Setting up and running a Polish company as a foreign group: KRS, CRBR and PLN payments

Why foreign groups set up in Poland

Poland is a member of the European Union with a large domestic market and an educated workforce. It uses its own currency, the Polish zloty (PLN), rather than the euro. Foreign groups set up in Poland for many reasons: to employ engineers and finance staff, to run a shared service centre, to manufacture, to sell into the Polish market or to serve the wider region from Warsaw, Kraków, Wrocław or Gdańsk.

Unlike the holding company jurisdictions discussed elsewhere in this series, Poland is usually chosen because the group wants real operations there. A Polish company will typically have staff, an office, local suppliers and local customers. That brings payroll, tax filings, social security contributions and a steady flow of domestic payments, all in PLN. For foreign owners, most of the practical work is running a properly administered operating company in a different language and currency.

The main entity types

Polish law offers several company forms. Three are relevant to most foreign groups.

• Spółka z ograniczoną odpowiedzialnością (sp. z o.o.). The limited liability company. This is by far the most common form for foreign subsidiaries. It has share capital, shareholders with limited liability, a management board that runs the company and, in some cases, a supervisory board.
• Spółka akcyjna (S.A.). The joint stock company. It has higher capital requirements and more formal governance, with both a management board and a supervisory board. It is used by larger businesses, regulated entities and companies that plan to list on the Warsaw Stock Exchange.
• Prosta spółka akcyjna (P.S.A.). The simple joint stock company, a newer form designed for start-ups and venture backed businesses. It has a flexible capital structure and can have either a board of directors or a management board.

Foreign groups can also operate through a branch of a foreign company in some cases, but a separate subsidiary is the more common choice, partly because it creates a clear local legal entity for employment, contracts and banking.

Setting up in general terms

A sp. z o.o. can be set up either by a notarial deed of articles of association or, for simpler cases, online through the government's S24 system using a standard template. Foreign shareholders often use a notary because they need bespoke articles or because their documents need to be legalised and translated.

The steps, in broad outline, are:

1. Agree the company name, registered office, share capital, shareholders and management board members.
2. Sign the articles of association, either before a notary or online.
3. Pay in the share capital.
4. File the application for entry in the National Court Register, the KRS, with supporting documents.
5. Once registered, the company receives its KRS number, and its tax identification number (NIP) and statistical number (REGON) are assigned through the registration process.
6. Report the beneficial owners to the Central Register of Beneficial Owners, the CRBR.
7. Register for VAT if required, open a bank account and register as an employer before hiring.

Foreign shareholders should expect their own corporate documents to be translated into Polish by a sworn translator and, where needed, apostilled. Management board members who live abroad will need to supply identification and, in practice, an address for service. Local lawyers and accounting firms handle these steps routinely.

KRS and CRBR explained

Two public registers are central to any Polish company.

The KRS, the National Court Register, is the official commercial register. An extract from the KRS shows the company's name, registered office, KRS number, NIP and REGON, share capital, the members of the management board and supervisory board, the rules of representation and, for a sp. z o.o., the shareholders holding a significant stake. Extracts can be downloaded online and are accepted by most Polish counterparties as proof of a company's existence and representation. Financial statements are also filed with the KRS.

The rules of representation in the KRS extract are especially important. They say who can bind the company. A common rule is that two management board members act jointly, or one board member acts together with a commercial proxy (prokurent). A payments provider will compare the signatories on an account application with the representation rules in the extract. If a single board member signs where the KRS says two are needed, the application will be returned.

The CRBR, the Central Register of Beneficial Owners, records the individuals who ultimately own or control Polish companies. Companies must report their beneficial owners and update the register when changes occur. The CRBR is publicly searchable online, and providers commonly check it against the ownership information they receive. Foreign groups should make sure the CRBR entry reflects the real individuals at the top of the chain, not just the immediate foreign parent company.

