Description

Business Operations in Poland summarizes the main business and tax laws of Poland and provides general background information concerning operations in the country. The Portfolio analyzes in depth the of Polish income taxation as it applies to individuals and corporations.

In addition to providing a detailed explanation of the statutory and procedural framework of the Polish system of income taxation as it applies to both resident and nonresident corporations and individuals, this Portfolio, written by Slawomir Boruc and Pawel Świrski, both of Baker & McKenzie, discusses the legal forms of business enterprise and examines the practical non-tax problems that confront foreign businesses operating in Poland, including licensing and franchising, financing, anti-corruption rules, and the employment of  foreign individuals.

Business Operations in Poland also covers the other main Polish taxes including value added tax and excise taxes, transfer tax and stamp duty, and inheritance and gift tax. 

The Worksheets in this Portfolio include a number of tax-related forms as well as the text of the Poland-United States tax treaty.

Business Operations in Poland allows you to benefit from:

• A perspective that addresses the concerns of foreign investors/enterprises and their advisors looking to invest/do business or already invested/doing business in the country
• Identification of those features of the country’s system that are likely to prove most problematic to outside investors
• Emphasis on those aspects of the tax system that impact transactions and structures with a cross-border dimension
• Information and insight to enable users to anticipate the pitfalls and opportunities likely to arise in making an initial investment, carrying on operations and devising potential exit strategies
• Invaluable practice documents including tables, charts and lists
• Time-saving citations to relevant sections of tax laws, regulations, court cases, and more

This Portfolio is part of the Foreign Income Portfolios Library, a comprehensive series containing more than 100 Portfolios, which covers critical transactions and issues in international taxation. This highly-regarded resource library offers commentary on a wide range of foreign income topics including: Foreign Tax Credit, Business Operations in Italy, Business Operations in Puerto Rico, Branch ProfitsTax, Source of Income Rules, Subpart F (Controlled Foreign Corporations), Foreign Partnerships and Partners, Transfer Pricing, and more.

