Eight mistakes that foreign companies make when starting operations in Poland

1. An inadequate assessment of company vs. branch structure

The decision to operate in Poland through a company or a branch is often made without fully considering the specific characteristics of these two forms.

A branch, which does not have separate legal personality, may be a suitable solution where Polish operations are intended to perform specific tasks for the headquarters. From a tax perspective, its key advantage is that transfers of funds or profits between the branch and the HQ are generally tax‑neutral, reducing the need to apply withholding tax or use more formal capital contribution mechanisms. On the other hand, access to the reduced 9% CIT rate is limited in this model, and the headquarters remains fully liable for the branch’s Polish tax obligations.

A corporate entity is typically preferred where broader and longer‑term operations in Poland are planned, especially if limiting liability and ensuring operational independence are important. At the same time, a company is subject to the full set of incorporation, corporate governance and statutory reporting requirements.

2. Insufficient preparedness for digital tax obligations

Poland’s tax system is highly digital, and businesses operating in Poland are subject to a number of electronic reporting obligations. Key examples include:

• JPK_CIT – maintaining and submitting accounting books in digital form,
• Electronic invoicing (KSEF) – issuing and receiving structured e‑invoices via a central system,
• JPK_VAT – electronic VAT reporting, generally on a monthly basis.

Regardless of periodic reporting, taxpayers must also be prepared to submit JPK files upon request during verification activities or tax audits.

3. Omitting analysis of available tax incentives

Poland offers a broad range of tax incentives which, if planned properly, can deliver significant tax savings. The most important include:

• the Polish Investment Zone (PSI), available for businesses planning the construction of a new facility or the expansion of an existing one, allowing CIT exemption of up to 50% of eligible investment costs or two‑year employment costs, depending on location and project scale;
• R&D tax relief, applicable across a wide range of industries – from manufacturing to IT and engineering – enabling an additional deduction of qualifying costs, in practice up to 200% for selected expenses;
• IP Box, used primarily in the IT sector and IP‑based businesses, allowing income from qualifying intellectual property rights to be taxed at a preferential 5% CIT rate.

Early verification of eligibility allows the operating model to be designed from the outset to maximise available tax benefits.

4. Excluding grants and public funding from investment planning

In addition to tax incentives, Poland offers numerous grant and public funding programmes supporting growth investments, innovation, R&D projects and the green transition. In practice, eligibility is largely timing‑driven – most schemes apply only to projects that have not started before an application is submitted. Failing to review available calls early enough often results in losing access to real sources of financing.

5. Failure to design a robust intercompany model

Intercompany arrangements are one of the key focus areas for Polish tax authorities.

Transfer pricing obligations go far beyond documentation – what matters most is properly defining the functional profile of the Polish entity, including its actual functions, assets and risks, and ensuring these are consistently reflected in intercompany pricing and overall profitability.

In addition, planning cross‑border payments to the group is critical, particularly so‑called passive payments (e.g. interest, royalties or dividends) subject to withholding tax. Under the pay‑and‑refund mechanism, payments to a single related party exceeding PLN 2 million per year generally trigger withholding tax at the full statutory rate of 19% or 20%. Failure to secure the position in advance (e.g. via a binding tax clearance) and to gather robust supporting documentation beyond a certificate of residence may result in the loss of access to WHT exemptions or reduced rates.

6. Underestimating People‑related matters

Ensuring correct payroll settlements, PIT and social security (ZUS) compliance, labour law compliance and the safe application of the appropriate engagement model is critical. Equally important is addressing relocation and immigration matters – missing work or residence permits or procedural delays can significantly hinder or delay the operational launch.

At the same time, People is not only about risk, but also about real cost‑optimisation opportunities, allowing effective increases in employees’ net remuneration without a proportional increase in the employer’s cost base, for example through properly structured benefits and remuneration models.

7. Treating compliance as something to address later

Deferring compliance frequently leads to inconsistencies in financial and tax data, increased audit exposure and costly corrections made after operations begin. In practice, the challenge is not only day‑to‑day tax compliance, but also the lack of a well‑designed accounting setup and structured bookkeeping processes, which makes it difficult to record transactions correctly, close reporting periods on time and maintain consistency between accounting records and tax filings.

8. Underestimating management‑level formalities

At the launch stage, formal obligations on the management side are often underestimated, even though they can determine whether the business can operate smoothly. Missing PESEL (personal ID) numbers or qualified electronic signatures for board members may prevent key actions such as signing statutory financial statements, filing documents with registers or granting powers of attorney. Properly prepared tax and corporate powers of attorney are equally essential – without them, day‑to‑day interaction with authorities and compliance execution may become impossible.