Branch of a Foreign Company in Poland
How to Establish a Branch of a Foreign Company in Poland: A Practical Guide for International Entrepreneurs
Expanding into the Polish market does not necessitate incorporating a separate legal entity. A foreign entrepreneur may conduct business operations in Poland through a branch—an organizational structure that functions as an extension of the parent company and operates on its behalf. Establishing a branch in Poland combines relative procedural simplicity with the capacity to engage in full-scale commercial operations on the territory of the Republic of Poland.
Understanding the Branch of a Foreign Company in Poland
A branch of a foreign company constitutes an organizationally separate and autonomous segment of business activity conducted by an entrepreneur outside its registered seat or principal place of business. This definition derives from Article 3(4) of the Act on the Principles of Participation of Foreign Entrepreneurs and Other Foreign Persons in Economic Activity on the Territory of the Republic of Poland.
In practical terms, a branch in Poland represents an operational center possessing its own management, material resources, and the capacity to negotiate with third parties. Crucially, however, a branch is not a distinct legal entity—it possesses neither legal personality nor legal capacity. All legal transactions executed through the branch create rights and obligations directly for the foreign entrepreneur that established it.
The Court of Justice of the European Union has developed substantial jurisprudence clarifying the essential characteristics of a branch. In the Somafer judgment (C-33/78), the Court established that a branch, agency, or other establishment implies a place of business possessing the appearance of permanency, functioning as an extension of the parent body, equipped with management and material resources enabling negotiation of business with third parties—such that those third parties, while aware that a legal relationship will ultimately connect them with the parent body headquartered abroad, need not deal directly with that parent body but may transact business at the local establishment constituting its extension.
The Blanckaert & Willems judgment (C-139/80) further refined these criteria by articulating three factors that preclude qualification as a branch or establishment: first, where the representative remains fundamentally free to organize their own work and working hours without instructions from the parent body; second, where the representative may simultaneously represent several competing firms in the same manufacturing or marketing sector; and third, where the representative merely transmits orders to the parent undertaking without participating in either the terms or execution of transactions.
These criteria derive from the foundational requirement established in De Bloos (C-14/76): that a branch or agency must be subject to the direction and control of the parent body. The absence of such subordination—characteristic of independent commercial agents—negates branch status regardless of the commercial relationship’s duration or intensity.
Eligibility to Establish a Branch of a Foreign Company in Poland
Polish commercial law differentiates the legal position of foreign entrepreneurs based on their country of origin.
Entrepreneurs from European Union Member States and EFTA states party to the Agreement on the European Economic Area may establish branches in Poland on the principle of equal treatment with Polish entrepreneurs. Establishing a branch in Poland by such a foreign entrepreneur requires no additional conditions or demonstration of reciprocity.
Foreign entrepreneurs from other countries may establish branches on the basis of reciprocity, unless ratified international agreements provide otherwise. Consequently, the ability of an entrepreneur from the United States, China, or the United Arab Emirates to establish a branch of a foreign company in Poland depends on whether Polish entrepreneurs enjoy analogous rights in those jurisdictions.
A foreign entrepreneur, as defined by the Act, encompasses both foreign persons conducting business abroad and Polish citizens conducting business activity outside Poland.
Scope of Permitted Activity for a Branch in Poland
The Act imposes a significant limitation: a foreign entrepreneur may conduct business activity through a branch exclusively within the scope of activity it pursues abroad. A branch in Poland cannot therefore expand the parent company’s business scope—it may only execute part or all of what the parent company does in its country of origin.
If a foreign entrepreneur conducts manufacturing and trading activities abroad, the Polish branch may engage in both. It cannot, however, undertake real estate development if the parent company does not pursue such activity.
Registration Procedure for a Branch of a Foreign Company
Establishing a branch of a foreign entrepreneur requires entry in the Register of Entrepreneurs maintained within the National Court Register (KRS). A foreign entrepreneur may commence activity through a branch only upon obtaining such registration.
Documentation Requirements for Branch Registration in Poland
The application for registration must include documents specified in the KRS regulations, supplemented by the following pursuant to Article 18 of the Act:
Where the foreign entrepreneur operates on the basis of articles of association, a partnership agreement, or statutes—certified copies of these documents together with sworn translations into Polish. When the entrepreneur establishes multiple branches in Poland, originals may be filed with one branch’s registry file, while other branches’ files contain copies with indication of where the originals are deposited.
Where the entrepreneur exists or operates on the basis of registration in a commercial register—an extract from that register together with a sworn translation into Polish. The same principle applies regarding multiple branches.
