Local Business Regulations for Start-ups in Poland

Poland, nestled in the heart of Europe, offers a blooming landscape for international companies seeking to expand their operations. With its strategic location, robust economy, and supportive business environment, Poland has emerged as an attractive destination for global enterprises, especially start-ups, looking to establish a presence in Europe.

As proof it is worth mentioning the fact that the income of foreign direct investors from direct investments made in Poland in 2022 reached the highest value historically and amounted to PLN 128.9 billion.

Local market entry procedures and requirements

Navigating the local market entry procedures is a crucial step for international companies eyeing expansion into Poland. Understanding the requirements and protocols is key to a smooth and successful entry. The Polish market generally welcomes foreign investment, and the process involves steps such as company registration, obtaining necessary permits, and compliance with specific legal regulations. The development plan offers entrepreneurs tax solutions that will help them develop and enter new markets. It introduces, among others: relief package for innovative companies. One of them is relief for venture capital (risk capital).

Understanding municipal business laws and compliance

Navigating the diverse municipal landscape of Poland involves grasping the distinct nuances of business laws and compliance measures tailored to each municipality. These regulations span a spectrum, encompassing zoning directives, operational schedules, licensing prerequisites, and a lot of business-specific mandates. The intricate nature of these varied requirements demands meticulous attention from international companies seeking to establish themselves in Poland. 

Failure to adhere to these specific requirements could pose significant hurdles and legal complexities. Thus, collaborating with local experts or advisory services proves instrumental in understanding and seamlessly navigating these multifaceted regulations. By engaging with seasoned professionals well-versed in the local business landscape, international companies can ensure comprehensive compliance, mitigating risks, and fostering a smoother path towards successful establishment and operation within Poland.

Overview of regional economic policies affecting business

The economic landscape in Poland operates on a regional basis, where specific policies cater to different areas, aiming to create conducive environments for business growth and development. Understanding these regional economic policies provides a deeper insight into a spectrum of incentives, grants, and specialised support mechanisms designed to invigorate entrepreneurship and facilitate business expansion across various regions.

• Incentives for business growth: Different regions in Poland offer diverse incentives aimed at attracting and retaining businesses. These could include tax breaks, subsidies, or reduced operational costs for companies establishing themselves in specific zones or industries.
• Grants and funding opportunities: Regional economic policies often encompass grants and funding options tailored to support start-ups or expanding businesses. These funds might be allocated for research and development, innovation, or job creation, encouraging companies to invest and grow within those areas.
• Specialised support systems: Various regions may provide specialised support networks or infrastructures, such as technology parks, incubators, or industry-specific clusters. These are designed to foster collaboration, innovation, and networking opportunities for businesses operating within those sectors.
• Industry-specific initiatives: Certain regions might focus on specific industries or sectors, offering targeted programs or initiatives to support growth in those fields. These could range from manufacturing to technology, renewable energy, or tourism, with dedicated support mechanisms.

Navigating local tax regulations

Poland’s economic landscape is not only characterised by its vibrant markets but also by a well-defined taxation framework that can significantly impact the operations of small businesses. Understanding local tax regulations and leveraging available incentives is paramount for international companies seeking to establish and grow their ventures in Poland.

VAT (Value Added Tax) regulations

• Registration requirements: International companies need to register for VAT with the Polish tax authorities if their taxable turnover exceeds specified thresholds. Understanding the registration process and compliance requirements is crucial to avoid potential penalties.
• VAT rates: Poland employs a tiered VAT rate system, with standard and reduced rates. Familiarising yourself with these rates and ensuring accurate VAT calculations is essential for businesses engaging in the sale of goods or services.

Corporate income tax

• Tax rates and calculation: Small businesses must navigate the corporate income tax structure, which includes a flat rate for businesses with revenue below a certain threshold. Calculating and fulfilling these tax obligations accurately is vital for compliance.
• Tax deductions: Exploring available tax deductions, such as those related to business expenses and investments, can significantly impact the overall tax liability for small businesses in Poland.

Reliefs offered for start-ups

Relief IPO along with relief for investments in listed debutants

The aim is to make it easier for Polish companies to enter the stock exchange and find investors. The relief is available to joint-stock companies that are Polish tax residents, are not listed on the Stock Exchange, and intend to issue additional shares in an initial public offering, making the company public by introducing its shares to stock exchange trading. 

Consolidation relief

The consolidation relief is intended to facilitate the investment expansion of entrepreneurs operating in Poland through the international development of the enterprise related to the acquisition of shares in other companies. It involves deducting the amount of expenditure on the acquisition of shares in a company with legal personality from the tax base.

The deduction cannot exceed PLN 250,000. PLN in the tax year. The consolidation relief will be offered to Polish companies that decide to save, for example, their contractor, supplier or other entity that needs support by taking over other entities. 

Expansion relief

The expansion relief allows additional deduction from the tax base of costs incurred by the company to expand its sales markets, both domestic and foreign. The relief allows you to settle 200% of the costs incurred in your income tax, i.e.: 100% as a tax-deductible cost, 100% as a deduction under the relief.

If you generate income (revenue) from non-agricultural business activity, the income from which is taxed on general principles according to the tax scale (i.e. at the rate of 12% or 32%) or with a flat tax – you can benefit from expansion relief. 

IP Box relief

This consists in taxing at a preferential 5% CIT/PIT rate the income obtained by the taxpayer from the commercialization of qualified intellectual property rights. The relief is available to entrepreneurs taxed under the tax scale (PIT-36), flat tax (PIT-36L), and corporate income tax payers (CIT-8).

Research and Development relief

Research and Development (R&D) relief for companies conducting research and development activities consists in deducting from the tax base part of the costs of obtaining revenues incurred for this activity. From 2022, each company can deduct up to 200% of eligible costs separately in its records. 