Table of Contents

Detailed Analysis

I. Poland - An Overview

A. Poland - the Country, People and Economy

1. Population

2. Political Organization

3. Economic Structure

B. Sources of Law

1. Statutes

2. Court System

3. Alternative Dispute Resolution

II. Operating a Business in Poland

A. Foreign Investment Regulations

1. Incentives

a. Tax Incentives

b. Nontax Incentives

c. Public Aid

2. Trade Licenses and Permits

3. Transaction Permits

4. General Notification Requirements

B. Currency and Exchange Controls

C. Trade and Commerce Regulation

1. Imports and Exports

a. Licenses and Quotas

b. Customs Duties and Other Taxes

c. Documentation

2. General Business Regulations

Content

a. Enforcement of the Antitrust Act

(1) Practices Restricting Competition

(a) Prohibited Conduct

(b) Exemptions

(2) Abuse of Dominant Position

b. Anticompetitive Practices - Fines

c. Leniency

d. Merger Control

(1) Notification Requirement

(2) Exemptions

(3) Non-compete Covenants

(4) Powers of the OCCP

(5) Fines

e. EU Antitrust and Merger Control Law

f. Unfair Trade Practices

(1) Acts of Unfair Competition

(2) Penalties

g. Protection of Consumers

(1) Prohibited Clauses

(2) Fines

(3) Unfair Commercial Practices

(4) Fines

h. Price Controls

i. Securities Regulation

(1) Shares

(2) Bonds

(3) Other Securities

(4) Public Trading in Securities

(5) Investment Funds

(a) Open-ended Funds

(b) Specialist Open-ended Funds

(c) Closed-ended Funds

(d) Special Structures of Investment Funds

(e) Special Types of Investment Funds

(f) Mixed Funds

D. Licensing and Franchising

1. General

2. Protection Afforded to Intangible Industrial Property Rights

a. International Treaties

b. Patents

c. Petty Patents - Utility Models

d. Industrial Designs

e. Topography of Integrated Circuits

f. Trade and Service Marks

g. Geographical Indications and Designations of Origin

h. Trade Names

i. Know-how

j. Copyright

E. Employment of Foreign Individuals in Poland

1. Residence Requirements

2. Work Permit

a. Issuance of Promissory Decision on Work Permit

b. Issue of Work Visa

c. Issuance of a Final Work Permit

3. Regulations on Employment of European Union Citizens in Poland

F. Labor Relations

1. Individual Labor Law

a. Definition of Employment Relationship

b. Continuing Employment after Merger or Takeover

c. Termination

d. Remuneration Regulations

e. Restriction on Competition

f. Work Regulations

2. Collective Labor Agreements

3. Co-determination - Employee Participation on Corporate Boards

a. Act on Trade Unions

b. Act on European Work Councils

c. Action on Information and Consultation of Employees

4. Redundancies

5. Social Insurance

6. Temporary Employment Agencies

G. Financing the Business

1. Shareholder Financing

a. Equity Capital

b. Debt Financing by Way of Shareholders' Loans

c. Shareholders' Loans

(1) Forgiveness or Waiver of a Shareholder's Loan

(2) Silent Participation Agreement (spolka cicha)

