Author: kancelaria

The White List of VAT Taxpayers in Poland

Posted on by kancelaria

How to Verify Business Partners and Avoid Tax Sanctions

Operating a business in Poland requires entrepreneurs not only to understand the tax regulations but also to systematically verify their business partners. One of the key tools serving this purpose is the White List of VAT Taxpayers (Polish: biała lista podatników VAT), which is an electronic Register of Entities Registered as VAT Taxpayers maintained by the Head of the National Revenue Administration (Krajowa Administracja Skarbowa, KAS). This instrument, in force since 1 September 2019 under Article 96b of the Polish VAT Act, gained particular importance following the introduction of sanctions effective from 1 January 2020, which may affect taxpayers making payments to bank accounts not included in the register.

For foreign investors who are starting or already conducting business operations in Poland, understanding the rules governing the White List is especially critical. Failure to verify a business partner may result in the loss of the right to treat the expenditure as a tax-deductible cost, and even in joint and several liability for the supplier’s VAT arrears. This article provides a detailed overview of the White List, the data it contains, the methods of verifying business partners, and the steps to take in order to avoid tax sanctions.

What Is the White List of VAT Taxpayers?

 Legal Basis and Purpose

The White List of VAT Taxpayers was introduced under Article 96b of the Act of 11 March 2004 on Tax on Goods and Services (the Polish VAT Act). It is a publicly accessible electronic database that replaced three previously operating registers of VAT taxpayers. The primary objective behind its creation was to tighten the tax system, particularly in relation to combating carousel fraud and VAT evasion. The White List also serves as a trust-building mechanism among market participants, enabling rapid and free-of-charge verification of the tax status of any business partner registered in Poland.

 Scope of Data Included in the Register

The Register of VAT Taxpayers contains a comprehensive set of information about entities registered within the Polish VAT system. In particular, it allows verification of the following: the company name (or first and last name for natural persons), tax identification number (NIP), statistical number (REGON), registered office address, VAT registration status (active taxpayer, exempt, deregistered, or unregistered), dates of registration, deregistration, or reinstatement to the VAT register together with the legal basis for such decisions, and – most critically from the settlement perspective – the bank account numbers reported to the tax office.

It is important to note that only settlement accounts within the meaning of Article 49(1)(1) of the Banking Law Act and named accounts in cooperative savings and credit unions (SKOK) opened in connection with business activity, confirmed through the STIR system, are published on the White List. Private bank accounts (personal current accounts) are not displayed in the register, even if an entrepreneur uses them for business purposes. This is a common reason for the absence of an account from the White List, particularly for sole proprietors.

 Categories of Entities Covered

The White List covers four categories of entities: taxpayers registered as active VAT payers, taxpayers registered as VAT-exempt, entities for which the head of the tax office refused registration or which were deregistered from the VAT register, and entities whose VAT registration was reinstated. Data on deregistered entities is removed from the register after five years from the end of the calendar year in which the deregistration occurred, which corresponds to the general statute of limitations for tax liabilities.

The Verification Obligation and the Threshold

 When Does the Verification Obligation Arise?

Although the regulations do not explicitly impose an obligation to check a business partner on the White List before every transaction, they indirectly enforce such verification through a system of sanctions. The obligation to verify a business partner’s bank account against the White List arises when three conditions are met simultaneously: the one-off transaction value exceeds PLN 15,000 gross (regardless of the number of payments resulting from that transaction), the transaction is conducted between entrepreneurs (B2B) and documented with an invoice, and the payment is made by bank transfer to an active VAT taxpayer.

It is worth emphasising that the PLN 15,000 threshold refers to the total value of the transaction, not to individual payments. Therefore, if the parties have agreed to pay a PLN 20,000 invoice in four instalments of PLN 5,000, each instalment is subject to the White List bank account verification requirement, even though individually it does not exceed the PLN 15,000 threshold.

 Transactions Exempt from Verification

Not all payments are subject to the verification requirement. In particular, the following are excluded: transactions with a value not exceeding PLN 15,000 gross, cash payments, payments to entities not registered as active VAT taxpayers (e.g. VAT-exempt entities), transactions with foreign contractors that do not hold a Polish NIP and are not registered for Polish VAT purposes, and payments made using the split payment mechanism, which itself constitutes a safeguard.

