Common mistakes foreign companies make when starting a business in Poland

The most common mistakes when starting a business in Poland result from legal, tax, accounting and operational decisions being made in the wrong order. Foreign investors should select the right business structure, assess investment incentives, prepare KSeF and JPK reporting, establish transfer pricing and withholding tax procedures, and calculate full employment costs before operations begin.

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Company or branch – which structure should foreign investors choose?

Starting a business in Poland requires a legal structure aligned with the operating model.

A limited liability company (sp. z o.o.) is a separate legal entity and generally answers for its liabilities with its own assets. A branch remains part of the foreign enterprise, which is responsible for its obligations.

The choice affects management, accounting and head-office settlements. Investors should also assess whether their activities could create a permanent establishment in Poland.

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When should investment incentives be assessed?

Available support should be reviewed before starting the investment or signing binding agreements.

Relevant instruments include:

• Polish Investment Zone,
• R&D tax relief and IP Box,
• selected grant programmes.

Under certain schemes, commencing the project too early may restrict or eliminate eligibility for support.

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How should accounting systems be prepared for Polish requirements?

Before the first sale, accounting and invoicing systems should support KSeF, JPK_VAT and applicable JPK_PD reporting, including JPK_KR_PD for taxpayers maintaining accounting books.

A central ERP system must accommodate Polish tax and accounting requirements. Companies should define document workflows, data responsibilities, accounting procedures and reconciliation between local records and group reporting.

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Transfer pricing and withholding tax – what thresholds apply?

Intra-group settlements must reflect the Polish entity’s actual functions, assets and risks.

As a rule, transfer pricing documentation thresholds for homogeneous transactions are:

• PLN 10 million – goods and financial transactions,
• PLN 2 million – services and other transactions.

The arm’s length principle applies even where documentation thresholds are not exceeded.

For certain related-party payments, exceeding PLN 2 million per tax year to the same taxpayer may trigger the withholding tax (WHT) pay-and-refund mechanism.

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What employment costs should investors consider?

Workforce budgets must account for employer social insurance contributions, payroll administration and potential relocation costs, not only gross salaries.

Foreign employees may require residence and employment formalities depending on their circumstances. Employees generally must be registered with ZUS within seven days of the insurance obligation arising.

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How can companies avoid costly mistakes?

Key preparations should follow a shared implementation schedule:

• Before registration: determine the structure, financing and investment incentives.
• Before the first invoice: configure accounting, KSeF and JPK reporting.
• Before intra-group payments: establish transfer pricing and WHT procedures.
• Before recruitment: calculate employer costs and review immigration requirements.
• Before the first period-end close: establish reporting and management responsibilities.

Management board members based abroad may also need access to electronic systems, signing arrangements and powers of attorney. A PESEL number can be relevant for specific activities but is not automatically required to perform every management board duty.

Coordinating legal, tax, accounting, HR and operational activities reduces the risk of corrections, additional costs and delays after entering the Polish market.

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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