Everything you need to know about accounting in PolandThe attractiveness of Poland as a place to invest is growing stronger every year and an increasing number of individuals based in other countries decide to set up their businesses here. Running a company and accounting in Poland offers numerous unique benefits not available anywhere else in the European Union.
You will be guided through all the stages of setting up and running a successful company in Poland. We will present and characterize all possible legal forms of business in Poland, pointing out the most beneficial for foreign companies. Step by step we will show you how to register a company in Poland, depending on the chosen legal form of business activity. You will learn how the tax system works in Poland and all the necessary aspects related to it. Moreover, we will cover issues strictly related to business activity, such as employment and employee salaries, import and export of goods, and many others. Furthermore, we will provide information on the company's obligations at the end of the year, i.e. everything concerning the annual tax return and end-of-year inventory. Finally, we will address all your doubts regarding virtual accounting.
Choosing a legal form and registering a company in PolandIn Poland, one can select the legal form of a company from 6 available options. There are significant differences between each of them, so it is especially important to choose the right one for your business. These include: - General Partnership - Limited Partnership (LP) - Partnership limited by shares - Limited Liability Partnership (LLP) - Limited Liability Company (LLC) - Joint-stock company/Public Limited Company (PLC) - Sole Proprietorship
General PartnershipIn order to establish a General Partnership, it is mandatory to have partners. The number of partners is unlimited, however, the minimum number required to start a business is two. There are no obligations or rights for the partners imposed on them by law, instead the partners determine these issues by means of a partnership agreement. When it comes to the responsibility for the occurrence of possible debts, each partner in a given General Partnership is bound by unlimited liability.
Limited Partnership (LP)Limited Partnership also includes partners, but it differs from General Partnership in the matter of liability. In the case of a Limited Partnership, it is only the general partners who have unlimited liability to the Limited Partnership. The remaining partners, that is limited partners, have a limited liability for debts. The amount of liability of a limited partner is strictly dependent on the amount of the limited partnership sum.
Partnership limited by sharesAnother of the available options involving partners is Partnership limited by shares. With this one, at least two people are needed to start the business, a general partner and a shareholder. A general partner has unlimited liability, while a shareholder has limited liability.Partnership limited by shares is a rather unpopular legal form chosen among both Polish and foreign companies functioning in Poland, but it is worth knowing about its occurrence.
Limited Liability Partnership (LLP)A Limited Liability Partnership (LLP) consists of an unlimited number of partners. Each partner included in a Limited Liability Partnership has limited liability. What this means is that any liabilities of a particular partner do not automatically become liabilities of the partnership and other partners as well, but rather remain separate. This type of legal form enables professional services activities. Limited Liability Partnership is a suitable choice for people performing specialized professions, so it is mostly chosen by legal or medical environments.
The most common legal forms of business in Poland are Limited Liability Company (LLC), Joint-stock company/Public Limited Company (PLC) and Sole Proprietorship. These are worth paying more attention to and taking a closer look at.
Limited Liability Company (LLC)Limited Liability Company (LLC) establishment requires minimal seed capital. The cost of the capital is relatively low, as the minimum amount of seed capital is 5 thousand zloty. By having such a sum of funds one is in a position to successively begin the activity of the Limited Liability Company. It is also important to bear in mind that the price set for a single share of the company cannot be less than 50 PLN per share. Obviously the price may also be higher and shares may differ in price - there is no requirement that each share should cost equally. Shareholders who are part of a Limited Liability Company have the opportunity not only to contribute to the company in cash, but also in kind, so it can be various types of assets.
When registering a Limited Liability Company, you can use online registration. This option is available if you would like to register a company that will operate under the standard contract terms for a Limited Liability Company. Unfortunately, in other cases it is not possible yet. Online registration of Limited Liability Company is quick and easy as the procedure of establishing a company is simplified, which saves a lot of time.
In a Limited Liability Company, there can be 3 types of governing bodies - the management board, the general meeting of shareholders and the supervisory board. Each of the bodies performs independent duties. The number of members on the Board of Directors is not formally specified, it can be formed by one person or a whole group. Members of the Board of Directors are usually elected from among the shareholders of the Limited Liability Company, however, there may also be third parties. It is irrelevant whether the members of the Board of a company registered and operating in Poland will have Polish citizenship or not. The main duties of the Board of Directors of a Limited Liability Company are to take care of the current affairs of the company and represent it in the external environment. The General Meeting of Shareholders, like the Board of Directors, is also made up of shareholders. The general meeting of shareholders is primarily responsible for selecting from among the shareholders of the Limited Liability Company those individuals who will serve on the Board of Directors. The last internal body is the Supervisory Board. The function performed by the Supervisory Board is overseeing the operations of the Company as a whole, taking into account all aspects.
