The opening of branches and representative offices in Poland.
Regardless of the scale of business in Poland, both a large-and small-scale entrepreneur knows that the fundamental constituent of success of any company is to move forward to new markets and the pursuit of a well-developed network of representative offices (departments, branches, subsidiaries, etc).However despite the similarity of all these concepts, not every businessman can understand the subtleties of their differences, and it is what the profitability of the venture directly depends on. If you choose a wrong form of the above-listed geographically separated units, the extension of the company’s scope you’re striving to, may never occur. Even if the success takes place, it may entail a lot of inconvenience and losses. In order to avoid any possible business troubles, we offer you to study the expert opinion carefully regarding each of the following points. To check the list of available companies click HERE.
Representative offices, branches, departments in Poland. Similarities and differences
On the whole, branch and representative office in Poland have similar features with other functional units of the organizational structure of a legal entity in European Union, but the main difference lies in the fact that they are geographically remote from the point of location of the legal entity.
Representative offices and branches in Poland have different purposes and therefore play very different roles in the process of business expansion.
Representation offices in Poland, and especially registration method
Representative offices in Poland act on behalf of their founding legal entity, i.e. defend its interests. The powers of branches are a bit wider - they are not limited to representation of interests of legal entities, but along with that perform its main functions (fully or partially)
A representative office of a foreign company cannot carry out industrial or commercial activities on the territory of the Republic of Poland and does not have the status of a legal entity, in other words, its function is limited to promotion of the parent company. Thus, the representative office may sign contracts, monitor their implementation and various ways to advertise their company. The representative office is registered in a special register of the Ministry of Economy (Trade and Services Department) in Warsaw.
As the name already implies, only a foreign company can register a representative office in Poland. You will also have to specify a residential address of the head of the representative office in Poland, as well as a physical address, since the most of registered legal address (virtual offices) are not suitable.A representation office can have a legal address and an office in any city of Poland, despite the fact that the registration takes place in the aforementioned Ministry of Economy in Warsaw. During the procedure, a certificate confirming the registration is issued on the basis of which it is possible to start the operation. The name of the representative office shall coincide with the parent company’s name.
An office is initially leased in the parent (foreign) company’s name.
Branch in Poland
Establish a Branch in Poland. A company’s branch has the status of a legal entity, 100% shares of which are owned by other company, not only a foreign one, in this case, the activities of the company and its name does not depend on the parent company. It represents the parent company’s interests just like the representative office, but the branch is empowered not only to negotiate but also conclude transactions on its behalf, carry out industrial, commercial or any other economic activities, that the parent company does itself.
Department in Poland
A department does not have the status of a legal entity. Its name should fully coincide with the parent company’s name, with an adscript "Branch in Poland". To register a branch of a foreign company in Poland, you should also have a representative residing in the territory of the Republic of Poland (without reference to the nationality, as in the case of a representative office). Despite the fact that the department does not grant the status of a legal entity, it is entitled to maintain separate accounting. In other words, the parent company owns the whole range of rights. The department can be a VAT payer. Departments are limited in respect to economic activity types to the activity types of their parent company. For example, if the company ХYZ, LLC forms a branch in Poland, it will be called ХYZ, 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 absolutely not equivalent to the ones of a legal person (i.e. their parent company) and as a result, they cannot act on their own behalf. Managers of remote subdivisions act under powers of attorney on behalf of a legal entity. Existing separate subdivisions of a company affect the composition of its constituent documentation, because it should include all the branches and representative offices. All these units shall act on the basis of internal regulations ratified by the parent company.
Entities often do not take into account the fact that when they open any subdivision of their company in Poland, its sole tax registration is insufficient, in addition, it is necessary to introduce relevant amendments to the constituent documents of the parent company and this should not be neglected.
The features that are inherent to each of the separate subdivisions (branches, representative offices in Poland and other structural elements) of a legal entity acquire more importance when the taxation system is concerned. Some of them provide an opportunity to use a simplified system of taxes, and others don't. Therefore, the correct choice of a separate subdivision will help you to protect yourself from financial losses.
If you want to get more detailed and specific information with regards to business expansion in Poland, we will be glad to help you with competent advice!