Mandatory Appointment of a Branch Representative
A foreign entrepreneur establishing a branch in Poland must appoint a person authorized to represent the foreign entrepreneur in the branch. This individual acts as the parent company’s representative in matters related to branch operations.
Post-Registration Obligations for a Branch of a Foreign Company
Branch Designation
The branch must use the original name of the foreign entrepreneur together with the Polish translation of the legal form and the words “oddział w Polsce” (branch in Poland). For example: ABC GmbH Spółka z ograniczoną odpowiedzialnością oddział w Polsce.
Accounting Requirements for the Branch
Separate accounting records must be maintained for the branch of a foreign entrepreneur in Polish, in accordance with Polish accounting regulations. This requirement is absolute, irrespective of accounting standards applicable in the entrepreneur’s country of origin.
Reporting Obligations
The foreign entrepreneur must notify the minister responsible for economic affairs of any changes in factual or legal circumstances concerning the commencement of liquidation proceedings or loss of the right to conduct business activity—within 14 days of occurrence.
Legal Consequences of the Branch Structure in Poland
Liability of the Foreign Entrepreneur
Since a branch possesses no legal personality, the foreign entrepreneur bears unlimited liability for all obligations arising in connection with branch operations. Counterparties of the branch are simultaneously counterparties of the parent company. This represents a fundamental distinction compared with the liability framework for board members of a limited liability company, which is generally limited.
Capacity to Sue and Be Sued
The party to court proceedings concerning matters related to branch activity is the foreign entrepreneur, not the branch. The Supreme Court has repeatedly confirmed that a branch of a foreign legal person lacks capacity to be a party to litigation. Where a lawsuit designates the branch as a party, the court treats the legal person whose branch was named as the proper party—there are no grounds for dismissing the action for lack of legal capacity.
Licenses and Permits
The foreign entrepreneur—not its branch in Poland—is the holder of rights arising from concessions, permits, or entries in registers of regulated activity.
Employer Status
A branch of a foreign company may qualify as an employer under the Labor Code if the foreign entrepreneur authorizes it to independently acquire rights and assume obligations in employment matters. Under Article 3 of the Labor Code, an employer is an organizational unit, even one lacking legal personality, that employs workers.
Taxation of a Branch of a Foreign Entrepreneur in Poland
Corporate Income Tax (CIT)
A branch of a foreign entrepreneur is a corporate income tax payer on income earned in Poland from conducting business activity. Taxation applies to income generated by the branch, not the entirety of the parent company’s income.
Value Added Tax (VAT)
For VAT purposes, a branch possesses no separate legal personality—the foreign entrepreneur remains the taxpayer. This represents a significant distinction from the corporate income tax treatment.
Distinguishing a Branch from an Independent Agent: Practical Implications
The CJEU jurisprudence carries direct practical consequences for structuring commercial relationships in Poland.
When an arrangement constitutes a branch. A foreign entrepreneur operating through a local representative will be deemed to maintain a branch in Poland where that representative acts under the entrepreneur’s direction and control, operates from premises identified with the entrepreneur, lacks authority to represent competing businesses, and participates substantively in negotiating contract terms and overseeing their performance. Such arrangements trigger the full panoply of branch registration requirements under Polish law.
When an arrangement does not constitute a branch. A foreign entrepreneur engaging an independent commercial agent—one who freely organizes their work schedule, may represent multiple principals including competitors, and functions merely as a conduit for transmitting orders without involvement in contractual terms—does not thereby establish a branch in Poland. No KRS registration obligation arises from the agency relationship itself.
The tax dimension remains distinct. Critically, the corporate law analysis does not resolve the tax question. Even where no branch exists under commercial law criteria, a permanent establishment of the dependent agent type may arise under tax treaty definitions if the agent habitually exercises authority to conclude contracts binding the foreign entrepreneur. The CJEU criteria for branch status and the OECD criteria for dependent agent PE, while conceptually related, operate independently. A representative who fails the Blanckaert test for branch status may nonetheless satisfy the dependent agent PE threshold—particularly where contract-concluding authority exists despite organizational independence.
This divergence mandates separate analysis under both frameworks when structuring cross-border commercial representation in Poland.
Branch versus Permanent Establishment: A Critical Distinction for Foreign Entrepreneurs
The concepts of “branch” and “permanent establishment” are sometimes used interchangeably, yet they operate within distinct legal frameworks and do not fully overlap.
A branch of a foreign company is a commercial law construct requiring formal registration in the KRS, creating a separately organized unit. A permanent establishment is an international tax law concept arising from the factual circumstances of conducting business, determining a jurisdiction’s right to tax enterprise profits.