(3) Participation Rights

d. Debt/Equity Considerations

2. External Financing

H. Combating Corruption

1. Polish Criminal Code

2. International Conventions

III. Forms of Doing Business in Poland

A. Principal Business Entities

1. Sole Proprietorships and Partnerships

a. Registered Partnerships

b. Professional Partnerships

c. Limited Partnerships

d. Partnerships Limited by Shares

2. Limited Liability Company

3. Joint Stock Company

4. Branch of a Foreign Entrepreneur and Representative Office

5. European Economic Interest Grouping

6. European Company (SE)

7. Other Entities

B. Limited Liability Company

1. Formation

a. Scope of Activities

b. Corporate Name

c. Incorporators

d. Articles of Association

e. Share Capital

f. Incorporation Procedure

g. Costs of Incorporation

h. Company in Process of Organization

2. Operation

a. License

b. Amendment of the Articles of Association

c. Increases and Decreases of Share Capital

d. Acquisition of the Company's Shares

e. Management Board

f. Supervisory Board/Audit Commission

g. Shareholders' Meeting

h. Books and Records

i. Financial Statements

j. Dividends and Other Forms of Profit Distribution

k. Reserves

3. Mergers

4. Dissolution and Liquidation

5. Reorganization (Domestic and International)

6. Corporate Spin-offs

C. Joint Stock Company

1. Formation

a. Scope of Activities

b. Corporate Name

c. Incorporators

d. Statute

e. Share Capital

f. Incorporation Procedure

g. Costs of Incorporation

h. Company in Process of Organization

2. Operation

a. License

b. Amendment of the Charter

c. Increases and Decreases of Share Capital

d. Acquisition of the Company's Shares

e. Management Board

f. Supervisory Board/Audit Commission

g. General Meeting of Shareholders

h. Books and Records

i. Financial Statements

j. Dividends and Other Forms of Profit Distribution

k. Reserves

3. Mergers

4. Dissolution and Liquidation

5. Reorganization

D. Limited Partnership

1. Formation

a. Scope of Activities

b. Corporate Name

c. Incorporators

d. Articles of Association

e. Capital and Contributions of Partners

f. Incorporation Procedure

g. Costs of Incorporation

2. Operation

a. License

b. Amendment of Articles of Association

c. Management

d. Supervision

e. Books and Records

f. Financial Statements

g. Dividends and Other Forms of Profit Distribution

h. Reserves

3. Mergers

4. Dissolution and Liquidation

5. Reorganization

6. Division

E. Representative Office of a Foreign Entrepreneur

1. Registration

2. Liability

3. Books and Records

IV. Principal Taxes

A. Personal Income Tax

B. Corporate Income Tax

C. Value Added Tax and Excise Taxes

D. Transfer Tax and Stamp Duty

E. Inheritance and Gift Tax

F. Gaming Tax

G. Payments on Profits Made by Companies Owned by the State Treasury and State Enterprises

H. Local Taxes and Fees

I. Agricultural and Forest Taxes

J. Tax Relief in Special Economic Zones

V. Taxation of Domestic Corporations

A. What Is a Domestic Corporation?

B. Corporate Income Tax

1. Taxation of Worldwide Income

2. Accounting

a. General

b. Tax Year

c. Tax Year Versus Financial Year

d. Accounting Methods

e. Consolidated Returns

3. Calculation of Income

a. General

b. Capital Gains

(1) General Rule

(2) Capital Gains Realized on the Sale of a Fixed Asset

c. Dividend Income

d. Accrued Income

e. Foreign Exchange Fluctuations

f. Income from Particular Sources

g. Income from Foreign Sources

h. Exclusions from Income

4. Business Expenses

a. General

b. Organizational Expenses

c. Travel, Advertising and Entertainment Expenses

d. Advertising Medicinal Products

e. Interest and Royalties

f. Charitable and Other Donations

g. Rent

h. Repairs and Maintenance

i. Casualty Losses

j. Depreciation and Amortization

(1) General

(2) Basis and Methods of Depreciation

(3) Depreciation Rates

(4) Accelerated Depreciation

k. Shares

l. Bad Debts

m. Reserves

n. Salaries and Wages

o. Expenses Incurred to Acquire New Technology

p. Health Care Expenses

q. Items Not Treated as Tax-deductible Expenses

5. Capital Expenditures

6. Loss Carryovers and Carrybacks

7. Foreign Tax Credit (or Exemption)

8. Calculation of Taxable Income and Tax Rates

9. Administration - Returns and Payments

a. Monthly Reconciliation

b. Annual Reconciliation

10. Special Corporate Income Tax Relief

a. General

b. Permits

c. Relief Related to New Investment Expenditures

d. Relief Related to Employment

e. Tax Relief in Special Economic Zones - Poland's Membership in the European Union

VI. Taxation of Foreign Corporations

A. What Is a Foreign Corporation

B. Determination of Taxable Income

1. Business Profits

2. Income from Capital Investments

a. General

b. Royalties

c. Interest

d. Dividends

e. Capital Gains from the Sale of Polish-situs Real Property

f. Management, Control, Guarantee, Advisory or Market Research or Similar Services

