Branches and Representative Offices in Poland
Irrespective of the size of a business in Poland, an entrepreneur is well aware that the primary factors responsible for the success of any business are to pursue new markets and establish a well-connected link of representative offices (branches, subsidiaries, departments, etc.). To see a list of the available companies, click HERE.
Still, regardless of the similarities of all these ideas, not every entrepreneur understands the subtleties of their differences, and this mainly decides how successful and profitable a venture will be. If you pick an invalid form of the previously mentioned different units, the extension of the company’s scope you are aiming for may never materialise. In the case that it somehow does, it will come at a great deal of loss and inconvenience. To avoid any eventual issues, we urge you to carefully understand the professional opinion concerning each of the following factors.
Representative offices, branches, departments in Poland. Similarities and differences
Generally, representative and branch office have very similar features in Poland, with working units of the organisational structure of a legal entity in European Union, but the major difference occurs in the difference of their remote geographical location from the point of the location of the legal entity.
Representative branches and offices in Poland have distinct functions, and thus they all attend to different functions in the business expansion process.
Representation offices in Poland, and especially registration method
In Poland, Representative offices act in place of their founding legal entity, i.e. cater to their interest. However, the power of branches is broader – they are not restricted to the representation of interests of legal entities, but in addition, they carry out their main functions in full or part.
In Poland, a representative office lacks the status of legal entity to carry out any commercial or industrial activity on the Territory of the Republic of Poland. Therefore, its function is restricted to just the promotion of its parent company. However, its representative office may sign and review contracts, oversee their advertisements and other implementations. The representative office must be registered in a special register of the Ministry of Economy (Trade and Services Department) in Warsaw.
As implied by its name, a representative office in Poland can only be registered in Poland. Also, a residential address will also need to be specified for the head of the representative office in Poland, in addition to other physical address, since most registered address (virtual offices) are not ideal. Furthermore, a representative office may have an office and legal address in Poland, even though the registration happens in the previously mentioned Ministry of Economy in Warsaw.
In the course of the process, a certificate attesting to the registration is issued based on the premise that the company can start operating. Also, the name of the parent company and representative office must be the same.
An office is first rented in the parent (foreign) company’s name.
Branch in Poland
Open a Branch in Poland. The branch of a company also doubles as its status of legal entity, all the shares which are owned by any other company, aside from a foreign one, in this instance, the functions of the company and its name is not dependent on the parent company. However, it represents the interest of its parent company, similar to a representative office. Although in this case, the branch is empowered to both negotiate and close deals on its behalf, carry out commercial, economic or any industrial activities, that the parent company is concerned with.
Department in Poland
A department lacks the status of a legal entity. And as such, its name should be the same as the parent company’s name, with an adscript “Branch in Poland.” In Poland, before you can register the branch of a foreign company, you must have a representative that lives in Poland (without any specific reference to nationality, as is the case of a representative office).
Even though the department does not grant the status of a legal entity, it is still entitled to keep a separate accounting. Therefore, the entire range of rights is still owned by the parent company. Also, the department may be a VAT player. Departments are often restricted due to the type of economic activity that their parent company is concerned with. For instance, if company ABC, LLC opens a branch in Poland, it will be called ABC, LLC Branch in Poland.
What shall be taken into account when you set up separate subdivisions in Poland
Rights of branches and representative offices in Poland are not totally equal to the rights of a legal person (i.e. their parent company), and as such, they lack the power to act on their behalf. Manager of remote subdivisions acts under the authority of attorney on behalf of a legal entity. Current distinct subdivisions of a company affect the formation of its constituent documentation because it must entail all the representative offices and branches. The entire unit must operate on the principle of internal regulations set in place by the parent company.
Entities often disregard the reality that if they set up any subdivision of their company in Poland, its sole tax regulation is insufficient. Also, it is mandatory to indicate relevant corrections to the constituent documents of the original company. This should not be forgotten.
The features that are naturally common to both separate subdivisions (branches, representative offices in Poland and other structural factors) of a legal entity is regarded as more important with reference to the taxation system. Some of them allow the chance of a simplified system of taxes to be used; others don’t. So, the appropriate choice of a separate subdivision will ensure that you are protected from financial losses.
To find out more about the expansion of a business in Poland, please reach out to us, and we will be glad to offer professional advice.
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