A Limited Liability Company is one of the most commonly chosen legal forms due to, among other things, the fact that it gives shareholders limited liability. What does this mean is that the company is treated completely separately from its shareholders. If a Limited Liability Company has debts, the shareholders are in no way obligated to pay them. In the worst possible scenario, the shareholders may simply lose their contribution which was brought into the Limited Liability Company. This type of legal form is considered very secure.
The actual amount of costs incurred when running a Limited Liability Company is also of significant importance. The majority of costs are considerably reduced compared to other legal forms - the level of operational costs is lower, moreover in case when the company has a minimum of two shareholders, the need to pay Social Security is eliminated. The only expense that is higher are accounting costs. Limited Liability Company requires a very detailed accounting, therefore a great amount of time is spent on it. Entrusting accounting to highly qualified individuals is especially important.
Detailed accounting has many benefits. It gives a very precise insight into all cash inflows and outflows. Since every single operation must be documented and must include all the possible details, there are no uncertainties concerning any present settlements. The finances of the company are the subject of constant surveillance and therefore it makes it far easier to control the current situation and allows for quick detection of any possible errors, irregularities or oversights.
On a daily basis, running a Limited Liability Company does not cause any major difficulties. Thanks to easy understandable rules and their simple application in reality, many foreign investors decide to give a chance to Limited Liability Company.
Joint-stock company/Public Limited Company (PLC)Joint-stock company/Public Limited Company (PLC) is in many ways a very similar legal form to the previous one discussed, i.e. Limited Liability Company. As well, in this case the absolute necessity to register the company and to start business activity is to provide seed capital. In the case of a Joint-stock company/Public Limited Company it is a minimum of 100 thousand zlotych. The minimum value a Joint-stock company/Public Limited Company share should have is at least 0.01 zlotych per share.
Joint-stock company/Public Limited Company consists of internal bodies such as General Assembly, Management Board and Supervisory Board. The members of the General Assembly are the shareholders of the company. Their task as the General Meeting is to perform the duties strictly defined for the Joint-stock company/Public Limited Company in the Code of Commercial Companies and the statute. For the Management Board as well as the Supervisory Board, their functions are almost identical to those of the previously mentioned Limited Liability Company.
Again, the shareholders of the company have limited liability. Any obligations and debts incurred by the company do not become the shareholders' responsibility and therefore they do not have to be concerned about repaying them. The only thing at risk are the contributions made to the Joint-stock company/Public Limited Company, as the shareholders may lose all of it in a critical situation. Other than this no additional costs will be incurred.
Joint-stock company/Public Limited Company is a legal form generally prevalent in the banking, finance and investment sectors.
The registration process of a company with both Limited Liability Company and Joint-stock company/Public Limited Company legal forms is similar. Before we undertake to file the necessary documents for the company registration, it is necessary to address the matter of seed capital first. Depending on the type of legal form, the sum required to deposit the seed capital varies. For a Limited Liability Company the obligatory amount to be paid is the whole seed capital, whereas the case is slightly different for a Joint-stock company/Public Limited Company - at least 25% of the seed capital is required at the very beginning. It is also worth mentioning that a Polish bank account is also a necessary condition to run a company in Poland.
In order to prepare for the registration of the company, it is necessary to obtain such documents as the articles of association, certificate of incorporation and tax on civil law transactions and an application to the court (form KRS-W3). In case of Limited Liability Company or Joint-stock company/Public Limited Company registration a notary public is required. The notary is the one who obtains all the above-mentioned documents except for the articles of association, and their presence is also necessary when signing the documents. It is important to bear in mind that in case of a Limited Liability Company or a Joint-stock company/Public Limited Company established on the territory of Poland, the notary must necessarily have Polish citizenship. If you wish to form a company with standard forms of incorporation, it is possible to complete all formalities via the Internet. In order to use this option, all that is required is a digital signature by the shareholders - the presence of a Polish notary public is not necessary anymore. The registration of a company via the Internet usually proceeds quite smoothly. For companies that require individual approach to specific matters, traditional registration is the only option available at the moment.
As soon as the company is registered, it receives REGON and NIP. From the moment of entering the entity into the National Court Register, the company is also obliged to prepare a NIP-8 form within 21 days. Another requirement is to register the company for VAT. Thus, businesses which intend to trade beyond the borders of Poland, within the European Union, have the possibility to undertake such activities. Other institutions that a newly established company must register with are the Social Insurance Institution and the National Labour Inspectorate - allowing employing staff.
Sole ProprietorshipRegistration of Sole Proprietorship can be done either in a traditional office or online using a special form prepared by the Central Business Register and Information. Like any other legal form, it is clearly necessary to be completed before the start of profit-making activities. The registration form requires specifying the classification categories of business activity, therefore it's worth getting acquainted with them before making the final decision. Along with the registration, the company receives a REGON and NIP number. Also, one should not forget to register with the Social Insurance Institution. In cases of conducting certain types of activity it may be necessary to become a VAT payer. The formalities related to this matter can be handled at the tax office.
