Investment in Poland kpmg.pl KPMG IN POLAND 2 | Investment in Poland Chapter 1 Contents Chapter 1 - Poland - a Brief Summary 4 4.2 F inancial Statements and Audit 1.1 Geography and Climate 4 Requirements 67 1.2 History 4 4.3 Leasing Regulations 71 1.3 Government and Constitution 6 4.4 Exchange Control Regulations 72 1.4 Currency 8 4.5 Intellectual and Industrial Property 74 1.5 Population and Language 8 4.6 Anti-Monopoly Law 76 1.6 Labour market 9 4.7 Labour Law 79 1.7 Economy 10 4.8 Real Estate 86 1.8 Main Cities 13 1.9 C oming to and Living in Poland Chapter 5 - Business – Practical Tips 27 and Personal Taxation 90 5.1 Taxes in Poland 90 Chapter 2 - Business Opportunities 38 5.2 General Rules of Taxation 90 2.1 Incentives for Foreign Investment 38 5.3 Taxation System 90 2.2 G rants from EU Structural Funds 39 5.4 VAT 91 2.3 N ational Sources 41 5.5 Customs Issues 97 2.4 T ax Incentives in Special 5.6 Excise Tax 101 Economic Zones 42 5.7 Corporate Income Tax 103 2.5 Other Incentives 44 5.8 C orporate Income Tax 2.6 Privatisation 46 (3epresentative offces) 10 5.9 Personal Income Tax 109 .10 Social SecVrity (;6S) 112 Chapter 3 - Forms of Carrying 5.11 S ocial Security 114 out Business Activity. 5.12 Local Taxes and Charges 115 Available to Foreign 5.13 S tamp Fees and Tax Entities in Poland 50 on Civil Transactions 115 3.1 Legal Status 50 3.2 Establishing a Company 51 Appendix A - C oncessions and Permits for Conducting Economic Activity in 3.3 Capital 53 Poland 3.4 Participation in Existing Companies 55 3.5 The Management Board 55 Appendix B - B asic Differences between Limited Liability Company 3.6 Supervisory Bodies 55 (Sp. z o.o.) and +oint Stock 3.7 The General Assembly 56 Company (SA) 3.8 Dissolution and Liquidation 58 Appendix C - P rocedures for Establishing 3. #ranches and 3epresentative 0ffces aŨCompany Appendix D - C ontents of Financial Statements Chapter 4 - Business Environment 62 Appendix E - S elected Data from Double 4.1 A ccounting, Financial Statements Taxation Treaties between Poland and Auditing Requirements 62 and Other Countries, Relating to Withholding Tax © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Investment in Poland | 3 © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 4 | Investment in Poland Chapter 1 Poland – a Brief Summary 1.1 Geography and Climate Poland’s climate is prone to abrupt changes both during the seasons and Poland is situated in the heart of Central from year to year. Average temperatures Europe and is the ninth-largest country are between and 0őC in +anVary to on the continent, with an area of 312,679 120őC in +Vly, with minimVm and square kilometres and a population of maximum temperatures ranging from -20 38.5 million. to 35°C. Poland is in the Central European The country borders Russia, Lithuania, time zone and is thus one hour ahead of Belarus and Ukraine in the north and standard GMT. The country switches to east, the Slovak and Czech Republics daylight saving time between the end of in the south and Germany in the west. March and the end of October. Its borders extend for almost 3,600 kilometres, including 530 kilometres on the Baltic coast. The capital, Warsaw 1.2 History together with its immediate suburbs, In early times, Poland was inhabited by has a population of 2.6 million. Poland’s Western Slavs, who adopted Christianity largest cities besides Warsaw are Cracow in 966 A.D. The Polish Kingdom was – which is Poland’s historical capital and established in 1025 A.D. and encompassed its second largest metropolis, òdĖ, approximately 80% of today’s Polish 8rocìaw, Poznaí and Gdaísk. territory. After the reign of the Piasts, Poland consists mainly of lowland areas, Poland’s ancient ruling family, Poland with 75% of the land less than 200 was divided into a large number of metres above sea level. The countryside smaller kingdoms (113130). After the is nevertheless varied: there are beautiful consolidation of the country during the lake regions (9,300 in excess of one +agiellonian period (1312), Poland once hectare in size), forests and moVntains. again ĜoVrished cVltVrally and economically Poland’s highest peak, Rysy in the Tatra its territory at the end of the period was Mountains, rises 2,499 metres above several times larger than that of today’s sea level. 