How to set up a limited liability company in Poland?
A limited liability company is the preferred form of doing business in Poland. You can establish it on your own or choose a faster and simpler alternative of buying a ready-made company. There are approximately 10,000 new limited liability companies registered every quarter to compare with only about 1,200 civil partnerships and less than 20 limited joint-stock partnerships. So what is the reason behind such popularity of a limited liability company?
What is a limited liability company?
A limited liability company is regulated by the provisions of the Commercial Companies Code. In a limited liability company it is the company, not shareholders, that is liable for the company’s obligations because the company has its own legal personality.
Shareholders are liable to make only such performances as are laid down in the company deed, and their liability for the company’s debts is limited to the amount of their capital contributions.
Furthermore, a limited liability company can be set up by even one person, then it is a sole-shareholder limited liability company. If there are more than one shareholder, they do not have to pay social insurance (ZUS) contributions for themselves, and any name may be chosen as the business name of the company; however, it should include an additional designation “spółka z ograniczoną odpowiedzialnością”, abbreviated to “sp. z o.o.”.
Step 1 – Share capital
To set up a limited liability company it is necessary to accumulate a minimum share capital of PLN 5,000.
The company’s share capital is divided into shares with equal or unequal nominal value, and the nominal value of a share may not be lower than PLN 50. The company deed determines whether a shareholder can have only one or more shares. If a shareholder may have more than one share, then all shares in the share capital should be equal and indivisible.
Shares may not be subscribed below their nominal value. If a share is taken up at a price higher than the nominal value, the surplus is transferred to the supplementary capital.
It is worth noting that a limited liability company can be multi-shareholder or single-shareholder. In the latter case, all shares of the company belong to the sole shareholder or the sole shareholder and the company.
Step 2 – Company deed
A limited liability company deed must be drawn up in the form of a notary’s deed, so a visit to a notary public is necessary.
To prepare the company deed, it is necessary to collect the following information which the deed should determine:
• business name and seat of the company;
• the object of the company’s activity;
• amount of the share capital;
• whether a shareholder may have more than one share;
• number and nominal value of shares taken up by each shareholder;
• lifetime of the company, if defined.
The following information should be prepared before a visit to the notary:
• personal data of shareholders (names, surnames, PESEL numbers, REGON, NIP, civil status, business name and seat if shareholders are legal persons and details of their representatives) confirmed by ID documents (ID cards, passports or foreigner residence card),
• lifetime of a company,
• information on the share capital and division of shares among the shareholders,
• company business name and seat,
• the objects of the company’s activity.
Once this information is ready, there will be an issue of notary’s fees which will depend on the amount of the share capital and §3 of the regulation on notary’s fees which determines the maximum amount:
• when a share capital is PLN 5,000, the notary’s fee will be – PLN 160,
• from PLN 5,000 to PLN 10,000 – PLN 160 + 3% on the surplus over PLN 5,000,
• from PLN 10,000 to PLN 30,000 – PLN 310 + 2% on the surplus over PLN 10,000,
• from PLN 30,000 to PLN 60,000 – PLN 710 + 1% on the surplus over PLN 30,000,
• from PLN 60,000 to PLN 1,000,000 – PLN 1,010 + 0.4% on the surplus over 60,000,
• from PLN 1,000,000 to PLN 2,000,000 – PLN 4,770 +0.2% on the surplus over PLN 1,000,000.
Step 3 – Entry in the National Court Register
A newly set up limited liability company must be entered in the National Court Register (KRS). A limited liability company is entered on the basis of an application submitted on an official form, to which the required documents must be attached in originals or officially certified copies or extracts.
A traditional paper form entry requires the payment of fee:
• PLN 500 – court fee for an entry,
• PLN 100 – fee for announcing an entry in the Monitor Sądowy i Gospodarczy [Court and Business Gazette]
and payment of tax on civil law transactions representing 0.5% of the share capital less the notary’s fee for execution of the company deed and the cost of entry in the National Court Register and announcement in the Monitor Sądowy i Gospodarczy.
Online registration at the National Court Register
Registration is also possible in electronic form if a company deed is drawn up using a ready-made template. Executing a limited liability company deed using the template requires the filling of a template form available in the computer system and signing the deed with a qualified electronic signature, a trusted signature or an advanced electronic signature.
Online registration fees are as follows:
• PLN 250 – court fee for an entry,
• PLN 100 – fee for announcing an entry in the Monitor Sądowy i Gospodarczy
Waiting time for processing the application for registration:
• 7 days from filing the application with the court
• 1 day from the date of its entry into the computer system,
Step 4 – Registration with tax office
Once a limited liability company has been formally registered, before starting operations, the new entity must be registered with the tax office in order to be able to settle income tax.
For this purpose, it is necessary to prepare a bank account agreement for a newly established company and a contract with the entity keeping the company’s accounting records, in which the place of keeping the accounting books will be stated.
Let us remind that any payments arising from business activities must be made through a corporate bank account, if:
• a party to the transaction is another business entity,
• a single transaction value, regardless of the number of payments, exceeds the equivalent of PLN 15,000, where transactions in foreign currencies are converted intozlotys at the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the transaction date.
Step 5 – VAT registration
Now, the new limited liability company needs to be registered for VAT purposes. Currently, a limited liability company does not have to be a VAT payer, unless:
• its sales volume in the previous year exceeded PLN 200,000,
• the company sells goods or services listed in the VAT Act.
In these two instances, there is an obligation to register a limited liability company as a VAT taxpayer, and if trade takes place with the participation of foreign entities, also VAT-EU. Registration for VAT purposes is free of charge.
Buying a ready-made limited liability company
An alternative to establishing your own limited liability company is the purchase of an existing company. This reduces the formalities for the buyer and saves time.
Check the available packages for the purchase of My Legal Store ready-made company.
Limited liability company – key information
• minimum value of share capital – PLN 5,000;
• one or more shareholders,
• company with legal personality governed by the Commercial Companies Code,
• company’s shareholders are liable for obligations of the company up to their capital contribution,
• manner of registration – traditional or electronic,
• shareholders liable to make performances laid down in the company deed,
• any name may be chosen as the business name of the company but has to include designation “sp. z o.o.”