Taking your business to, or embarking on a new venture in Poland? Here are the main challenges that you should be aware of.
Poland is the most populous country in Central Europe with a consumer market of over 38 million people.
The country fared better through the economic downturn than most countries in Europe. It emerged as one of the most attractive European locations for foreign investors due to its stable economic and political environment, educated workforce and favourable location at the heart of the continent – providing easy access to an export base of over 500 million people.
Poland is further bolstered by its membership of the European Union (EU), the European Economic Area (EEA), the World Trade Organisation (WTO), the North Atlantic Treaty Organisation (NATO) and the Organisation for Economic Co-operation and Development (OECD). Poland has also been ranked by Bloomberg as the best country for doing business in the Central and Eastern European (CEE) region.
Wide-ranging reforms in economic regulation have been implemented since the adoption of EU legislation, and there is now considerably less government intervention in the private sector. Despite these strengths, the country’s business environment has its challenges.
Starting your business
Limited liability companies are the most common form of business representation used by foreign businesses in Poland. Starting a business can be a long process, and it will likely take over a month to complete the various procedures. A company agreement must first be notarised before depositing capital into a bank account, filing at the National Court Register, and setting up VAT payments.
Getting connected
Getting electricity is a similarly laborious process, taking 186 days and involving six different processes. It can also be a costly undertaking, particularly regarding electrical contractor costs when setting up an external connection.
Paying taxes
The corporate tax rate is 19% and the basic rate for VAT is 23%, which is applicable to the majority of goods and services. Companies are also subject to a host of other levies, including contributions to the Social Security Institution (ZUS) and the State Fund for Disabled (PFRON).
HR regulation
The Polish Labour Code states that an employment contract should be prepared in writing and must contain information related to the type of contract, date of conclusion, terms of employment and remuneration, type of work, place of work, working time, and start date. Employers are also allowed to negotiate collective bargaining agreements.
Terminated employees are usually entitled to severance pay. The amount ranges from one month’s pay to three month’s pay, depending on how long the employee has worked for the employer. This is applicable to companies employing at least 20 people.
Work permits
The Promotion of Employment and Labour Market Institutions law states that an employer can hire foreign workers after receiving permission from a voivode (a local governor). Citizens from EU countries or the EEA are entitled to work in Poland without a work permit, but those from outside these areas require a work permit as well as the appropriate visa.
Local culture
The Polish fight for independence and sovereignty created a population that is particularly attached to their traditions and heritage. Companies looking to expand in Poland should be culturally aware, as it will give them an appreciation of the sense of national pride and the customs and traditions that govern the business environment.
Enforcing contracts and resolving insolvency
Enforcing contracts can take an average of 685 days and requires 33 procedures to complete. Resolving insolvency is a similarly lengthy procedure, taking three years compared to an OECD average of 1.7 years.
Getting credit
Poland excels in terms of providing businesses with access to credit. However, you should be aware that there is no public registry office, which can cause some difficulties and delays.
Protecting investors
Poland’s modern judicial system gives good support to investors, although the country scores poorly on the extent of director liability index.
Trading across borders
It takes 17 days to export and 16 to import in Poland, which is significantly higher than the OECD average. This is largely down to the length of time it can take to submit and handle the required documents.
Talk to us
TMF Poland’s experts based in Warsaw and Katowice have the local knowledge to help you navigate these complexities. Whether you are looking to set up in Poland, or simply want to streamline your Polish operations.
Make an enquiry with us today.