Common mistakes foreign companies make when starting a business in Poland

The most common mistakes when starting a business in Poland rarely result from one incorrect decision. More often, they arise because company registration, signing an investment agreement, hiring employees or launching the first sales take place before tax implications have been analysed, accounting processes prepared or rules for settlements with the foreign head office properly established.

The greatest risk arises when Polish market entry is treated as a simple extension of a business model already used in other countries. Legal form, financial systems, intra-group settlements, employment arrangements and management board responsibilities must all be adapted to Polish requirements. The earlier a company addresses these differences, the lower the risk of later corrections, additional costs and delays.

Choosing a business structure in Poland – company or branch?

One of the most important decisions for a foreign investor is how to conduct business in Poland. Problems arise when the legal form is selected before the intended operating model of the Polish business has been clearly defined.

A subsidiary and a branch of a foreign company differ in more than just registration formalities. They are also subject to different rules regarding liability, management, accounting and settlements with the foreign head office.

Company or branch – key differences

The cost of establishing the entity or the speed of registration should therefore not be the main selection criteria. A company planning long-term operations, a larger workforce, its own commercial contracts and local assets will have different needs from a business carrying out a limited range of functions in Poland on behalf of its head office.

Before making a decision, it is worth determining who will sign contracts with customers, who will bear liability for obligations, how the business will be financed and what financial flows will occur between Poland and the foreign head office. At this stage, the company should also assess whether the planned operating model could create a permanent establishment in Poland for tax purposes.

In practice, the form of business should be a consequence of the chosen operating model, rather than the starting point for designing it.

Investment support should be assessed before the project actually begins

Another common problem is assessing available tax relief, grants and other support instruments too late. Some businesses begin implementing a project, sign their first agreements or order fixed assets before analysing whether they may qualify for available incentives.

For some programmes, this sequence may restrict or exclude access to support. This is particularly important for investments involving construction of a production facility, purchase of machinery, expansion of existing operations or research and development projects.

Instruments that may require advance analysis include the Polish Investment Zone, R&D tax relief, IP Box and selected grant programmes. Not every project will meet the conditions of a particular scheme, but eligibility should be checked before taking steps that cannot later be reversed.

For example, a foreign manufacturer may plan an investment in a new plant and sign binding agreements covering part of the project before assessing the available support. If those actions are treated as the start of the investment under a particular programme, the company may lose access to the relevant instrument.

For this reason, analysis of tax incentives and funding should form part of the investment process itself, rather than being treated as an additional stage after the budget has already been approved.

KSeF, JPK and accounting – preparation before the first sale

Once the registration stage is complete, another challenge arises: preparing financial and accounting systems for actual operations in Poland.

International groups often use one central enterprise resource planning (ERP) system. This can be efficient, but only if the system has been properly adapted to local requirements.

In Poland, relevant requirements include the National e-Invoicing System (KSeF), JPK_VAT and new accounting records reporting obligations under JPK_PD, including JPK_KR_PD for taxpayers maintaining accounting books. Technical system integration alone does not solve every issue. The company must also know where invoice data comes from, who is responsible for its accuracy, how documents are transferred into the accounting records and how differences between group reporting and Polish statutory records are identified.

If these matters are addressed only after sales begin, the number of manual corrections and the risk of inconsistent data can increase quickly. A central system may, for example, correctly process invoices under group standards while not being properly configured for Polish tax and reporting requirements.

In such a case, the company begins adapting its processes only after issuing its first documents. This means operating the business while simultaneously correcting a system that should have been ready earlier.

Accounting configuration, document workflows and invoicing processes should therefore be completed before the first transaction. This is also one of the key elements in preparing a foreign company for Polish market entry.

Settlements with the head office: transfer pricing and withholding tax

A Polish company operating within an international group will usually rely from the outset on certain resources provided by the head office or other related entities. These may include IT services, financing, management, marketing, licences, trademarks or other services. Problems arise when the first invoices or payments appear before the settlement rules have been formally established.

Transfer pricing starts with the business model

Transfer pricing obligations should not be reduced to preparing documentation after the end of the year. The key issue is to define the actual role of the Polish entity in advance.

The company should determine what functions it performs, what assets it uses, what risks it assumes and how these factors should be reflected in its remuneration. Only on that basis can it assess whether the settlement method used with related entities reflects the actual operating model.

As a rule, the documentation thresholds for homogeneous controlled transactions are:

However, remaining below a given threshold does not mean that settlements between related parties can be determined freely. The terms of such transactions should comply with the arm’s length principle.

For example, the head office may regularly charge the Polish company for management services. If the local team does not have documentation showing what services were actually provided, who benefited from them and how the remuneration was calculated, problems may arise well before transfer pricing documentation is prepared.

Withholding tax should be reviewed before payment

Cross-border payments may also trigger obligations under withholding tax (WHT Poland) rules. This applies, among other things, to dividends, interest and royalties.

For certain payments covered by WHT rules and made to a related party, exceeding an aggregate amount of PLN 2 million in a tax year to the same taxpayer may trigger the pay-and-refund mechanism.

If the WHT analysis begins only when the payment is about to be made, the company may not have enough time to collect the necessary documentation and assess whether the relevant tax preference can be applied. The tax implications of financial flows between the Polish entity and other group companies should therefore be analysed before the first significant payments are made.

Employment costs in Poland – what should not be overlooked?

Employment is one of the most important components of an investment budget. Despite this, some foreign companies calculate workforce costs mainly on the basis of gross salaries, without fully accounting for other employer costs.

Employers also incur social insurance contributions, obligations under Polish employment law, payroll administration costs and, where relevant, employee relocation expenses. For larger teams, the difference between gross salary and the actual cost of employment can materially affect project economics.