Methods of Verifying Business Partners

 Ministry of Finance Search Engine

The primary tool for verifying business partners is the search engine available on the Ministry of Finance website at https://www.podatki.gov.pl/wykaz-podatnikow-vat-wyszukiwarka. The search can be performed using one of four parameters: NIP number, REGON number, bank account number, or entity name (first and last name for natural persons). It is crucial to specify the date for which the data should be displayed – the Ministry of Finance recommends that bank account verification be carried out on the day the payment order is placed.

The search engine also allows downloading a verification confirmation, which should be retained in the company’s documentation in case of a potential tax audit. The data in the register is updated once daily on business days, based on information from the KAS database, the CEIDG, and the KRS registers.

Verification via API

For businesses processing a large number of transactions, the Ministry of Finance has made available an API (Application Programming Interface) that enables automatic verification of business partners without the need to manually use the search engine. The API allows integration with accounting and ERP systems, enabling automatic bank account verification at the time of invoice booking or payment ordering.

 Mass Verification – the Flat File

The third verification method is the so-called flat file, published daily at approximately midnight on the Ministry of Finance’s resources. This file contains encrypted data enabling mass verification of NIP–bank account number pairs. This solution is particularly useful for large business entities that process hundreds of payments daily and need a fully automated verification process.

The biznes.gov.pl Portal

An alternative verification source is the business search engine on the biznes.gov.pl portal, which, in addition to White List data, also presents information from CEIDG and KRS entries. This is a particularly useful tool for comprehensive assessment of a business partner’s credibility, combining registry data with tax information.

Sanctions for Payments to Accounts Outside the White List

 Income Tax Consequences

Making a payment to a bank account that does not appear in the register on the date the payment order is placed carries serious consequences. Primarily, the purchaser loses the right to treat the entire payment amount (not just the excess above PLN 15,000) as a tax-deductible cost. If the expense has already been recognised in costs based on the received invoice, the taxpayer is obliged to make the appropriate adjustment – either reducing costs or increasing revenue in the month in which the payment order was placed.

 Joint and Several Liability for VAT

The second, equally severe consequence is the purchaser’s joint and several liability for the VAT not paid by the supplier – proportional to the VAT amount attributable to the relevant transaction. This means that the tax authority may pursue payment of this tax directly from the purchaser, with their entire assets, if the supplier has failed to meet their tax obligations. This sanction is particularly deterrent in nature and constitutes one of the strongest mechanisms motivating systematic verification of business partners.

How to Avoid Sanctions – Protective Mechanisms

The ZAW-NR Notification

If, despite exercising due diligence, a payment is made to an account outside the White List, the legislator has provided for the possibility of avoiding sanctions by filing a notification on the ZAW-NR form. This notification must be submitted to the head of the tax office competent for the purchaser (the taxpayer making the payment) within 7 days of the date the payment order was placed. The date of placing the payment order is understood as the day on which the payment instruction was submitted to the bank or SKOK, not the day the account was actually debited.

A significant simplification is that the ZAW-NR notification is filed only once – upon the first payment to a given account outside the register. Subsequent payments to the same account in the course of cooperation with the same business partner do not require a new notification. The notification can be filed electronically via the e-Tax Office (e-Urząd Skarbowy) or the e-Delivery (e-Doręczenia) system. However, it should be noted that since 1 January 2026, notifications submitted via ePUAP to tax offices are no longer recognised as effectively delivered.

 The Split Payment Mechanism

The second effective method of protection against sanctions is making a payment using the split payment mechanism (MPP). A payment made in this manner to an account outside the White List releases the purchaser from joint and several liability for the supplier’s VAT obligations. However, it is important to note that the use of split payment does not automatically eliminate the income tax consequences – filing the ZAW-NR notification remains necessary in this regard.

 The White List and Foreign Investors

Scope of Application to Foreign Entities

The White List applies exclusively to entities registered for Polish VAT purposes. This means that foreign contractors who do not hold a Polish NIP and are not registered as VAT taxpayers in Poland do not appear in the register. The obligation to verify bank accounts against the White List and the associated sanctions do not apply to payments made to the foreign bank accounts of such entities. For verifying the VAT status of business partners from EU Member States, the separate VIES system (VAT Information Exchange System) should be used.