Documents a payments provider will ask for

For a Polish company, the onboarding pack is usually simpler than for an offshore company, because so much is in the public record. Expect to provide:

• A current KRS extract.
• The articles of association, with an English translation if the provider needs one.
• A CRBR confirmation showing the beneficial owners.
• Confirmation of NIP and REGON, which appear on the KRS extract.
• Recent financial statements, filed with the KRS.
• A board resolution or power of attorney authorising the account and naming signatories, consistent with the representation rules.
• Identification for management board members, signatories and beneficial owners.
• A group structure chart showing the foreign parent and the ultimate owners.

Where the parent company is in another jurisdiction, such as Cyprus or a Caribbean territory, the provider will also want documents for the parent. See our guides to Cyprus holding companies and the BVI business company for what those usually look like.

PLN payment flows

A Polish operating company makes and receives most of its domestic payments in PLN. Domestic transfers use the Polish clearing system, and supplier and tax payments follow local formats. A few features stand out for foreign groups.

• Split payment. Poland uses a split payment mechanism for VAT on certain transactions, under which the VAT part of an invoice is paid into a dedicated VAT account. Companies that trade domestically need to understand when it applies.
• The white list. The tax authority publishes a list of VAT taxpayers and their registered bank accounts. Paying a supplier's invoice to an account not on the list can have tax consequences for the payer above certain thresholds. Finance teams check the list before paying.
• Tax and social security payments. Corporate income tax, VAT, payroll taxes and social security contributions are paid to dedicated individual accounts.

These rules apply to domestic Polish banking. They affect how a Polish company pays its local suppliers and authorities, and they are one reason why most Polish subsidiaries keep a domestic PLN account with a Polish bank for local payments, alongside any international accounts the group uses.

Funding the subsidiary and running payroll

The money that pays Polish salaries usually starts somewhere else. A foreign parent with revenue in euros, sterling or US dollars needs to fund its Polish subsidiary every month, and the subsidiary needs PLN on the right day to pay staff.

The common funding methods are:

• Intercompany service fees. The Polish company invoices the parent for services, such as software development or accounting, under an intercompany agreement. The parent pays the invoice, often in euros, and the Polish company converts to PLN.
• Capital contributions. The parent increases share capital or makes additional payments to the company. These involve corporate formalities.
• Intercompany loans. The parent lends money under a loan agreement, with interest on arm's length terms.

The conversion from the group currency into PLN is where costs and timing can be managed. A group that converts a large euro amount into PLN once a month at whatever rate the bank offers on the day is exposed to both the rate and the spread. Converting at spot through a provider that shows the rate before execution, and timing the conversion a few days ahead of payroll, gives more control.

Payroll itself is usually paid from a Polish bank account by domestic transfer, alongside the related tax and social security payments. Where a group uses a provider to deliver PLN into the subsidiary's account, or to make batch payouts to contractors in Poland and elsewhere, the provider will want to see the intercompany agreement and an outline of the payroll cycle.

Governance points for foreign owners

Running a Polish company from abroad works well when a few basics are in place. Keep the KRS entry up to date: changes to the management board, shareholders, registered office or articles must be filed, and an outdated KRS extract is one of the most common reasons a provider asks for more information. Update the CRBR whenever ownership changes. Hold the annual shareholders' meeting to approve the financial statements and file them on time. Give a commercial proxy to a trusted local manager if foreign board members cannot sign quickly.

Finally, keep intercompany agreements current. Polish tax authorities and auditors look closely at intercompany pricing and documentation. Payments providers do not assess tax, but they do want to see that a regular payment between group companies has a contract behind it.

General information only

This article provides general information about Polish companies owned by foreign groups and how their payments typically work. It is not legal or tax advice. Polish rules on company law, VAT and payroll should be checked with local advisers. CCYFX does not set up companies or run payroll, but it can provide spot FX into PLN, international payments and batch payouts for Polish entities and their parents. Our Poland page explains how CCYFX works with Polish companies.