Types of taxes
Value added tax (VAT)Some companies established in Poland may be required to register for VAT. Such an obligation is imposed on a company whose annual turnover exceeds the amount of PLN 200 thousand during one year. In order to start registration, it is necessary to prepare a VAT-R form, providing all relevant information about the company. Before starting any transactions involving another company registered in a different country of the European Union, contacting the head of the tax office and informing about the company's plans is also a must.
VAT can be distinguished between output VAT and input VAT. The output VAT refers to the value of sales received in a given period of time. Its value is determined on the basis of invoices collected by the company. The company selling products or offering services must pay the appropriate amount of money directly to the bank account indicated by the tax office. Input VAT is a tax which the company is able to deduct. VAT can be deducted on goods and services purchased by a company and which are strictly related to its business activity. However, in order for the company to be permitted to deduct input VAT, certain conditions must be met, which are set out in detail in the regulations.
As a standard, the VAT rate is 23% for the vast majority of business activities. There are, however, some exceptions where the VAT rate is lower or completely reduced to zero. The 8% VAT rate is imposed on activities such as for example medical equipment, some services related to agriculture, newspapers, passenger transportation, catering services and some restaurant services and social housing. The 5% VAT rate applies to meat, fish, poultry and dairy products. Economic activities with 0% VAT rate include transportation of goods between European Union member countries. Various financial services are exempt from VAT.
Tax on civil law transactionTax on civil law transaction is not the same for every company registered in Poland. Its rate depends entirely on the type of business activity performed by the company. The company is required to pay the tax within 14 days following the date the transaction took place.
The highest rate of Tax on civil law transaction is due to sale or donation of property - with this type of activity the company is obliged to pay 2% tax. In case of sale of property rights the company is required to pay 1% tax. When it comes to activities such as conclusion of contracts of incorporation of a partnership or capital company, granting of loans for any amount by a partner in a partnership or increase of contribution or capital in a company, then the Tax on civil law transaction is 0.5%. The case is different for loans in a capital company. A company is exempt from tax, just like it is in the case of a loan agreement.
Income taxRegarding income tax, determining the legal form of the business is crucial. The standard income tax rate is 19%, and that applies to self-employment for flat taxation, a limited partnership, a limited company, a company limited by shares, and dividends from a company limited by shares. However, there is a 9% income tax for small taxpayers. This is understood as individuals and legal entities with sales revenues of no more than €1.2 million.
Personal income tax (PIT)Personal income tax (PIT) applies only to individuals who are residents of Poland. A foreigner is considered a resident of Poland if they reside in Poland for more than 183 days during the whole calendar year. Once a person stays in Poland for that long, they become a tax resident. This means that income earned by them is subject to personal income tax (PIT). Exceptions from this rule are people employed by a foreign company with a Polish representative office or a company with foreign shareholding. Income of non-Polish residents is taxed only if it is generated from Polish sources. Personal income tax is not differentiated according to the legal form of the company. Tax for income up to 85 528 PLN is 18%, while the surplus above this amount is taxed at 32%.
AmortizationDepreciation allows a company to account for the purchase of an asset gradually, spreading it over time. One-time depreciation is also possible, but certain conditions must be met. First, one-time depreciation may be applied only to fixed and intangible assets with a value below PLN 10 thousand. The exceptions are fixed assets purchased by individuals considered small taxpayers or by those who only started their business activity in the current tax year - in their case the value limit for fixed assets eligible for one-time depreciation is PLN 100 thousand or EUR 50 thousand. Unfortunately, one-time depreciation cannot be applied to every type of fixed asset. According to current legislation, it is possible only if the depreciated fixed assets belong to groups 3, 4, 5, 6 and 8 of KŚT. In addition, the depreciated fixed assets must be brand new. To sum up, one-time depreciation cannot be used for group 1, 2 and 7 of KŚT and it does not apply to intangible assets.
It is also worth mentioning what is considered a fixed asset in Polish law. Fixed assets are mainly buildings, equipment, machinery and means of transport. For an asset to be considered a fixed asset of the company, it has to be owned or co-owned by the owner or partner of the company. It also has to be acquired in-house. The purchased asset has to serve the purposes related to the company's business activity or, alternatively, it can be leased or rented to another entity. Its value also has to be over 10 thousand PLN. It has to be new, fully operational on the day of receipt and the expected period of its use cannot be shorter than 12 months. If a business has any fixed assets, it is necessary to maintain fixed asset records. More information on fixed assets can be found in the PIT Act.