The situation differs, however, for foreign entities registered as active VAT taxpayers in Poland. Such entities are required to report their Polish bank accounts via the NIP-2 or NIP-8 forms and are subject to all the White List rules. Foreign investors conducting business through a Polish subsidiary or branch should ensure that the company’s bank accounts have been properly reported and appear on the White List.

Practical Guidance for Foreign Investors

Foreign investors should pay particular attention to several key matters. First, immediately after registering the company and opening a business bank account, they should ensure that the account has been properly reported on the NIP-2 or NIP-8 forms. Second, before issuing the first VAT invoice, they should verify that the company appears on the White List as an active VAT taxpayer – the absence of such an entry may discourage potential business partners who fear sanctions for payments to entities outside the register. Third, it is advisable to implement internal contractor verification procedures, ideally integrated with the accounting system, to automate the process.

 The White List in the Context of KSeF

The implementation of the mandatory National e-Invoice System (KSeF), which commences on 1 February 2026 for large entities and on 1 April 2026 for other taxpayers, adds a new dimension to business partner verification. KSeF provides assurance that an invoice has been issued by an authorised entity, thereby increasing mutual trust among market participants. At the same time, the White List remains an indispensable tool for verifying the bank account to which payment should be made – KSeF does not replace this function. In practice, both systems operate in a complementary manner: KSeF confirms the authenticity of the invoice, while the White List verifies the correctness of the payment account.

It is also worth noting that the implementation of KSeF may accelerate the VAT refund process – the envisaged timeframe is 40 days instead of the standard 60. This is a significant benefit for taxpayers who properly implement the new invoicing system, provided they simultaneously comply with the rules on business partner verification via the White List.

Best Practices for Business Partner Verification

In order to minimise tax risk and ensure full regulatory compliance, entrepreneurs should adopt a comprehensive approach to business partner verification. It is essential to carry out bank account verification on the day the payment order is placed, not earlier, as the data in the register may change. Each verification confirmation should be archived in the company’s documentation. For entities processing a large volume of transactions, integration of the accounting system with the White List API is recommended to automate the entire process.

Equally important is the ongoing monitoring of one’s own data on the White List – entrepreneurs should regularly check whether their bank accounts are visible in the register and whether other data remains current. When changing a bank account or tax office, it is necessary to immediately file an updating notification. Entrepreneurs should also develop internal procedures for handling situations where a payment has been made to an account outside the register, including the immediate filing of a ZAW-NR notification.

Conclusion

The White List of VAT Taxpayers is a fundamental instrument within the Polish tax system, designed to tighten economic transactions and protect honest entrepreneurs. The obligation to verify business partners, although formally indirect, is effectively mandatory for B2B transactions exceeding PLN 15,000 gross – as the sanctions for non-compliance are exceptionally severe.

For foreign investors conducting business in Poland, it is crucial to incorporate verification procedures into everyday business practice and to ensure that their own data on the White List is complete and up-to-date. In an era of mandatory KSeF implementation, the White List remains a complementary element of the verification system, providing tax security for both purchasers and suppliers alike.

 

 

Representative office of a foreign company in Poland

Posted on by kancelaria

Foreign entrepreneurs considering entry into the Polish market face a fundamental question about the optimal legal form of their presence in Poland. Alongside establishing a subsidiary or opening a branch, Polish law offers yet another, often underestimated option – setting up a representative office. This is the lightest form of market presence, which can serve as a strategic starting point for building business relationships before the investor commits to full operational engagement.

The institution of the representative office is primarily regulated by the Act of 6 March 2018 on the Rules of Participation of Foreign Entrepreneurs and Other Foreign Persons in Economic Transactions in the Territory of the Republic of Poland. This article discusses the rules governing the establishment, registration and operation of a representative office, with particular emphasis on the limitations to which this form of presence is subject, as well as situations in which a representative office may prove to be the optimal solution.

What is a representative office and what is its scope of activity

A representative office of a foreign entrepreneur is an organisational unit without legal personality, forming an integral part of the foreign entrepreneur. Unlike a subsidiary or even a branch, a representative office is not an independent legal entity – all rights and obligations arising from its activities rest directly with the foreign entrepreneur.