The critical insight: one may have a permanent establishment in Poland without registering a branch in the KRS. This situation most commonly arises through a dependent agent PE—where an employee or representative of the foreign entrepreneur, operating in Poland, possesses and habitually exercises authority to conclude contracts binding the entrepreneur. For example: a German company employs a Polish sales manager working from home in Warsaw who negotiates and concludes contracts with Polish customers. This configuration creates a permanent establishment in Poland—and thus an obligation to pay CIT on profits generated by that manager—despite the absence of a registered branch.
A permanent establishment may also arise through actual use of a fixed place of business (warehouse, office, construction site lasting more than twelve months) without formal registration. Polish tax authorities examine economic substance—actual conduct of business—rather than corporate form.
The practical consequences are significant. A foreign entrepreneur that has not registered a branch but factually operates through a permanent establishment must obtain a tax identification number (NIP), file CIT returns on income attributable to the establishment, register for VAT when conducting taxable transactions, and maintain transfer pricing documentation for intra-establishment dealings.
Failure to identify a permanent establishment generates risk of tax arrears together with interest and penalties.
Branch of a Foreign Company versus Other Forms of Market Presence in Poland
Branch versus Subsidiary
The choice between a branch and incorporating a separate company in Poland depends on multiple strategic, tax, and risk management factors.
Liability. A branch of a foreign entrepreneur provides no limitation of liability—the parent company bears unlimited responsibility for obligations arising from branch operations. A limited liability company constitutes a separate legal entity whose obligations generally do not encumber its shareholders. This liability segregation represents the primary argument favoring a subsidiary structure where operations generate significant operational or regulatory risk.
Tax Optimization. A subsidiary incorporated in Poland qualifies as a Polish tax resident, enabling access to Poland’s network of double tax treaties and local investment incentives. A branch in Poland offers no such opportunities—its income consolidates with the parent company’s income. These matters require careful tax planning.
Market Credibility. Counterparties, banks, and administrative authorities frequently regard locally incorporated companies as more credible than branches of foreign entrepreneurs. In certain regulated industries (banking, insurance, telecommunications), a branch may not constitute a permissible form of conducting business at all.
Operational Flexibility and Exit. A subsidiary can be divested through a straightforward share sale—a transaction that is simple and transparent for acquirers, requiring appropriate legal support for the transaction. A branch cannot be “sold” as a going concern; only asset transfers and contract assignments are possible, requiring counterparty consents and considerably greater procedural complexity.
When a Branch May Be Advantageous. A branch structure proves suitable for limited-scope activity, short time horizons, or where the foreign entrepreneur seeks to utilize branch losses to reduce the tax base in the home country (where domestic law permits). Establishing a branch in Poland also requires lower establishment costs and a simpler governance structure.
Branch versus Representative Office
A representative office of a foreign entrepreneur may conduct activity exclusively in the sphere of advertising and promotion of the foreign entrepreneur. It cannot engage in commercial operations—it cannot conclude commercial contracts, sell goods, or provide services. A branch in Poland faces no such limitations—it may conduct full business activity within the scope corresponding to the parent company’s operations.
A representative office is registered in a separate register maintained by the minister responsible for economic affairs, not in the KRS. Registration is valid for two years and requires renewal.
Prohibition of Activity for a Branch
The minister responsible for economic affairs may issue a decision prohibiting a foreign entrepreneur from conducting business through a branch where the entrepreneur grossly violates Polish law, liquidation proceedings have been commenced or the entrepreneur has lost the right to conduct business, the entrepreneur’s activity threatens state security or defense or other overriding public interest, or the entrepreneur has been struck from the register in its country of origin.
Issuance of such a decision triggers an obligation to conduct liquidation proceedings for the branch within not less than 30 days. The liquidation follows the provisions of the Commercial Companies Code concerning liquidation of a limited liability company, applied accordingly.
These provisions do not apply to entrepreneurs from EU and EEA Member States.
Summary – Establishing a Branch of a Foreign Company in Poland
A branch of a foreign entrepreneur constitutes a flexible form of conducting business in Poland. It enables full participation in commercial activity without the necessity of incorporating a separate entity. However, it requires awareness of the legal consequences inherent in this structure—primarily the unlimited liability of the parent company and the absence of separate legal personality for the branch.
Foreign entrepreneurs contemplating expansion into the Polish market should thoroughly analyze the scope of planned activity, liability structure, and tax implications before deciding on a particular organizational and legal form of presence in Poland. Professional legal advisory and tax advisory services help avoid costly mistakes and optimally plan market entry.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