5he 8isìa (7istVla), Polandijs Poland. During the following 200 years, the longest river, measures 1,050 kilometres kings (inclVding a nVmber of foreign rVlers) in length. The second longest, the Odra were elected by a congress of noblemen. (0 kilometres), Ĝows along the border Their accumulated reigns brought about with Germany. prosperity and the accelerated growth of the country’s towns. Nevertheless, recurrent © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Investment in Poland | 5 wars eventually impoverished the economy of the worldwide depression. Following and led to rural stagnation. Germany’s invasion of Poland on 1st September 1939 – which gave rise to World Efforts to address the rapidly deteriorating War II – the country was divided between situation, including the proclamation of the Nazi Germany and the Soviet Union. The world’s second liberal constitution (after government was forced to Ĝee Poland, and that of the 6S), were Vndertaken mVch eventually resumed operations in England. too late. Poland’s neighbours resolved to Despite strong oppression by their invaders consolidate their forces, and took advantage Poles maintained a strong underground of its military and economic weakness by resistance throughout the war. imposing three consecutive partitions, in 1772, 1793 and 1795. The result of these Subsequent to World War II, Poland divisions was the total erasure of Poland once again regained its independence, from the map of Europe. The three regions althoVgh it was signifcantly restricted by a of partitioned Poland (under Russian, strong Soviet inĜVence over the coVntryijs PrVssian and AVstrian control) had varying economic and political systems. In 1945, it degrees of autonomy, but were constantly had 24 million inhabitants and covered an subject to new restrictions, primarily area of 311,700 square kilometres. Following directed against Polish culture and national the war, it lost signifcant territories and identity. This gave rise to a series of protests, cities in the &ast (inclVding -vov and 7ilniVs), which in 1830 and 1863 took the form of bVt acRVired some 8estern ones (8rocìaw general uprisings. and Szczecin), which were historically Polish. During this period, internal migration took At the end of World War I, Poland regained place on a massive scale. both its independence and control over a large part of its former territory. In 1919, the According to the prevailing Soviet doctrine, country had over 26 million inhabitants and all large farms and banks, and nearly the was approximately 25% larger than it is whole of industry, commerce, transport today. In 1939, there were already 35 million were nationalised and centrally managed. Poles, although a third of them had a mother In practice this brought more losses than tongue other than Polish. gains, along with a growing discontent among the population. Activity by the Between the two World Wars, Poland had democratic opposition eventually led to ample time to consolidate its national, several explosions of social discontent and political and legal identity economic the creation in 1980 of the Solidarity union consolidation was harder to achieve because ĸ the frst independent Vnion in Central © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6 | Investment in Poland Chapter 1 Poland – a Brief Summary and Eastern Europe since World War II. Monetary Fund, the World Bank, NATO, the Determined to stay in full control, in 1981 the OECD, and the Convention for the Protection authorities imposed martial law, which sent of Intellectual Rights, as well as other the opposition underground and resulted in international bodies. Until 1st May 2004, numerous economic sanctions by the West. Poland was also a member of the free-trade zone CEFTA. EU enlargement automatically In 1989, the Communist Party, in the wake terminated CEFTA membership for the new of general economic collapse and social EU countries – Poland, Czech and Slovak discontent, was effectively forced to step Republics, Hungary and Slovenia. aside in favour of the opposition following the ”round table” negotiations. The years following witnessed free presidential and 1.3 Government and Constitution parliamentary elections, recovery of political