The scope of activity of a representative office is strictly limited by law and may encompass only advertising and promotional activities on behalf of the foreign entrepreneur. This means that a representative office cannot conduct business activity understood as the sale of goods, provision of services or conclusion of commercial contracts generating revenue in Poland. It may, however, organise trade fairs and conferences, operate a showroom, build a network of business contacts, conduct market research and maintain relationships with potential clients and trading partners.

It is worth noting that representative offices may also be established by foreign persons appointed by an act of the competent authority of their country of registered office. The scope of activity of such offices is even narrower – it may only encompass promotion and advertising of the economy of that state.

Who may establish a representative office in Poland

Unlike a branch, the establishment of which by entrepreneurs from outside the EU requires the existence of a reciprocity principle, any foreign entrepreneur may set up a representative office in Poland, regardless of their country of registered office. There is no need to demonstrate the existence of bilateral agreements or reciprocity. This constitutes a significant advantage of a representative office over a branch, particularly for entrepreneurs from third countries such as Asian, African or Latin American states that do not have reciprocity agreements with Poland.

Entrepreneurs from EU and EFTA countries naturally enjoy full freedom of establishment and may freely create branches, subsidiaries and representative offices alike. For these entrepreneurs, a representative office constitutes the lightest form of market entry – an ideal solution at the market reconnaissance stage, without the need to incur the costs of registering a company or branch.

Registration procedure

Preparation and submission of the application

The establishment of a representative office requires entry in the register of representative offices of foreign entrepreneurs, maintained by the minister responsible for economic affairs (currently the Minister of Development and Technology). Unlike a branch, a representative office is not subject to registration in the National Court Register (KRS).

The procedure begins with the foreign entrepreneur adopting an appropriate corporate resolution – most commonly a resolution of the parent company’s management board to establish a representative office in Poland. An application for entry in the register must then be submitted, containing: the name, registered office and legal form of the foreign entrepreneur; the main business activity of the entrepreneur; the name, surname and address in Poland of the person authorised to represent the entrepreneur at the representative office; and the address of the representative office in Poland.

Required documents

The application must be accompanied by an official copy of the document confirming the registration of the foreign entrepreneur in the register appropriate for its registered office, together with a certified Polish translation. A document confirming the authorisation of the person to represent the entrepreneur at the representative office and proof of payment of the stamp duty of PLN 1,000 are also required.

All foreign-language documents must be translated into Polish by a sworn translator. Documents from countries that are parties to the Hague Convention require an apostille, while documents from other countries require consular legalisation.

Duration of the procedure and the minister’s decision

The registration process typically takes approximately one month. The minister enters the representative office in the register if the applicant meets all statutory requirements, and then issues ex officio a certificate confirming the entry. The certificate is delivered to the applicant by registered mail with acknowledgement of receipt, although personal collection at the ministry’s premises is also possible.

The minister issues a decision refusing entry in the register if the establishment of the representative office would threaten the security or defence of the state, the security of classified information, another important public interest, or if the objectives of the representative office would exceed the permissible scope of promotional and advertising activity.

Validity period and renewal obligation

Entry in the register of representative offices is valid for a period of two years from the date of entry. This constitutes a significant difference compared to branch registration in the KRS, which is not time-limited. If the entrepreneur intends to continue the representative office’s activity, an application for renewal must be filed within the last 90 days of the current entry’s validity.

Failure to file a renewal application within the required deadline results in loss of the right to operate the representative office and removal from the register. The renewed entry is valid for a further two years. It should be noted that the register of representative offices is public and freely accessible, ensuring transparency regarding the operations of foreign entities on the Polish market.

Obligations of the entrepreneur operating a representative office

Organisational and reporting obligations

The foreign entrepreneur who has established a representative office is obliged to designate it using the original name of the foreign entrepreneur with the addition of the words “przedstawicielstwo w Polsce” (representative office in Poland). There is no flexibility regarding naming – Polish law does not provide for the free choice of a name for a representative office.

Furthermore, the entrepreneur must appoint a person authorised to represent them at the representative office. This person serves as the liaison between the foreign entrepreneur and Polish administrative authorities and counterparties. Any changes in factual or legal circumstances relating to data covered by the register entry must be reported to the minister within 14 days of their occurrence.

Accounting obligations

Although the representative office does not conduct business activity generating revenue, the foreign entrepreneur is obliged to maintain separate accounting records for it in the Polish language, in accordance with the provisions of the Accounting Act. This obligation encompasses maintaining accounting books, preparing financial statements and archiving accounting documentation. In practice, this means the need to employ or outsource accounting services to a specialised accounting firm in Poland.