Intangible assets that are recognized in Poland are described in Article 22b §1 of the PIT Act. Briefly, intangible assets include, among others, licenses, trademarks, patents, various types of designs (decorative and functional), rights to inventions, but also copyrights or related property rights, co-operative right to premises, co-operative ownership right to residential premises and right to a single-family house in a housing cooperative.
Depreciation requires that the initial value of the asset is determined, i.e., its valuation. According to the balance sheet and tax law, the initial value of an asset is established on the basis of its production cost, purchase price or market value. The initial value may also change if some additional costs were associated with the purchase or production of the asset. The most frequently taken into account costs that increase the initial value of the depreciated asset are excise duty, customs duty, taxes, transportation, insurance, installation, commissioning.
Depreciation of an asset begins in the month following the month in which the asset was registered in the records of tangible and intangible assets. For example, if a certain fixed asset was purchased by a company in September 2021, depreciation will begin in October 2021. Depreciation is complete when the sum of all depreciation charges equals the initial value of the depreciable asset. Extraordinary events can also occur, such as the depreciable asset becoming non-resourceful or being liquidated. In such situations, the last depreciation record takes place in the month in which such an event occurred.
The depreciation rate depends not only on the initial value of the asset being depreciated, but also on the classification of fixed assets (CFA). Fixed assets are classified as follows:
1: buildings and premises and the cooperative right to commercial premises and the cooperative right to residential premises
2: civil engineering structures
3: boilers and power plant
4: general-purpose machinery, equipment and apparatus
5: specialised machinery, plant and equipment
6: technical devices
7: means of transport
8: tools, instruments, movable property and equipment n.e.c.
Of course, in addition to the main categories of fixed assets, there are also many subcategories. The most popular method of depreciation is by far the linear method. It is also the easiest of all available methods. Linear depreciation is based on the assumption that the asset depreciated will be used uniformly throughout the expected period of its use. If the depreciated asset changes its profitability over the period of depreciation, then the method is called degressive. This is the second most common method of depreciation. You can use this method only if the asset to be depreciated belongs to groups 3, 4, 5 6 or 8 of the KŚT. The least common method of depreciation is the natural method. The amount of depreciation in this case is determined by the natural and physical consumption of the resource, which is determined, for example, by the number of hours, kg or pieces for a given period.
Companies that started their activity in a given tax year or have the status of a small taxpayer may apply for the use of one-off depreciation under de minimis aid. To request the aid, you must first obtain a certificate from the head of the tax office. It is granted upon presentation of documents such as a proof of depreciation, a document that confirms the purchase transaction of the asset, a statement in which the company indicates an alternative method of depreciation in the event that the single depreciation method would not be used, and copies of certificates, depending on the company's situation, of previous use or non-use of such aid. Over a period of three years, a company can receive assistance of up to €200,000. The exception is transport companies, for which the amount is 100 thousand euros.
EmployeesA company that hires an employee under an employment contract is required to deduct mandatory social security contributions from their wages. These are pension contributions (9.76%), benefits contributions (1.5%) and sick pay contributions (2.45%). Taken together, all social security contributions amount to 13.7% of an employee's salary. In addition, it is also necessary to deduct 9% for health insurance from the salary. Other costs that the company bears when hiring employees on the basis of an employment contract are, among others, safety equipment and working clothes, equipment for workplaces, safety training and medical examinations with an occupational medicine doctor.
The cost of hiring an employee under a free-for-task agreement can vary depending on the situation. The smallest costs are incurred if the employee is a student before the age of 26 - in such case the employer bears the costs only related to the payment of the gross salary to the employee. In a situation where an employee working for a company on a free-for-task agreement does not have any other source of income, the same contributions will be deducted from the employee's salary as if they were employed under a contract of employment. There may also be a case where, in addition to being employed by a given company under a free-for-task agreement, an employee also has a job in which they are employed under a contract of employment. If the remuneration of a given employee does not exceed the amount of the minimum wage established for a given year, the company employing him on the basis of a free-for-task agreement must pay all Social Security contributions on his remuneration. If, on the other hand, the employee's salary exceeds the minimum wage, then the employer who employs the employee on the basis of a free-for-task agreement is obliged to make contributions only for public welfare.
Employing an employee under a contract for specific work releases the company from the obligation to pay Social Security contributions, and the only necessary cost to be incurred is the employee's salary. However, there are two exceptions. The first exception is when one party to the contract is the employer and the other is the employee who is also employed under a contract of employment. The second exception is when the employer is the recipient of the work.
Sick leaveSick leave compensation amounts to 80% of the employee's salary. It is paid to employees with an employment contract and to employees with any kind of contract whose employer has decided to make voluntary social security contributions. The age of the employee is significant. If the employee is less than 50 years old, the employer is required to pay 33 days of sick leave. In the case of employees over 50, this period is reduced to 14 days. In both cases, after exceeding respectively 33 or 14 days, it is the Social Insurance Institution which takes over the obligation to pay benefits.