Poland is a parliamentary democracy and individual freedoms, regained external headed by a president elected in political autonomy, and the introduction of a general elections. The presidential market economy. term of offce is years from the date Since the collapse of communism in 1989, of swearing in. The president’s role, Poland has dramatically transformed its the election procedures, the functions economy and has enjoyed unsurpassed and responsibilities of the parliament success in terms of economic growth, and government are determined by the fnancial stability and investment provisions of the Constitution of the attractiveness. This is demonstrated by EUR Republic of Poland of 2nd April 1997. 153.3 billion of Foreign Direct Investment The president is the commander of the stock, as of December 2011. armed forces and may veto legislation Following a successful referendum on passed by the parliament. The vetoes European Union accession and subsequent can be overturned by a minimum of a approvals of the EU member countries, threeffths vote in the SeKm (the lower Poland joined the EU on 1st May 2004. hoVse of parliament). 5he president is the Along with nine other countries, Poland country’s top-level representative in all became a member of an economic and international and internal relations and his political organisation that will determine its powers also include the right to dissolve prospects for decades. the parliament and call new elections if Poland is a member of the United Nations the parliament proves unable to observe Organisation, UNIDO, the International constitutional deadlines for adopting © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Investment in Poland | 7 such key legislation as the budget or the conjunction with the Polish People’s Party composition of a new government. (PS-), a social conservative party ( of seats), formed the government. 5he -aw 5he president of Poland is #ronisìaw and +Vstice (PiS) party won 3 of seats. Komorowski of the governing Civic Platform (P0) party, elected on th +Vly The prime minister, nominated by the 2010. president to form a government and win a vote of confdence in the SeKm, chairs the Poland’s previous president was Lech Council of Ministers and is Poland’s head Kaczyíski, of the rightwing -aw and of government. Poland’s incumbent prime +Vstice party (PiS), elected in 0ctober minister is Donald Tusk, the leader of 2005. On 10th April 2010 the president Civic Platform (P0). together with his wife Maria and dozens of the country’s top political and military Poland is divided into 16 provinces leaders lost their lives in a plane crash with signifcant selfgoverning powers. in Smolensk. -ech Kaczyíski was Ĝying Each of the provinces (voivodeships – to Smolensk to commemorate the 70th woKewòdztwa) is headed by a provincial anniversary of the murder of Polish governor (voivode ĸ woKewoda) appointed offcers by the Soviet secret police. by the central government. The provinces The plane crash was the worst political are further divided into 379 counties disaster in the post-war history of Poland. (powiaty) and 2, commVnes (gminy). The local governments of the provinces, The bicameral parliament, composed of counties and communes are elected in a lower hoVse (SeKm) and Vpper hoVse general local elections the most recent (Senat), is elected every foVr years in elections were held in autumn 2010. general elections and is responsible for Local administrations are responsible creating laws. In this respect, it is the for managing local affairs, including the SeKm that has most of the power the allocation of public funds. Senate may only suggest amendments to legislation passed by the Sejm. Poland’s last parliamentary elections were held in 0ctober 2011. Civic Platform (P0), a centre-right party based on liberal conservative values won the elections for the second time in a row and received 45% of the seats in the Sejm, and in © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 8 | Investment in Poland Chapter 1 Poland – a Brief Summary 1.4 Currency it is important to note that the PLN exchange rate has been subject to strong Polandijs offcial cVrrency is the zìoty (P-/) ĜVctVations over the last. which is subdivided into 100 groszy. 