Tax status of a representative office

Corporate income tax (CIT)

A representative office does not conduct business activity and does not generate revenue in Poland; therefore, in principle, it is not an independent CIT taxpayer. The taxpayer remains the foreign entrepreneur. However, Polish tax regulations and double tax treaties define the concept of a permanent establishment, which under certain circumstances may also encompass a representative office.

Under most double tax treaties based on the OECD Model Convention, maintaining a fixed place of business solely for the purpose of carrying out activities of a preparatory or auxiliary character should not give rise to a permanent establishment. It is crucial, however, that the actual activity of the representative office does not exceed the scope of advertising and promotion. Exceeding this scope – even informally – may result in the representative office being classified as a permanent establishment of the foreign company, entailing the obligation to settle CIT in Poland.

Value added tax (VAT)

A representative office is not a VAT taxpayer, as it does not carry out transactions subject to this tax. It is therefore not subject to registration in the VAT taxpayer register. The costs of operating the representative office, such as office rent, telecommunications services and promotional materials, are borne by the foreign entrepreneur. With regard to input VAT included in the costs of the representative office’s operations, the foreign entrepreneur may apply for a refund under the provisions governing VAT refunds to foreign entities (the VAT-REF procedure for EU taxpayers or the reciprocity-based procedure for non-EU entities).

Employer obligations

Where employees are hired at the representative office, the foreign entrepreneur acts as a withholding agent for personal income tax (PIT) and social and health insurance contributions (ZUS). This means the necessity to register with ZUS as a contribution payer, make timely PIT advance payments, and submit the relevant tax declarations and returns. A representative office, although it does not conduct business activity, may indeed employ staff in Poland.

Representative office versus branch – key differences

Criterion Representative Office Branch
Scope of activity Advertising and promotion only Full business activity within the scope of the parent company
Registration Register of representative offices (Minister of Development) National Court Register (KRS)
Validity of entry 2 years (renewable) Indefinite
Availability Any foreign entrepreneur EU/EFTA + reciprocity countries
VAT status Not a VAT taxpayer May be a VAT taxpayer
CIT status In principle, does not create a PE Creates a PE – full CIT obligations
Registration fee PLN 1,000 (stamp duty) Approx. PLN 1,000–2,000 (KRS fees)
Legal personality None – part of the foreign entrepreneur None – part of the foreign entrepreneur

 

Removal from the register and termination of activity

The minister responsible for economic affairs removes a representative office from the register ex officio in strictly defined circumstances. This occurs when the foreign entrepreneur grossly violates Polish law, the representative office does not hold legal title to the premises indicated in the register, the foreign enterprise has been liquidated, or the renewal application has not been filed within the required deadline. Removal from the register results in the loss of the right to operate a representative office in Poland.

The foreign entrepreneur may also decide to close the representative office by submitting an appropriate notification to the ministry. In both cases, it is necessary to settle all obligations, including settlements with employees and tax authorities.

When is a representative office the optimal choice

A representative office is the most appropriate form of presence in Poland for foreign entrepreneurs who are at an early stage of market reconnaissance and do not yet intend to conduct full operational activity. It is an ideal solution for companies planning to participate in trade fairs and industry conferences, build a network of contacts with potential clients and distributors, conduct research on the Polish market before committing to a larger investment, and maintain a contact office or showroom.

A representative office may also serve as the first stage of a market entry strategy – following the reconnaissance phase and establishment of business relationships, the entrepreneur may transform their presence into a branch or establish a full subsidiary. The costs of operating a representative office are significantly lower than those of a branch or company, making this form particularly attractive for small and medium-sized enterprises testing expansion opportunities.

Practical recommendations for investors

When deciding to establish a representative office, the entrepreneur should attend to several key matters. First, it is essential to secure legal title to the premises where the representative office will be located – this may be an office lease or even a virtual office. Second, it is advisable to arrange sworn translations of all required documents well in advance, as formal deficiencies are the most common cause of delays in the registration procedure. Third, strict compliance with the permitted scope of activity is crucial – undertaking actions beyond advertising and promotion exposes the entrepreneur to the risk of removal from the register and, in extreme cases, tax consequences associated with the creation of a permanent establishment.