The prototype relief is a new instrument addressed to taxpayers developing a new product as part of R&D activities. It will make it cheaper to produce a prototype and then implement the invention into production. The relief allows you to deduct from the tax base an additional 30% of the costs related to trial production of a new product and introducing the new product to the market. 

Local entrepreneurship laws and business licensing procedures

In the landscape of Poland’s business regulations, a nuanced understanding of entrepreneurship laws and licensing procedures is critical for international companies. These components play a pivotal role in shaping the operational framework and legal standing of businesses within the country.

Entrepreneurship laws

Poland’s entrepreneurship laws are designed to provide a conducive environment for business growth. These laws often incorporate measures to simplify the process of establishing and operating businesses, fostering a climate of innovation and dynamism.

Flexibility in corporate structures

Understanding the legal flexibility offered in corporate structures is essential. Poland’s legal framework allows for adaptable business structures, accommodating the evolving needs and strategies of companies, particularly beneficial for start-ups and enterprises exploring innovative approaches.

Intellectual property protection

Entrepreneurship laws in Poland encompass robust provisions for intellectual property protection. This is vital for companies engaged in innovation and creative endeavours, ensuring the safeguarding of their intellectual assets.

Intellectual property consists of three main elements that are protected by law. These include rights arising from copyright, protection provided for by industrial property law and broadly understood issues related to the protection of know-how. 

1. Copyright: The subject of copyright protection is the broadly understood concept of a work. The Act on Copyright and Related Rights explains that a work is any manifestation of creative activity of an individual nature, recorded in any form, regardless of its value, purpose and method of expression. Therefore, the work as such can be expressed in any way, for example verbally, artistically, through photography, architecture, music and audio visualization. Therefore, a work in a startup may be source code, promotional photos and videos, layouts, marketing or copywriting descriptions, and even blog publications.  
2. Industrial property law: The law covers patent protection of inventions, trademarks, industrial designs, utility models, geographical indications, and in some countries, including Poland, also utility models and topographies of integrated circuits. In the context of startups, utility models are an interesting concept. They mean a previously unavailable, useful solution of a technical nature that concerns the shape, structure or combination of a durable object.  
3. Know-how: This concept largely means the so-called trade secret, i.e. all undisclosed technical, technological, organizational and other information of economic value that determines the company’s advantage over its competitors. In order to secure such information – from the legal point of view – an appropriate contract should be concluded with employees and contractors. More precisely, this mainly concerns confidentiality statements or agreements, as well as non-competition agreements.  

Regional business licensing and local start-up incentives

In Poland’s diverse business landscape, regional nuances play a significant role in shaping business licensing procedures and start-up incentives. Understanding these regional variations is important for international companies seeking to establish a presence that aligns seamlessly with local regulations and harnesses available support systems.

Navigating through regional business licensing procedures involves a meticulous examination of requirements set forth by specific areas within Poland. Each region may press its own set of regulations and licensing prerequisites, necessitating a tailored approach to compliance. International companies must not only comprehend the overarching national framework but also delve into the local intricacies, ensuring comprehensive adherence to all necessary protocols.

Moreover, Poland offers a spectrum of local start-up incentives, each region presenting unique opportunities for businesses. These incentives encompass financial benefits, reduced taxes, and specialised support systems tailored to encourage entrepreneurial endeavours. By aligning with regional start-up incentives, international companies can not only optimise their operational costs but also tap into resources that propel innovation and growth, thus fostering a harmonious integration into the dynamic business ecosystems across different regions in Poland.

Effective business development strategies in Poland

Developing a successful business in Poland requires a nuanced approach that integrates cultural understanding, market dynamics, and strategic planning. Here are key considerations and effective business development strategies for international companies venturing into the Polish market:

• Cultural awareness: Understanding and respecting Polish culture is fundamental. Tailoring marketing strategies and business practices to align with local cultural norms fosters better engagement and acceptance.
• Localised marketing: Crafting marketing campaigns and materials in the Polish language demonstrates commitment to the local market. Additionally, incorporating culturally relevant themes enhances resonance with the target audience.
• Market research: Conducting thorough market research helps identify consumer preferences, market trends, and potential competitors. This knowledge forms the basis for informed decision-making and strategic positioning.
• Local partnerships: Establishing partnerships with local businesses or distributors can expedite market entry. Local partners bring insights into consumer behaviour, regulatory landscapes, and established networks.
• Adaptation to local regulations: Ensuring compliance with local regulations and standards is paramount. Adapting products or services to meet local requirements showcases a commitment to ethical business practices.
• Customer service excellence: Prioritising exceptional customer service fosters customer loyalty and positive word-of-mouth. Addressing customer needs promptly and effectively contributes to a positive brand image.
• Employee engagement: Cultivating a positive workplace culture and ensuring employee satisfaction contributes to organisational success. Engaged employees are more likely to contribute to business growth and client satisfaction.

Parakar’s expertise in simplifying compliance

Navigating the intricacies of establishing and expanding a business in Poland demands a comprehensive understanding of local regulations, cultural nuances, and strategic market dynamics. 

As international companies embark on this journey, Parakar emerges as a key partner, offering expertise in local and international regulations. Our specialised advisory services streamline market entry processes, ensuring compliance with regional business licensing, taxation, and entrepreneurship laws. 

By leveraging Parakar’s knowledge, businesses can reduce risks, avoid legal complications, and optimise their strategies for sustained success in the dynamic and diverse landscape of the Polish market. With a commitment to excellence, Parakar stands as a trusted ally, facilitating a smooth integration for international companies seeking growth and prosperity in Poland.