being listed as a public company: excellent exposure to business partners, promotion and increased recognition of the company as well as increased credibility from banks and other counterparties perspective. In addition, the issuer receives another opportunity to obtain the financing needed for development by further share issuance.

An initial public offering on NewConnect is a very important milestone in a company’s history, as it introduces the necessary financing for the business and helps realise planned investments and above-average growth rates.

The key to success is not only convincing investors that the company’s development plans are sound, but also finding a compromise between the owners’ and investors’ expectations as to the value of the business. Floating a company on NewConnect takes from 4 to 6 months. The scope of services performed by Grant Thornton advisers includes determining the interest in the company, negotiations and recapitalisation as well as observing formalities.

NewConnect IPOsDetermining the interest in the company includes:• Developmentoftheprojectexecutionstrategy• Drawingupaquestionnairecheckinginterestin the project, which is distributed to investors• Determiningtheinvestors’interestinthecompany• Reviewmeeting

Negotiations and company recapitalisation include:• Developmentofthefinancialmodel• Companyvaluation• Drawinguptenderdocuments• Contactwiththeinterestedinvestors• RoadShow–presentationmeetings• Negotiationswithkeyinvestorsconcerning the investment contract• Companyrecapitalisation

Formal activities include engaging an agent/sponsor of the issue, drawing up the Information Document and preparing applications to the Warsaw Stock Exchange, KDPW, KNF. As a result of these activities, the company is floated on NewConnect. To be able to realise the potential offered by a NewConnect IPO, it is necessary to adapt the company’s organisational structure to stock exchange requirements and to implement public company standards.

NewConnect Authorised Advisers from Grant Thornton provide support to companies in making the necessary adjustments. With our extensive experience we can provide a top-quality service, and cooperation with our NewConnect experts boosts your chances of success on the stock exchange.

The current economy provides many

opportunities to raise capital for development. The key to success is in selecting

the option that is coherent with the plans and goals

of the company, and the perfect execution

of transactions.


27 26

Catalyst is the first organized market of debt financial instruments in Poland. Issuance of corporate bonds on Catalyst enables us to broaden the horizons of investment.

Catalyst debut is preceeded by the submission of an application for the introduction of financial instruments to the market. An attachment to the application should include:• Informationdocument(incaseofprivate placement for alternative WSE market and/or BondSpot) • Informationnote(whereotherfinancial instruments of that issuer are already listed on a regulated or alternative market);• Prospectusorinformationmemorandum (in case of public offering and in case of financial instrument introduction to the regulated market).

Debt securities are traded on two markets: retail and wholesale, managed respectively by Warsaw Stock Exchange and BondSpot. Each of these markets is further divided into two platforms: alternative and regulated markets. Each of the debt instruments can be listed on WSE platform and BondSpot. The goal of the service is to provide advice on raising debt capital in the form of bonds and assistance in introducing companies to the Catalyst market.

As Catalyst Authorised Advisers, Grant Thornton specialists develop business and financial models presenting the company’s appeal to potential investors. We also take care of the formal aspect of the process, including drawing up the necessary documents and collateral arrangements.

Thanks to the extensive experience and expertise of our advisers, the bond issue process and Catalyst début will be conducted in an effective manner. As part of the service, we also provide advisory services in seeking and acquiring investors.

To make sure that all related activities present a consistent business vision, we coordinate the work of all the parties involved, including law firms.

The service covers the following stages:• Developmentoftheprojectexecutionstrategy• Determiningtheconditionsforacquiring debt capital• Negotiationswithinvestors• Acquiringcapital• Compliancewithformalrequirements connected with bond registration and listing• DébutontheCatalystmarket

Competence and experience in Catalyst share issues allow Grant Thornton advisers to minimise the risk of failing to raise capital from investors and the risk of insufficient bond prices.

Bond issue on WSE CatalystIssuers have the possibility to receive authorization for the issue of bonds. As a result of authorization, each series of bonds, which do not necessarily have to be dematerialized, is registered in the publicly available information system of Catalyst. In the alternative trading system issuers of publicly listed debt instruments can cooperate with an Authorized Advisor which supports in complying with disclosure requirements and helps in preparation of the information document, which is the basis for the introduction of instruments to trading. The Public Offering Act defines two ways to conduct a bond issue: via public offering and through private placement.Private placement of bonds is defined as offering of bond securities to fewer than 99 investors identified by name. In this case, it is not required to prepare a prospectus or information memorandum.

decisionconcerningthe strategyof capitalraising

surveysamong

investors– distribution

of teaser

distributionof offering materials

to interestedinvestors

bondsallotmentand cash inflow to the

Company

preparations of registration

dokument

fulfillment of formal

procedures for NDS and

WSE

debut/first day oftrading

meetings withinvestors andnegotiations

formal requirements related to debutidentification of interested investors negotiations and capital raising

2 weeks 6 weeks10 weeks

Bonds – are a debt security issued in series, in which the issuer states that he is indebted to the owner of the bond (bond holder) and is obliged to return the borrowed amount. Provision may be settled in cash or in kind.