It is recommended to engage the services of a professional legal and tax advisor who will help properly structure the presence in Poland and avoid regulatory pitfalls. A good advisor will also help plan the potential transformation of the representative office into a more advanced form of activity once the entrepreneur decides to commit to full operational engagement on the Polish market.

How ATL Law can help

ATL Law specialises in providing comprehensive legal and tax advisory services to foreign investors entering the Polish market. Our extensive experience in advising international clients enables us to effectively guide the entire process – from selecting the optimal legal form of presence in Poland, through registering a representative office, branch or subsidiary, to ongoing compliance and reporting support.

In the area of representative offices of foreign entrepreneurs, we offer full support encompassing preparation of corporate documentation and the application for entry in the register of representative offices, coordination of sworn translations and apostille, representation before the Ministry of Development and Technology, organisation of accounting services for the representative office in accordance with Polish accounting regulations, as well as ongoing advisory on the permissible scope of activity and tax risks.

We also advise in situations where a representative office is no longer a sufficient form of presence and transformation into a branch or subsidiary becomes necessary. By combining legal and tax competencies, we provide cohesive support that minimises regulatory risks at every stage of the investment. Our experts work in Polish and English ensuring smooth communication with international clients.

 

 

Transfer Pricing in Poland – Documentation Requirements 2026

Posted on by kancelaria

Transfer pricing remains one of the most significant areas of tax audits in Poland. Related parties conducting intra-group transactions must demonstrate that the terms of these transactions correspond to arm’s length conditions – that is, conditions that would have been established between unrelated parties. The year 2026 brings a continuation of existing requirements while introducing updates to the safe harbour mechanism for financial transactions and new TPR reporting structures.

This guide provides a comprehensive overview of transfer pricing documentation obligations applicable in Poland in 2026, with particular focus on documentation thresholds, deadlines, required documentation elements, and available exemptions and simplifications.

Legal Framework

Transfer pricing regulations in Poland are primarily contained in Chapter 1a of the Corporate Income Tax Act (Articles 11a-11t of the CIT Act) and correspondingly in the Personal Income Tax Act (Articles 23m-23zf of the PIT Act). These provisions implement OECD Transfer Pricing Guidelines and comply with European Union directives on anti-avoidance measures.

Key legal instruments also include ordinances of the Minister of Finance specifying the detailed scope of transfer pricing documentation and TPR (Transfer Pricing Information) form templates. From 1 January 2026, the updated Announcement of the Minister of Finance and Economy dated 10 December 2025 applies, setting out parameters for the safe harbour mechanism for financial transactions.

Entities Subject to Documentation Obligations

Definition of Related Parties

Related parties are defined as entities where one entity exerts significant influence over another, or entities that are subject to significant influence by the same other entity or the same natural person. Significant influence means holding directly or indirectly at least 25% of shares in capital, voting rights in supervisory, management or constituent bodies, or shares in profits. The relationship may also arise from an entity’s actual ability to influence key business decisions of another entity.

Controlled Transactions

A controlled transaction is any commercial activity conducted between related parties whose terms have been established or imposed as a result of the relationship. This includes in particular goods transactions (sale and purchase of goods), financial transactions (loans, guarantees, sureties, cash pooling), service transactions (management services, advisory services, licenses), and other transactions (transfer of intangibles, restructurings).

Documentation Thresholds for 2026

The obligation to prepare local transfer pricing documentation arises upon exceeding the value thresholds for homogeneous controlled transactions in a given tax year. These thresholds vary depending on the type of transaction and the characteristics of the counterparty.

Standard Thresholds

Transaction Type Documentation Threshold
Goods transactions PLN 10,000,000
Financial transactions PLN 10,000,000
Service transactions PLN 2,000,000
Other transactions PLN 2,000,000

Transaction value is determined based on net amounts (excluding VAT) from accounting documents. For financial transactions, the value is the principal amount of a loan or credit, the guarantee sum, or the value of bond issuance, respectively.

Thresholds for Transactions with Tax Haven Entities

For controlled transactions with entities based in jurisdictions applying harmful tax competition (so-called tax havens), significantly lower documentation thresholds apply.

Transaction Type Documentation Threshold
Financial transactions PLN 2,500,000
Other transactions PLN 500,000

The list of countries and territories applying harmful tax competition is published by the Minister of Finance by way of ordinance and is subject to periodic updates. The latest update occurred in March 2025.