In some cases, the sick leave compensation may also be 100% of the employee's salary. This is precisely described in Article 92 of the Labour Code. The sickness benefit equivalent to remuneration may be paid to pregnant employees who are unable to work and who are on sick leave, to employees who have an accident on the way to work or from work and to employees who undergo medical examinations in order to donate or remove cells, tissues or organs.
Electronic sick leaves are a significant simplification and time saver. An employer who has an account on PUE ZUS has access to all sick leaves related to their employees, receives them as soon as they are issued, can check whether they are correct and send the ZUS Z-3 version to ZUS. If the employer is not registered on PUE ZUS, the employee is obliged to collect the permission printout from the doctor and hand it over to the employer.
Import and export within the European Union and beyondThe transport of goods can take place both from / to a member state and from / to a third country. A member state is a country which is a member of the European Union, while third countries are countries which do not belong to the European Union community. By territory of the European Union is meant the territory of all countries belonging to the European Union. According to the VAT Act, Article 2(3), the Isle of Man is treated as the United Kingdom of Great Britain and Northern Ireland, the Principality of Monaco as the territory of the French Republic and Akrotiri and Dhekelia as the territory of the Republic of Cyprus. Some Member States also have territories that are treated as excluded from the Community. These are the Channel Islands (Great Britain and Northern Ireland), Ceuta, Melilla, the Canary Islands (Kingdom of Spain), Mount Athos (Hellenic Republic) the island of Heligoland (Federal Republic of Germany), the French territories referred to in Articles 349 and 355 sec. 1 of the Treaty on the Functioning of the European Union (French Republic), Livigno, Campione, Italia, the Italian part of Lake Lugano (Italian Republic), Åland Islands (Republic of Finland) and Gibraltar.
Importing goods to Poland from another EU member state is called intra-community acquisition of goods (IAC). Once a company decides to purchase goods from other EU countries it becomes a EU VAT taxpayer and is obliged to obtain a VAT-R printout, which can be received after a visit to the tax office. Although the invoice obtained from the contractor does not include VAT, the buyer of the goods is still obliged to account for it. VAT on transactions is zero. If the importer is a Polish company, it is necessary to show the purchase value of the goods in the VAT-7 and VAT returns in incomes and costs. Import of goods in this case is treated as a company expense. It is necessary to convert the amount into PLN, regardless of what other currency the transaction was made in. This is necessary and enables calculation of the taxable base. According to Article 31a of the VAT Act, in order to correctly perform the conversion, it must be done on the basis of the average exchange rate of the National Bank of Poland (NBP) on the last working day, which was the day preceding the day on which the tax settlement is made. In other words, the rate to be taken into account is that of the day before the invoice date of the transaction.
On the other hand, if a Polish company imports goods from a third country, which is located within the European Union, it is obliged to cover both customs duty and VAT. For more information, see Article 2.7 of the VAT Act. In addition, in the case of goods that are subject to excise duty, it is necessary to pay not only VAT and customs duty, but also excise duty. When imported goods come from the United States or Russia, the tax base is calculated based on the sum of the customs value and duty due (SAD). Companies may benefit from the opportunity to deduct VAT. To do so, it is necessary to prepare a VAT-7 return for VAT on imported goods.
When Poland exports goods to another EU member state, it is an intra-community supply of goods. In this case, the carrier is obliged to deliver the relevant export documents, which mainly include the delivery note and the specification of individual pieces of cargo. In addition, it may also be useful to provide documents concerning cargo insurance, e-mails from contractors, receipts of payment, and descriptions of goods. The seller must receive these documents in time, i.e. before the VAT return deadline expires.
The tax rate for goods sold within the European Union is preferential, i.e. the rate is zero. At the same time companies retain the possibility to deduct VAT from costs, due to invoicing contractors. The tax refund from the Tax Office takes place no later than within 60 days after submitting the VAT-7 tax.
The zero tax rate can be used only if all the necessary conditions are met. The first condition is to become a taxpayer of EU VAT - for this purpose it is necessary to visit the tax office. The second condition is to have a Europes buyer identification number. This number is preceded by a two-letter country code. In the case of Poland, the country code is PL. The third condition is the proof of export of the goods. It must clearly confirm that the goods were delivered to another country from the territory of Poland. Companies that do not meet the eligibility conditions for zero-rated tax, apply 23% VAT rate.
A Polish company exporting its goods outside the European Union must document the transaction with an IE-599, i.e. confirmation of export or the original of the SAD 3 card. Exporting goods outside the European Union must also be declared in the Customs Office. Again, the preferential 0% rate can be used. For this purpose it is necessary not only to obtain a confirmation from the Customs Office, but also to make sure that the transport is carried out on behalf of the Polish supplier or possibly by a purchaser from outside the European Union.