Issue Price – the price at which the issuer sells bonds in the primary market.

Example schedule for implementation of the Catalyst through private offer.


29 28

4. Responsibilities – how not to get lost in them

„Why should I use the services of a tax consultant? After all, I employ a good accountant and pay him a lot of money, I always send him to training and subscribe to specialized press. For that, he should take care of my tax affairs. To such framed views of CEOs I always respond with an analogy: when I have an excellent family doctor, but I have a tooth ache, would I go to my doctor or to the dentist? The choice is simple. Similarly, it should be obvious that any accountant who deals with the company books and reporting, providing reports and management information, assessment of agreements, deployment of free cash, supervision of liquidity and many other critical issues, is unable to perform the function of a good tax advisor.”

We provide ongoing tax advisory on an as-needed consultation basis or through continuous cooperation. The service is priced and rendered on the basis of an analysis of the given actual state of affairs and documents (agreements, administrative decisions, etc.) submitted by the client. Client expectations are examined in each instance during an interview.

Depending on the nature of the problem and your expectations, ongoing tax advisory can take the form of:• writtentaxopinions• memossentbyemail• telephoneconsultations• consultationandtrainingmeetings• hotline

Our experience and commitment in getting to know the specifics of your business and your business goals guarantees our very high effectiveness in solving tax problems.

We do not theorise in our opinions, we solve our clients’ problems. We settle more than a thousand diverse issues for our existing clients every year, which helps us build a very broad basis of experience and solutions that we can apply in future cases.

We work in a comprehensive manner. We assess the consequences with regard to law and taxation (across all tax liabilities), as well as the balance sheet and business consequences.

Grant Thornton’s ongoing tax advisory includes the following services:• Solvingclients’taxproblems• Providingtaxinterpretationofbusinessevents, as they occur• Analysisofcontractswithregardtotheirtax consequences• Draftingagreementswithcompliancetointendedtax consequences• Developmentoftaxoptimisationstrategiesfor implementing intended business operations• Supportinimplementingtheproposedstrategies for business operations by drawing up drafts of legal documents

Ongoing tax advice

A taxpayer who has an agreement with an advisor feels safe and

secure that the accounts are correct. It is one

of the most important benefitsofongoing

service

31

Tax optimisation Optimisation of structures and transactions

4. Responsibilities – how to avoid getting lost

Each business function or a specific undertaking may be realised within various legal and organisational frameworks. The adopted solution affects the amount of tax liability. The goal of tax optimisation services is to identify the legal and organisational frameworks which ensure the lowest possible level of taxation to the entrepreneur. Optimisation activities cover both the permanent elements of business processes going on in an enterprise, such as goods supply, marketing activities, investments and renovations, payroll, and one-off activities, including e.g. investment undertakings, new methods of promotion or contracts with new business partners.

The complete scope of the service comprises the following stages:• Diagnosisofcurrentstatus–developmentofthe AS IS model• Analysisofcurrentstatusintermsoftaxeffectiveness• Developingoptimisationsolutionsandconsulting them with the client• Descriptionofthetargetprocessmodel – the TO BE model• Schedulingtheimplementationofoptimisation solutions• Supportingtheclientintheimplementation of approved solutions

As a result, Grant Thornton tax advisers provide you with a range of solutions, including optimisation activities defined in detail and scheduled, leading to complete implementation. If necessary, we offer support in developing any related documentation, regulations, agreements, procedures as prerequisites for the implementation of optimisation solutions.Grant Thornton advisers take into account the requirements of a given business sector and client expectations, while the solutions we propose are consistent with the client’s business model and goals.

The goal of tax optimisation services

is to identify the legal and organisational frameworks which ensure the lowest possible level of taxation

to the entrepreneur.

