A UK Ltd company and providing services in Poland

If you want to provide services through your Ltd company in another country, you are no doubt aware that thanks to European Union regulations an internal market has been created, forming an area without internal borders across its territory. This ensures the free movement of services, goods, people and capital. It means that you can provide services across borders, both temporarily and by starting a business in another member state, for example in Poland. Under the TFEU, the free movement of services (Article 56) and the freedom of establishment (Article 49) guarantee that restrictions on exercising these provisions are prohibited, with only a few exceptions.

To operate in Poland, a British company has several options for conducting business.

If the business will focus mainly on importing or providing intangible services, and the service provider themselves has no need to travel to Poland, it can operate as a foreign company providing services in another country. In this case, under Article 7(1) of the double taxation treaty, the profits of a business operating in the United Kingdom with no registered office in Poland are not subject to Polish CIT (corporate income tax).

Another option is for your business to establish a representative office or branch in Poland. A representative office will not be a corporate income tax payer, because it does not conduct business activity and serves only a preparatory or auxiliary role. It will, however, be a payer of personal income tax and of social and health insurance contributions once it employs staff. A representative office is entered in the register of representative offices kept by the Ministry of Economy. A branch of a business serves to carry out business activity and, once established, must be entered in the National Court Register (KRS), where it is assigned a KRS number. Such entities are required to use the appropriate designations in their name - “representative office in Poland” or “branch in Poland” respectively.

Registering a Ltd company in Poland allows you to conduct business on terms similar to those of “ordinary” businesses, but it is cheaper. Foreign entities do not pay tax in Poland on income whose source is abroad, but only on services performed or goods sold in Poland. The condition for being subject to this limited tax obligation is not having a registered office (under the civil code: the locality where its governing body is based) or effective management there.