The Single Administrative Document (SAD) is an indispensable document regardless of the type of transaction carried out, both within and outside the European Union. The SAD is a universal document and can contain information on all goods, regardless of type, quantity or country of origin.
Companies conducting transactions with other European Union countries are required to provide adequate VAT-EU information. This obligation applies to both active VAT taxpayers and those who are exempt but registered for intra-community transactions. The information to be provided relates to details of specific transactions that have taken place within the European Union. The transactions for which VAT-EU information is required are intra-community acquisitions of goods, intra-community supplies of goods, and supplies of services to EU contractors. The deadline to file a VAT-EU declaration is the 25th day of the following month. The declaration should be submitted to the tax office. The obligation to file the declaration lies with both sides of the transaction because the compliance of the submitted declaration is checked in comparison with the one submitted by the business partner.
The flow of information between individual Customs Offices is greatly facilitated by the ECS system. It allows customs officers throughout the European Union to share information about export customs declarations. The declarant must first ensure that the declaration submitted to the UCS conforms to the XML technical specification and has a secure data transmission key to enable the electronic signature. If any of the thresholds is exceeded, it is necessary to declare trade flows using the INTRASTAT declaration for a given reporting period. The INTRASTAT declaration must be completed in full if the specific threshold is exceeded, however, if the basic threshold is exceeded, fields numbered 7 (Total statistical value in PLN), 12 (Delivery terms code), 15 (Mode of transport code) and 20 (Statistical value in PLN) can be omitted while completing the declaration. The INTRASTAT declaration should be submitted by the 10th day of the month following the reporting month. The declarations are submitted electronically, but with prior notification to the relevant customs authorities, it is also possible to submit the application in a paper form.
The issue of cars and means of transportationDepending on the way in which the car was purchased and the purposes for which it is used, the subject of the car in the company looks very different. If the car used belongs to the entrepreneur's private resources, expenses related to its exploitation, such as insurance, fuel or repairs, can of course be classified as tax deductible costs, but in this case only 20% of them are taken into account. The vehicle may also be purchased by the entrepreneur by means of a loan or under a financial lease. In this situation, it is possible to apply depreciation. When it comes to VAT, a car can be settled in 100% only if it is used for transporting other people, i.e. it is a cab. However, if an entrepreneur uses a car not only for his business activity, but also in his free time, VAT is settled at 50%. A car can also be purchased by an entrepreneur by means of an operator's lease, but then, unfortunately, it cannot be depreciated and it is not the entrepreneur's property. The entrepreneur can use the means of transport thanks to a lease agreement, which obliges him to regular payment of lease instalments. The car becomes the property of the company at the moment when all required installments are paid off. It is important to know whether the car is also used by an entrepreneur beyond the scope of the company's business activities - if so, the entrepreneur may benefit from a 50% VAT deduction on each invoice. A 100% deduction is also possible, however it requires filing a VAT-26 return. An entrepreneur claiming this deduction must provide the completed form to the Tax Office.
Obviously, there is also a possibility that the car can become a fixed asset of the company and thus be included in its fixed asset register. To be able to do so, the purchase invoice of a given vehicle must include the company's data and the purchase cost. As the cost of purchase is considered the purchase price of the car, and thus its initial value, and the cost of its transport. If the company decides to purchase an imported car, it is also necessary to take into account the excise and customs duties. However, that is not enough to consider the purchased car as a company car. It is also necessary to draw up an appropriate declaration, which declares the use of the means of transport only for business purposes. It must be delivered along with the purchase invoice and a photocopy of the registration certificate to the accounting department. Recognition of the car as used solely for business purposes has a great advantage, since it entitles the entrepreneur to deduct all VAT. After preparing a declaration and submitting it with attachments to the accounting office, all the entrepreneur needs to do is submit a VAT-26 form to the Tax Office. If the company decides not to apply this solution, it is entitled to deduct only half of the tax.
An entrepreneur may also want to withdraw the car from the company after a certain time in order to use it privately. The key question here is, for how long after the withdrawal of the car from the company it will continue to be used privately and after what time it will be sold. If the car is sold within 6 years of withdrawal, the amount received as a result of the sale transaction will be considered as business income and the seller must bear in mind that the undepreciated initial value of the vehicle may be taxed at the moment of sale. On the other hand, if the sale occurs after 6 years, it will not generate income for the business. In some cases, the seller may also have to pay VAT, specifically if it was fully or partially deductible.
If a vehicle that was a fixed asset of a company is sold, the profit from its sale is classified as "other income". Since the sale generated income, tax must be paid. The company may benefit from a deduction of expenses, for example, the unadjusted value of the car. If the car was sold after two years of use and the depreciation was 20% per year, 60% of the car's value must be paid. The situation is different when the sold car is fully depreciated - then the tax is paid only from the sale price. It must be remembered that when selling the car, 23% VAT must be added to the invoice.