Compliance Deadlines

The regulations precisely define deadlines for fulfilling individual documentation obligations. For taxpayers whose tax year coincides with the calendar year, the deadlines are as follows:

Obligation Deadline Date (calendar year)
Local documentation (Local File) 10 months 31 October
TPR Information 11 months 30 November
Group documentation (Master File) 12 months 31 December

For transactions carried out in 2025, these deadlines fall on 31 October 2026 (Local File), 30 November 2026 (TPR), and 31 December 2026 (Master File), respectively.

Elements of Local Transfer Pricing Documentation

Local transfer pricing documentation (Local File) must contain specific elements enabling demonstration of the arm’s length nature of the controlled transaction. Documentation is prepared in electronic form and should include the following components:

Description of the Related Party

Documentation must contain a detailed description of the entity’s organisational and management structure, including functions performed, assets employed, and risks assumed in the context of controlled transactions. A description of the competitive environment and market position of the entity must also be presented.

Description of the Controlled Transaction

Each controlled transaction requires a detailed description covering the subject matter of the transaction, transaction value together with the calculation method, agreements governing the transaction, and the method of determining the transfer price. The description should include a functional analysis indicating functions performed by the parties to the transaction, assets employed, and risks assumed.

Transfer Pricing Analysis

A mandatory element of documentation is a benchmarking analysis or conformity analysis. A benchmarking analysis involves comparing the conditions of the controlled transaction with conditions of comparable transactions concluded by unrelated parties. A conformity analysis is used in cases where preparation of a benchmarking analysis is not possible or appropriate. The analysis should indicate the transfer pricing verification method and justification for its selection.

Regulations require updating the benchmarking analysis at least once every three years, unless changes in economic conditions require earlier updating. Significant changes in the economic environment, such as those caused by the COVID-19 pandemic, the armed conflict in Ukraine, or high inflation, may justify the need for earlier updating.

Transfer Pricing Information (TPR)

Regardless of the obligation to prepare documentation, related parties must file electronic transfer pricing information (TPR-C form for CIT taxpayers or TPR-P for PIT taxpayers). From 11 December 2025, updated TPR-C(6) and TPR-P(6) forms apply.

TPR information includes identification data of the entity, information about related parties and controlled transactions carried out, financial indicators of the entity, and information about transfer pricing verification methods applied. Entities benefiting from exemptions from the documentation obligation file TPR information in a limited scope, indicating only the transaction value.

The TPR form also contains a statement that local transfer pricing documentation has been prepared in accordance with the actual state of affairs and that transfer prices covered by this documentation are established at arm’s length. Information is filed electronically via the e-Deklaracje system or a dedicated web application provided by the Ministry of Finance.

Group Documentation (Master File)

The obligation to prepare group transfer pricing documentation applies to entities belonging to capital groups whose consolidated revenues in the previous financial year exceeded PLN 200,000,000. Group documentation contains information about the capital group structure, business activities conducted, intangibles, intra-group financial transactions, and the group’s transfer pricing policy.

Safe Harbour Mechanism – 2026 Update

The safe harbour mechanism constitutes a significant simplification in transfer pricing for certain types of transactions. If statutory conditions are met, the tax authority refrains from determining income (loss) in the scope covered by the simplification, and the taxpayer is exempt from the obligation to prepare local transfer pricing documentation for that transaction.

Safe Harbour for Financial Transactions

From 1 January 2026, the updated Announcement of the Minister of Finance and Economy applies, setting out safe harbour parameters for loans, credits, and bond issuances between related parties. A significant change is the expansion of the catalogue of permissible base rates for PLN-denominated transactions.

Base rates applicable from 2026:

For PLN transactions: WIBOR 3M, WIRON 3M Compound Rate, or POLSTR 3M Compound Rate (new from 2026). For USD transactions: 90-day Average SOFR. For EUR transactions: EURIBOR 3M. For CHF transactions: SARON 3M. For GBP transactions: SONIA 3M.

Margin:

The margin level remains unchanged compared to 2025: for the borrower, a maximum of 2.6 percentage points; for the lender, a minimum of 2.0 percentage points. In case of a negative base rate value, the margin constitutes the sum of the absolute value of the base rate and the specified margin.

