9 steps to set up a Polish subsidiary for international IT companies

As Poland is an attractive option for business owners in general, it is becoming increasingly popular especially among foreign IT companies. When establishing an office in Poland, entrepreneurs can choose between various possible structures, e.g. a branch, a representative office or a subsidiary. However, the last one is the option most frequently chosen.

A subsidiary is an entity that is controlled by another – dominant – company. This dominance can be formed in a few ways, mainly by acquiring a majority of shares in the subsidiary.  Below you will find out how to create a subsidiary in 9 simple steps.


Step 1 – Choosing a legal form of the subsidiary


The first step to create a subsidiary is determining its legal form. A subsidiary wholly owned by its parent company can be established exclusively as a company – spółka z ograniczoną odpowiedzialnością (short form: Spółka z o.o. or Sp. z o.o. – equivalent to a limited liability company – LLC) or spółka akcyjna (short form: S.A., equivalent to a joint-stock company).

Since a limited liability company has a far less complex structure than a joint-stock company, it is recommended for IT subsidiaries – and for this reason, below we mostly refer to topics related to establishing a Spółka z o.o.

Another thing to remember is that a wholly owned Polish limited liability company cannot be created by a wholly owned company, because Polish regulations forbid this. However, this condition applies only when the Polish company is established, which means that the wholly owned parent company can later acquire 100% of shares of Polish LLC.


Step 2 – Power of attorney


If the representatives for the entity establishing the subsidiary do not want to travel to Poland to sign necessary documents personally, they can grant power of attorney to somebody who will do that for them.

As the Articles of Association of a Polish Spółka z o.o. must be drawn up in notarial form, Polish law requires that a power of attorney to sign them is also granted as a notarial deed.

It is simple if a power of attorney is given in Poland, however, when it is given in another country, there is a problem with what is considered the legal equivalent to a Polish “notarial deed” and whether it is required.

There is no point in dwelling into international law regulations here, however depending on the country, different forms of granting of a power of attorney may be available, so each time it should be verified.

There is also the issue of apostille – the official confirmation that a particular document is an official document of the country where it has been created.

In general, there should be no need to put apostille on a notarial power of attorney to create a company. However, there is a risk that either the Polish notary or the registry court may demand that a document with apostille is presented.

If no power of attorney is given, then the managers or directors acting in the name of the parent company should have documents proving that they are authorised to do so, in particular, official excerpts or certificates from the government body that holds the register of the companies.


Step 3 – Articles of association


Articles of Association (AoA) are the basic founding documents of a Polish Sp. z o.o. They can be executed in electronic form (using the Internet company registration process) or as a notarial deed.

Internet registration is, however, quite complicated for foreign shareholders and forces you to use the standard template of AoA with a limited choice of provisions available.

The Articles of Association of a wholly owned subsidiary do not have to contain complicated provisions related to potential conflicts between shareholders (as there is only one shareholder). However, there are several reasons to have them still custom made and not just use a basic template.

First of all, the parent company may want to limit the management board (for instance – by requiring the consent of the shareholder in specific matters).

What is more, custom-made AoA may describe actions that could be executed only if they are first stipulated in the AoA – like the redemption of shares, financing the subsidiary by additional contributions or increasing the share capital.

So before you decide to use a standard template for AoA, it is better to analyse the options given by Polish company law.


Step 4 – Making contributions (paying up the capital)


Unless the company is established using the Internet registration system, the shareholders should make contributions to the share capital of the company before the registration.

In the case of subsidiaries, the standard contribution is cash – therefore it should be paid to the bank account. However, opening a bank account before registration may prove very difficult. For this reason, depending on the amount of the contributions, other ways of paying up the capital are usually applied (however, in case of a joint-stock company, a bank confirmation that the transfer has been executed is required).

A limited liability company in Poland requires a minimum share capital of PLN 5.000 PLN and a joint-stock company – PLN 100.000.


Step 5 – Appointing the management 


Before the company is registered, the shareholders must appoint the first management board.

It can be composed of one or several members whose role is to represent the company and conduct the whole business activity.

It is essential to know that in Poland only natural persons can be appointed to the management board.

In case of joint-stock companies or the rare case of LLCs, an additional body – a supervisory board must also be appointed, however, those are rarely used in case of subsidiaries of foreign companies.


Step 6 – Registering in the national court register


All Polish companies must register in the National Court Register. If the AoA have been drawn up in electronic form, then the application is sent via the same webpage.

However, if the articles of association have been created as a notarial deed, then the application is typically filed using paper forms. Paper applications should be delivered to the registry court that has jurisdiction over the city where the company has its legal seat.

If the application is not filed within six months after the AoA of Spółka z o.o. are signed, then the company is dissolved and must be liquidated. In case of Internet registration, the time is just seven days.


Step 7 – Accounting services


Any company has a number of obligations with regard to keeping accounting records and tax settlements. Since limited liability or joint-stock companies have quite a complex structure, the book-keeping may be pretty tricky. That is why you are going to need a reliable accounting office. Finding one should be your priority right after your company’s incorporation.

It is crucial not to wait with this issue, as 21 days after the company is registered additional information must be filed to the tax authorities – and the accountant typically does this.


Step 8 – VAT registration


Finding an accountant is essential, among others, for VAT registration. Polish tax authorities are currently fighting hard against VAT frauds, therefore being registered for VAT often takes much time. A good accountant can make this process quicker and more straightforward for the company.


Step 9 – Getting a PESEL number


PESEL is a National Identification Number used in Poland to identify a person. Due to recent changes in legal regulations, PESEL is now required for at least one member of any company’s management board to submit yearly financial statements via a special-purpose online system. Polish citizens have it assigned as soon as they are born, but foreigners need to apply for it. The procedure to get a PESEL number is free of charge. However, an application must be filed to a competent municipal office.


About the Authors:
This blog post is written by Jan Marczyński, Natalia Rogólska and Tomasz Wiese from our highly recommended legal partner JWMS.