For example, an investor may plan to hire several dozen employees and prepare a budget based solely on agreed gross salaries. Only when payroll is being organised does it become clear that the total employer cost is higher than originally assumed. The issue becomes even more complex when part of the workforce is to be relocated to Poland from other countries.

Employee relocation can affect the planned start of operations

Depending on nationality, residence status and the type of work performed, additional requirements relating to legal residence and employment may apply.

Not every foreign national requires a work permit, but companies should not assume that the procedure will be identical for every employee relocated within the group. If the company sets a start date before the relevant formalities have been completed, some employees may be unable to begin work according to the original schedule.

Local employer obligations must also be taken into account, including registration of the employee with the Social Insurance Institution (ZUS), generally within seven days of the date on which the insurance obligation arises.

For this reason, recruitment and relocation should be planned together with the operational launch schedule, rather than treated as a separate project that begins only after the start date has already been fixed.

Accounting should not be organised only after several months of operations

During the first months of a company’s activity, the main priorities are usually sales, recruitment and organising day-to-day operations. Accounting is therefore sometimes treated as an administrative function that can be organised later.

In international structures, however, this approach can quickly create problems with data quality. The same transaction may be correctly recognised for group reporting purposes but require a different classification under Polish accounting or tax rules.

If such differences accumulate over several months, reconstructing documentation and reconciling balances later becomes much more labour-intensive. Before operations begin, the company should therefore define the chart of accounts, document workflows, expenditure approval rules, closing timetable and scope of reporting to the head office. It should also establish who is responsible for reconciling data and explaining discrepancies between local accounting and group reporting.

Where accounting is outsourced, it is equally important to clearly define the division of responsibilities between the company and the external service provider. getsix® can support a business during its Polish market entry by helping organise accounting and tax processes before operational activities begin.

Appointing a management board does not mean the company is operationally ready

Foreign investors often focus on formally appointing management board members and only later consider how those individuals will perform their actual duties.

This issue is particularly relevant for companies managed by individuals who live outside Poland. In practice, important matters may include how documents are signed, access to electronic systems, appropriately prepared powers of attorney and the ability to represent the company before public authorities.

In certain situations, a Polish personal identification number (PESEL) may also be relevant. However, this does not mean that every person without a PESEL automatically cannot perform the duties of a management board member. The appropriate solution depends on the specific activity and the system being used.

Problems arise when the company begins verifying these matters only shortly before the first important tax or reporting deadline. A safer approach is to prepare in advance a list of activities requiring management board involvement and determine which tools, authorisations and powers of attorney will be needed.

Lack of coordination between teams is often the biggest problem

Many mistakes made by foreign companies in Poland do not result directly from an incorrect interpretation of regulations. Instead, they arise from a lack of coordination between the teams responsible for different parts of the project.

The legal team registers the company, HR starts recruitment, IT implements the system, procurement signs the first agreements, while the group’s finance team establishes financing and intra-group settlement arrangements. Each of these teams may perform its own tasks correctly, but if there is no shared timetable, decisions may still be made in the wrong order.

For example, an investment agreement may be signed before available support is assessed, an employee may receive a start date before immigration formalities are completed, or the first payment to the head office may be made before WHT implications are analysed.

For larger projects, it is therefore worth appointing a person responsible for coordinating the entire process and creating one implementation schedule covering legal, tax, accounting, HR, financial and operational matters.

How to organise the start of operations in Poland

The most practical approach is to plan activities around the points after which changing a decision becomes more difficult or more expensive.

Before registration and the start of the investment, the company should analyse the business structure, financing model, potential tax incentives and available investment support instruments.

Before the first invoice is issued, accounting systems, invoicing processes, document workflows, KSeF and the required JPK structures should be ready.

Before the first payment to a group company, the company should establish intra-group settlement rules, the remuneration calculation method, required documentation and any potential withholding tax obligations.

Before the first employee is hired, the company should understand the full employer cost, payroll administration model and requirements applicable to foreign employees.

Before the first period-end close, reporting rules, responsibility for data and the practical arrangements for management board members to fulfil their obligations should also be established.

This approach shifts the focus from fixing problems later to designing the right processes in advance.

Frequently asked questions about starting a business in Poland

Conclusion

Mistakes made by foreign companies in Poland rarely come down to one overlooked formality. Much more often, they result from decisions being taken in the wrong order and from insufficient coordination between legal, tax, accounting and operational areas.

The business structure affects liability and settlement arrangements, the financing model determines financial flows between Poland and the head office, employment arrangements affect the actual cost of the project, and the preparation of financial systems determines whether reporting obligations can be fulfilled correctly.

For this reason, the Polish project should be treated as a separate implementation process, even if the company already operates in many other markets. Organising the key decisions in advance reduces the risk of having to change processes after operations have already started.

getsix® supports foreign companies in organising key areas before starting business activities in Poland – from choosing the right structure and setting up accounting processes to preparing tax and operational procedures. Support at the Polish market entry stage helps identify risks earlier and reduces the need to correct solutions once operations are already underway.

This article was written by the getsix® Editorial Team
getsix® provides accounting, tax advisory, HR and payroll, and business consulting services, supporting companies operating in Poland. The getsix® Editorial Team prepares practical information that makes Polish accounting, tax, and HR and payroll matters easier to understand.

If you have any questions regarding this topic or if you are in need for any additional information – please do not hesitate to contact us:

Ask a question »

CUSTOMER RELATIONSHIPS DEPARTMENT

ELŻBIETA
NARON-GROCHALSKA
Head of Customer Relationships
Department / Senior Manager
getsix® Group

***