Periodic responsibilitiesA monthly duty of a company operating on the territory of Poland and being an active VAT taxpayer is submitting a JPK VAT form. This form contains detailed information about sales and purchases of VAT in a given month. A JPK VAT form is submitted in an electronic form. For this purpose there is a special application created by the Ministry of Finance through which all relevant files can be transferred. Examples of files that need to be uploaded are bank statements, company books, invoices or inventory information.
Information provided in JPK should be very carefully verified and checked. The penalty for any mistakes made is currently 2800 PLN. A company can also pay a fine if it fails to submit JPK in time. This type of fine can be up to 120 daily rates, however it is determined individually in each case. Polish accounting may be quite complicated, therefore in order not to be concerned about possible penalties and fines, the right idea is to pay special attention to this matter and hire a professional Polish accountant or cooperate with a Polish accounting company.
At the end of the year, every company is required to conduct an inventory and take stock of such information as materials, semi-finished products and production in progress, finished products, trade goods, and waste. Fixed assets and equipment are not taken into account during the inventory. Besides, the list should also include information such as the name of the company, the date the inventory was made, the specification of the goods, the unit of measure, the price in PLN per unit of measure, the amount at the moment of the inventory, the price in PLN per unit of measure, the total value of the goods, the total value of the inventory, an appropriate clause and the signatures of the people responsible for taking the inventory and the owners or partners of the company. Once the inventory has been compiled, the company has 14 days to value all the items on the list. The inventory made at the end of the year is still valid on January 1st of the new year. Inventory and list are of great importance since the initial and final value of inventory has an impact on subsequent costs incurred during the year.
PIT-11 is submitted in order to settle the tax on performed work. It contains information about the income earned in the previous year and the tax advances paid. PIT-11 should be prepared in exactly three copies - one for the appropriate tax office, one for the taxpayer and one for storage. The employer is required to submit the PIT-11 by the end of February in the year following the tax year; any delays may result in financial penalties. If an employee has retired or for any reason his employment with the company has ended, then the employer is also obligated to prepare their PIT-11. The period within which the employer must comply with this obligation is 14 days from the moment the taxpayer submits a written request for this purpose. However, if the employee is on maternity leave and does not receive any benefits during this time, then the employer is not required to provide the employee with PIT-11.
If a taxpayer has filed for a tax card, they can use the PIT-16A. The PIT-16A provides information on health insurance premiums, specifically all premiums that were collected from the tax card in a given tax year. Both PIT-16A and PIT-16 need to be prepared and the returns can be submitted by January 31st of the year following the tax year in question.
There is also an additional option for taxpayers who settle their accounts based on a lump-sum tax, and that is the PIT-28. This return primarily takes into account income such as rental income. As with the PIT-16A, the deadline for filing the PIT-28 is January 31st.
Taxpayers who have any links with running non-agricultural business activity which is taxed according to general tax scale rules may use PIT-36 to settle the income which originates from various sources, i.e., among others, from lease contracts, rental contracts and other similar contracts which are subject to settlement according to general tax rules, but also all kinds of income sources which originate in a country other than Poland. Unfortunately, PIT-36 cannot be used to settle income if its taxation method is different from the general rules of the tax scale, so it excludes sources of income taxed with a flat rate tax, lump sum tax and tax card. When using PIT-36, there is no obligation to file PIT-37. The deadline for filing PIT-26 is 30 April of the following year after the given tax year.
Taxpayers who settle according to the flat tax may use the option of settling by means of PIT-36L form. However, it should be remembered that this type of form can be used only for one source of income, other sources of income cannot be combined with each other. If the taxpayer also has a full-time job, then in addition to the PIT-36L, he/she will also have to file the PIT-37 form. As in the case of the PIT-36, April 30 is the last possible date to file the PIT-36L for the previous tax year.
People who do not run any business activity are also obliged to settle accounts. In case of this type of taxpayers, who additionally settle on general principles, do not have minor children and do not take advantage of reliefs for incurred losses, the most frequently chosen settlement form will be the PIT-37. This form takes into account only the income which source is employment in a company based in Poland, so this should also be taken into consideration. April 30th is the deadline for filing PIT-37 tax returns.
PIT-38 will be the appropriate form to file if the profit is derived from dividends or the sale of shares, borrowed shares, derivative financial instruments or rights attached to them. As in most cases, April 30 is the deadline for filing.