C. Method of Assessment - Tax Rates

D. Subsidiary versus Branch

1. Scope of Activities

2. Method of Taxation

VII. Adjustment of Intercompany Prices

A. Scope of the Provision

B. Competent Authorities

C. Advance Pricing Agreements

VIII. Transactions Subject to Reporting

IX. Taxation of Partnerships

X. Taxation of Resident Individuals

A. Scope of Taxation

B. Residence

C. Determination of Income

1. Taxation of Employee Salary

a. Definition

b. Withholding at Source

2. Taxation of Income from Independent Personal Services

a. In General

b. Income Derived from Personal Activities under a Management Contract

3. Income from Business Activities

a. Determining the Amount of Gross Income

b. Business Expenses

c. Method of Payment

4. Income from Real Property

5. Investment Income and Capital Gains

6. Gains from the Sale or Exchange of Real Property and Certain Property Rights

7. Income from Undisclosed Sources

8. Taxation of Small Business Owners

D. Calculation of Taxable Income, Allowances, Deductions and Exemptions

1. Deductions

2. Expenses Incurred to Acquire New Technology

3. Exemptions

4. Exemptions for Income Derived Within Special Economic Zones

E. Tax Rates

F. Assessment and Filing

G. Joint Taxation of Spouses

1. In General

2. Benefits of Joint Income Tax Settlement

H. Taxation of Persons Bringing up Children Single-Handedly

XI. Taxation of Nonresident Individuals

A. General

B. Business Income

C. Income from Personal Services

1. Taxation of Employees' Salaries

2. Taxation of Income from Independent Services

D. Investment Income

1. Interest

2. Dividends

E. Royalties

F. Capital Gains

1. Sale of Shares in a Polish Company

2. Other Capital Gains

G. Method of Taxation

XII. Shares

XIII. Value Added Tax and Excise Tax

A. Scope of Taxation

B. Taxpayers

C. Taxable Activities

1. Supply of Goods

2. Supply of Services

3. Intra-European Union Acquisition of Goods

4. Intra-European Union Supply of Goods

5. Export and Import of Goods

D. Place of Supply

1. Place of Supply of Goods

2. Place of Supply of Services

E. Exemptions

1. Exemptions Based on Type of Activity

2. Exemptions Based on Turnover

3. Other Exemptions

F. Filing Procedures

G. Value Added Tax Deductions

H. Refund of Tax

I. Time Limits for Refund of Tax

J. Refund of Polish Value Added Tax to Foreign Entities

K. Excise Tax

1. Taxable Activities

2. Taxpayers

3. Excise Tax Suspension Procedure

4. Payment Rules and Periods

XIV. Transfer Tax

A. Scope of Taxation

B. Civil Law Activities Not Subject to Transfer Tax

C. Exemptions

D. Tax Liability

E. Taxable Base

F. Rates of Transfer Tax

G. Payment of Transfer Tax

XV. Stamp Duty

A. Scope of Taxation

B. Exemptions from Stamp Duty

C. Rates of Stamp Duty

D. Liability for Payment

XVI. Real Property Tax

A. Scope of Taxation

B. Property Not Subject to Real Property Tax

C. Taxpayers

D. Taxable Base

E. Tax Rates

F. Exemptions

G. Procedures

H. Real Property Tax Register

XVII. Inheritance and Gift Tax

A. General

B. Tax Liability

C. Taxable Base

D. Tax Rates

E. Tax Relief for Residential Purposes

F. Tax Treaties

XVIII. Tax on Means of Transportation

A. Taxable Types of Means of Transportation

B. Tax Liability

C. Tax Rates

D. Deadlines for Paying the Tax

E. Exemptions

XIX. Tax Law Circumvention Clause

A. Introduction of Tax Law Circumvention Clause

B. Powers of Tax and Tax Audit Authorities

XX. Binding Rules Issued by the Minister of Finance

XXI. Avoidance of Double Taxation

Introductory Material

A. Tax Credit and Exemption Methods

B. Tax Treaties

1. Existing Tax Treaties

2. Taxation of Business Income

a. Permanent Establishment

b. Business Profits

3. Taxation of Investment Income

a. Dividends

b. Interest

c. Royalties

4. Poland-United States Tax Treaty

Working Papers

Table of Worksheets

Worksheet 1 CIT-2 Corporate Income Tax Monthly Return

Worksheet 2 CIT-8 Corporate Income Tax Annual Return

Worksheet 3 PIT-5 Personal Income Tax Monthly Return

Worksheet 4 VAT-7 VAT Monthly Return

Worksheet 5 VAT-R Registration Form for VAT Taxpayers

Worksheet 6 NIP-2 Tax Identification Number Registration Form

Worksheet 7 ITF-1 Information Regarding Withholding Tax on Royalties and Interest

Worksheet 8 CIT-6 Information Regarding Withholding Tax on Dividends

Worksheet 9 List of Comprehensive Double Taxation Agreements and Related Protocols Signed by Poland as of March 1, 2008

Worksheet 10 Table of Withholding Tax Rates

Worksheet 11 1974 Poland-United States Income Tax Treaty

Worksheet 12 Ordinance of the Minister of Finance of December 11, 2000, Concerning Territories and Countries Considered to Be Harmful Tax Competitors

Worksheet 13 List of Countries (Territories) in the Case of Which Service Import Tax Is Not Deductible for VAT Purposes

Worksheet 14 List of Countries Complying with the Rule of Reciprocity and EU Member States, for Purposes of Applying for a VAT Refund

Bibliography

Listings

Authors