Top 8 challenges of doing business in Poland
The Polish market remains attractive to investors due to its size and largely untapped potential. With a consumer base of over 37 million people as of 2024, it ranks among the largest markets in Europe.
Poland's strategic central location on the continent facilitates the export of goods across Europe, reaching a market of over 500 million consumers. The country’s domestic economy is stable and has shown consistent growth over the past two decades.
In 2022, Poland attracted €22.3 billion in foreign direct investment, a significant increase from previous years. This growth was driven by new investment projects in the automotive, electronics and chemicals sectors and has been supported by 14 Special Economic Zones (SEZs). These SEZs offer attractive tax exemptions, employment incentives and well-prepared investment lots.
Although the business environment can be challenging, Poland has made substantial progress in simplifying regulatory processes. Following the adoption of EU legislation, Poland has implemented wide-ranging economic reforms that have reduced government intervention in the private sector. Companies wishing to expand into Poland should ideally engage local expertise to navigate the tax environment and manage regulatory burdens effectively.
Here are the top 8 challenges of doing business in Poland.
1. Starting a legal entity
Starting a legal entity in Poland involves several steps. The most common types of business structures include limited liability companies (spółka z ograniczoną odpowiedzialnością or sp. z o.o.), joint-stock companies (spółka akcyjna or S.A.) and partnerships. The process generally includes the following steps, which can be done via a dedicated portal:
- decide on the appropriate legal structure for your business
- verify and register the company name
- deposit the minimum share capital in a bank account
- register the company with the National Court Register (KRS)
- register for tax purposes and obtain a VAT number
- register with the Social Insurance Institution (ZUS)
- open a business bank account.
2. Reporting requirements
Companies in Poland are subject to a number of reporting requirements.
- Annual financial statements: these must be submitted to the National Court Register (KRS) within 15 days of approval at the general meeting of shareholders.
- Tax returns: corporate income tax returns must be filed annually. VAT returns are typically filed monthly or quarterly.
- Statistical reporting: certain companies may need to report to the Central Statistical Office (GUS).
- Social security contributions: monthly reports must be submitted to ZUS.
3. Taxes and Social Security charges
These are the taxes and contributions that are compulsory in Poland.
- Corporate income tax (CIT): the standard rate is 19%, with a reduced rate of 9% for small businesses.
- Value-added tax (VAT): the standard rate is 23%, with reduced rates of 8% and 5% for certain goods and services.
- Personal income tax: progressive rates of 17% and 32%.
- Social security contributions: both employers and employees contribute to social security, which includes pension, disability, accident and health insurance. The rates vary but typically total around 35% of the employee's gross salary.
4. Employment and payroll regulations
Polish employment law covers several key aspects of employment.
- Employment contracts: these must be in writing and must include the terms of employment such as salary, working hours and job responsibilities.
- Working hours: standard working hours are 40 hours per week.
- Minimum wage: as of 2024, the monthly minimum wage is set by the government. The average minimum in 2024 should not be lower than the statutory minimum (4,270.60 PLN gross).
- Leave: employees are entitled to annual leave (up to 26 days), sick leave and parental leave.
- Termination of employment: employers must follow specific procedures for termination, including notice periods and severance pay.
5. Language requirements
While Polish is the official language, many business documents can be prepared in English, especially in multinational corporations. However, legal documents and contracts often need to be in Polish. Organisations should consider using a professional translation service to ensure compliance and accuracy.
6. Opening a bank account
To open a business bank account in Poland, you generally need the following documents:
- company registration documents containing proof of registration with the National Court Register
- a notarised copy of the articles of association
- passports or other accepted identification of company representatives
- tax identification number providing proof of registration with the tax office.
7. EU law implementation
As an EU member, Poland has incorporated numerous EU directives into its national legislation. This includes regulations on consumer protection, data privacy (GDPR), competition law and environmental standards. Businesses must comply with both Polish and EU laws, which often require adjustments to business practices to meet EU standards.
8. Stability of the legal system
Poland has a relatively stable legal system with a well-established framework for business operations. The judiciary is independent, but there are occasional concerns about political influences. Overall, Poland offers a secure environment for business activities, with legal protections that are aligned with EU standards.
Contact our local TMF Group experts
At TMF Group, we have global reach through 87 jurisdictions, with local teams on the ground in each one. This combination allows us to help you navigate any challenge or opportunity when expanding into Poland. Whether you want to set up in Poland or simply want to streamline your Polish operations, talk to us today.