Suspension and termination of the businessAny company may experience a situation in which it does not prosper as expected - costs may exceed profits, there may be a temporary downtime or any other unexpected situation, both related to the company and privately in the life of the company owner. When this happens, the company doesn't have to be closed right away, it can be temporarily suspended.People who operate on the basis of sole proprietorship and companies that have no employees are entitled to suspend their business. However, this decision must be made carefully because if the company is suspended, the owner will not be able to legally generate income from its operations for the duration of the suspension. Moreover, any fixed assets that the company owns are not subject to further depreciation. If the decision to suspend the company's activity has been finally made, it is necessary to submit an application to the Central Register of Business Activity and Information. This is the same document which is submitted in the case of registering a company, i.e. Form-1. In order to suspend the company, an X should be placed in field 01.3.
What is the most important thing to consider is the specific period for which the business activity is to be suspended. Unfortunately, if the suspension is decided for a given period, it is not possible to extend it. The solution to this situation is to resume the activity of the company for some time and then suspend it again, in the same way as before.
An entrepreneur who has decided to suspend the activity of their company, obviously cannot undertake any actions by which they will receive a profit, but this does not mean that all activities related to the company are prohibited. While the company is suspended it is still allowed, among other things, to manage its equipment and assets, fulfill necessary obligations such as, for example, paying rent, take part in various proceedings which are related to the company's activity before the suspension and accept repayments of obligations and debts which arose before the period of suspension. The entrepreneur also has obligations that must be fulfilled. One of them is to settle accounts, that is to submit an annual tax return for the previous year. It has no importance if the company's profits were at a certain level before the suspension and if the company made any profits at all, the tax return has to be filled in and submitted anyway.
Suspending a business has its advantages and disadvantages. Many entrepreneurs may be hesitant to decide to suspend their business mainly due to the fact that suspending a company's business activity is associated with being discharged from Social Security. In practice, this means that after a period of 30 days from the payment of the last contribution for health insurance, the entrepreneur is no longer entitled to receive health benefits. Furthermore, the period during which the company is suspended is not included in the working time, which is then taken into account for retirement. On the positive side, once the business is suspended the entrepreneur is no longer obligated to pay insurance premiums and does not have to worry about paying advance income tax.
If the period of suspension of the company has passed, then in order to resume its activity it is necessary to submit a CEIDG-1 application. Neglecting this issue and not submitting the application within 24 months will result in removing the entrepreneur from the register of entrepreneurs.
The importance of accountingAccounting matters of all kinds are critical and have a major impact on the final performance of a business. Accounting requires specialized knowledge, skills and experience, which is why it' s important to invest in an accountant who performs his duties properly from the very beginning. A good accountant is first and foremost a person who can be trusted to take care of all accounting issues in the best possible way. They are able to point out the best solution for the company and their honesty is unquestionable. A competent accountant not only avoids making mistakes but is able to spot all kinds of irregularities that have been committed and efficiently finds a way to resolve any problems. They also have an excellent knowledge of law which they can easily put into practice. What makes a professional accountant different from an ordinary accountant is that they not only perform their tasks within the necessary duties but also go beyond that and adapt to the individual needs of a company in the most flexible way possible. Their services are not limited to the basics, but they take the initiative and use the potential of the business as much as possible. If the company is located in Poland, it is particularly important to hire a good Polish accountant who knows Polish accounting inside out. Accounting in Poland can be very complicated at times but having a qualified Polish specialist at hand allows the company to rest assured about its future.
In today's era and numerous conveniences offered by the Internet, virtual accounting is one of the solutions that entrepreneurs who wish to move with the times should be interested in. Nowadays a big part of a company's business is done remotely - bank transfers are sent via mobile banking applications, contact with contractors is also done from a distance. In the nearest future virtual accounting will become another such obvious thing. Virtual accounting has all the features of traditional accounting, and the only difference lies in the fact that its form is much more convenient. All accounting services, from basic ones like billing, to more individual ones like consulting and various kinds of assistance, are still available, however from the comfort of your own screen. To be able to use virtual accounting you need one thing which nowadays most people have - a device with access to the Internet, such as a smartphone. Controlling your business finances will become easier than ever and will be possible at your fingertips. Virtual bookkeeping gives a lot of freedom, allowing one to manage a company's finances from almost every place where a person is, no matter if it is office or home. Virtual accounting is a solution which is used by more and more companies. The fact that it helps to save a lot of time and all the activities undertaken by the company can be carried out much faster than in the case of traditional accounting is particularly encouraging. It is especially appealing for start-ups and small entrepreneurs since these are the ones who usually suffer from time shortage. Everything that an entrepreneur may ever need is always available thanks to virtual accounting. This is a huge convenience that will become a standard for every type of business over time.
Virtual accounting, like traditional accounting, should be managed by an experienced Polish accountant or a competent Polish accounting firm. If an entrepreneur decides to run a company in Poland, accounting must be handed over to a professional who is well versed in Polish law and accounting in Poland.