5he P-/ is sVbKect to a Ĝoating eYchange rate applied to foreign currencies. The 1.5 Population and Language acceptable ĜVctVation range of the market Poland has 38.5 million inhabitants, 52% rate towards the central one as quoted of which are women. Over 98% of the by the Central #ank of Poland (/#P) is population is of Polish origin. More than not restricted and is determined solely by 60% live in cities, of which almost 50% market mechanisms. The 2012 average live in communities of over 100,000 NBP exchange rates were: USD 1 = inhabitants. The vast majority of Poles P-/ 3.2 &63 1 .1 P-/. )owever, () are 3oman Catholics. 3. of PLN EXCHANGE RATE 5,0 4,8 4,6 4,4 4,2 4,0 3,8 3,6 3,4 3,2 3,0 2,8 2,6 2,4 2,2 2,0 USD / PLN EUR / PLN Source: KPMG in Poland based on National Bank of Poland data © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Investment in Poland | 9 POPULATION BY AGE GROUPS Poland’s population is of working age. Polish is the offcial language; it belongs to the Indo-European group of languages 17,8% 18,3% and is part of the West Slavonic language Pre-working age (0-17) family. Working age/mobility (18 -44) Knowledge of foreign languages can be Working age/non-mobility (45-59/64) 23,9% rather limited, except in Poland’s main Post-working age (60/65+) cities. This situation is slightly better in 40,0% organisations which have frequent contact with foreigners. However, language problems may arise in local institutions 17,8% 18,3% and industrial enterprises. Pre-working age (0-17) English is best spoken in the major cities Working age/mobility (18 -44) and by the younger generation, whereas Working age/non-mobility (45-59/64) 23,9% German predominates amongst older Post-working age (60/65+) generation and in Western Poland. The 40,0% older generation, especially in the east Source: KPMG in Poland based on Polish part of the country, knows Russian. Central Statistical 0ffce data 1.6 Labour market universities, as well as highly esteemed medical academies. More than 492 As much as 17% of people aged over 13 thousand people graduated in 2011, of have completed higher education, with which 122 thousand majored in business a considerably higher education level and administration, 8.7 thousand in law, among women (19%, compared with 10 thousand in biology, 6.9 thousand in 14.8% among men). What is more, the physics, 4.2 thousand in mathematics and qualifcation levels of the Polish workforce statistics, 15.1 thousand in information are constantly increasing. Currently there technology, 28.1 thousand in engineering, are 1.7 million students in 453 higher 14.4 thousand in manufacturing, 14.6 education institutions in Poland, including thousand in architecture and construction a large number of technical and business and 42.6 thousand in medical studies. © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 10 | Investment in Poland Chapter 1 Poland – a Brief Summary AVERAGE MONTHLY GROSS SALARY (PLN) 4 000 Labour costs in Poland are still well below 3 500 3 103 3 225 3 400 3 522 the average EU level, comparable to 3 000 2 691 2 944 Hungary and Slovakia and lower than in 2 500 2 477 the Czech Republic. The average monthly gross salary amounted to about PLN 2 000 3.5 thousand (EUR 841) in 2012. The 1 500 unemployment rate amounted to 13.2% 1 000 at the end of H1 2013. However, it is still 500 below the levels recorded in 2000-2006, 0 when unemployment ranged from 15 to 2006 2007 2008 2009 2010 2011 2012 20%. Source: KPMG in Poland based on Polish Central Statistical 0ffce data REGISTERED UNEMPLOYMENT RATE 16,0% 14,8% 14,0% 13,4% 12,1% 12,4% 12,5% 12,0% 11,2% 10,0% 9,5% 8,0% 6,0% 4,0% 2,0% 0,0% 2006 2007 2008 2009 2010 2011 2012 Source: KPMG in Poland based on Polish Central Statistical 0ffce data (end of period) 1.7 Economy and foreign investment, Poland’s economy became the strongest in CEE. What is After the political changes in 1989 and the more, in the 21st century it remained one of transition to free-market economy, Poland the most stable and healthy economies in achieved considerable economic success. Europe. This was particularly visible in 2009 Driven by extensive internal demand, exports © 2013 KPMG Sp. z o.o. a Polish limited liability company and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.