Our specialists’ activities within the framework of tax optimisation of structures and transactions include:• Identifyingtheclient’staxoptimisationneedsboth in terms of the structure of their business and individual transactions• Developmentandpresentationofbespokeconcepts for enhancing business tax efficiencies, taking into account such issues as the unique features of a given business, adopted business goals, boundary conditions specified by the client and applicable legal regulations, costs of implementing a structure/concluding a transaction• Detailedanalysisofpotentialrisksassociatedwith implementing and functioning of the target structure and undertaking measures aimed at reducing or eliminating them, including obtaining private rulings from tax authorities• Preparatoryactivitiesprecedingtheimplementation of a given solution• Comprehensivelegalandtaxservicesrelatedtothe optimisation structure implementation process, including: Establishment of new legal entities Business consolidation, transformation, division, liquidation Contributions of assets, enterprises and their organised parts Sale and other forms of share transfer Changes in equity• Processsupervisionandcoordinationofallentities involved in individual activities• Assistanceindisclosingtransactionsfortaxand financial reporting purposes

The goal of our services related to tax optimisation of structures and transactions is to minimise tax liabilities while maintaining regulatory compliance, by means of solutions related to the legal form of business, shape of group structures and use of various legal institutions to achieve business goals.

The extensive experience and knowledge of Grant Thornton advisers enable us to develop and successfully implement optimisation structures adapted to the client’s unique needs and specific business models. The solutions we propose combine increased tax efficiency of your business with tax security.

The international network of Grant Thornton member firms covering more than 100 countries, including several countries with attractive tax regimes in place, enables our specialists to design and implement not only domestic but also transnational optimisation structures based on offshore tax jurisdictions.The continual changes in Polish tax law regulations do not just hinder the security of Polish taxpayers’ business activities, but also deliver new tools which, when used skilfully in tax planning, can help reduce taxes or extend tax due dates.

33 32

Tax Compliance Transfer pricing

4. Responsibilities – how to avoid getting lost

Transfer pricing services aim to eliminate or at least limit the tax risks related to transactions between related entities and optimisation of tax liabilities resulting from those transactions.

Grant Thornton advisers take into account the requirements of a given business sector and client expectations, while the solutions we propose are consistent with the client’s business model and goals.

The scope of services in the area of transfer pricing includes:• Analysisoftaxrisksrelatedtotransactions with related entities• Drawinguptaxdocumentationrequired by the law for transactions between related entities• Developingtransferpricingpolicyandprinciples of accounting between related entities• Benchmarking• Assigningtheprofitstoapermanent establishment of a foreign enterprise operating in Poland• Analysisanddrawingupagreementsbetween related entities (including cost sharing agreements)• Assistanceinapplyingforadvancepricing arrangements• Advisoryservicesintaxproceedingsconcerning transfer pricing (including preparation of the argumentation and documents supporting the taxpayer’s position)• Transferpricingtrainingsandworkshops

Our services are provided by specialists with broad knowledge and practical experience in transfer pricing issues.

The tax compliance service provided by Grant Thornton tax advisers aims to support you in drawing up tax returns.

Depending on your needs, the scope of works may cover both reviewing pre-prepared tax calculations for compliance with bookkeeping records, or drawing up tax returns with an in-depth review of data used as the tax base. The tax compliance service is often combined with a tax review, including all factors affecting the determination of the amount of tax or selected areas of the client’s operations. The scope of service may cover the following taxes:

Corporate Income Tax (CIT)• calculatingtheamountofCITdueandprepayments• verificationoftheclient’scalculationoftheamount of CIT due and amounts of prepayments• verificationofproceduresrelatedtocalculating CIT due and CIT prepayments• taxreviewsofdataunderlyingthetaxbase

Withholding tax• comprehensiveanalysisoftaxpayer’sproper compliance with their obligations• calculatingwithholdingtaxdue• obtainingcertificatesoftaxresidence• drawinguptaxreturns

Goods and services tax (VAT)• taxpayerregistration• drawingupVATreturns,summarystatements and INTRASTAT

Expatriate accountingGrant Thornton also offers the international tax compliance service – tax reporting covering multiple tax jurisdictions. The service has been designed mainly with holding groups in mind.

35 34

www.GrantThornton.pl

©2013GrantThorntonFrąckowiaksp.zo.o.sp.k.61-131Poznań,ul.abpaAntoniegoBaraniaka88ENIP 778 14 76 013, REGON 301591100SądRejonowyPoznań–NoweMiastoiWildawPoznaniuVIIIWydziałGospodarczyKrajowegoRejestruSądowego,KRS369868GrantThorntonFrąckowiakjestfirmączłonkowskąGrantThorntonInternationalLtd

Anna PisarekDirector – establishment of business

T +48 32 721 3782M +48 661 538 523 E [email protected]

Contact us

How to set up your business in Poland (2014)

Business

Transcript of How to set up your business in Poland (2014)