Conditions for Using Safe Harbour

To benefit from the safe harbour mechanism for financial transactions, the following conditions must be met cumulatively: interest is variable and determined based on a base rate and margin compliant with the applicable announcement, the agreement does not provide for payment of fees other than interest related to providing financing (except handling fees up to 0.2% of the financing amount), the financing period does not exceed 5 years, the total principal value of loans granted or received from related parties does not exceed PLN 20,000,000 in a tax year, and the lender is not based in a jurisdiction applying harmful tax competition.

Safe Harbour for Low Value-Adding Services

The safe harbour simplification also covers low value-adding services, i.e., services of a routine nature supporting the group’s core activities. The condition for benefiting is applying a mark-up on costs ranging from 2% to 5% for the service recipient and from 2% to 5% for the service provider, provided that the services do not constitute the main business activity of the provider.

Exemptions from Documentation Obligation

The regulations provide for several exemptions from the obligation to prepare local transfer pricing documentation, even when documentation thresholds are exceeded.

Exemption for Domestic Transactions

The most important exemption applies to transactions carried out exclusively between Polish related parties that cumulatively meet the following conditions: none of the entities benefits from exemptions in special economic zones or from support decisions under the Polish Investment Zone, none incurred a tax loss in the given tax year, and the revenues and costs of the given transaction were fully recognised for tax purposes in Poland.

Exemption for Micro and Small Entrepreneurs

Entities with micro-entrepreneur or small entrepreneur status within the meaning of the Entrepreneurs’ Law Act are exempt from the obligation to prepare a benchmarking analysis or conformity analysis. However, they remain obligated to prepare the remaining elements of local transfer pricing documentation and to file TPR information.

Transfer Pricing Verification Methods

Polish regulations provide for five basic transfer pricing verification methods, consistent with OECD guidelines:

The Comparable Uncontrolled Price method (CUP) involves comparing the price applied in a controlled transaction with prices applied in comparable transactions by unrelated parties. The Resale Price Method is based on deducting an appropriate gross margin from the sale price of goods acquired from a related party. The Cost Plus Method involves determining the price based on direct and indirect costs plus a profit mark-up. The Transactional Net Margin Method (TNMM) involves examining the level of net profitability indicator from the controlled transaction. The Transactional Profit Split Method involves dividing total profits between transaction parties in proportion to their contributions.

Penalties for Non-Compliance

Non-compliance with transfer pricing obligations carries significant consequences under both tax law and fiscal criminal law.

Tax Penalties

If the tax authority finds that transfer prices deviate from arm’s length conditions, it may reassess income. Reassessed income is subject to taxation at standard CIT rates (19% or 9% for small taxpayers), and in certain cases an additional penalty tax of 10% to 30% of the difference between declared and determined income may be imposed.

Fiscal Criminal Liability

Failure to prepare transfer pricing documentation or filing unreliable TPR information may result in fiscal criminal liability of responsible persons (board members, chief accountants). The fine may amount to up to 720 daily rates, the amount of which depends on the minimum wage.

Practical Recommendations

Foreign investors operating in Poland should implement comprehensive transfer pricing risk management procedures. Key recommendations include conducting detailed identification of all controlled transactions at the beginning of each tax year, implementing a transfer pricing policy defining the principles for establishing intra-group transaction conditions, ongoing collection of source documentation (agreements, invoices, calculations) throughout the year, regular reviews and updates of benchmarking analyses taking into account changes in market conditions, and ensuring adequate lead time for preparing documentation and TPR information before statutory deadlines.

For financial transactions, it is worth considering structuring intra-group loans in a manner enabling use of the safe harbour mechanism, which will allow for significant simplification of documentation obligations. It should be remembered that variable interest must be applied and other statutory conditions must be observed.

Summary

The year 2026 brings a continuation of rigorous documentation requirements in transfer pricing in Poland. Related parties must demonstrate particular diligence in identifying controlled transactions, timely preparing documentation, and reliably reporting in the TPR form. Changes to the safe harbour mechanism for financial transactions, including the expansion of the catalogue of permissible base rates to include POLSTR 3M, offer additional flexibility in structuring intra-group financing.

Professional transfer pricing advisory allows minimising the risk of disputes with tax authorities and ensures compliance with dynamically changing regulations. Foreign investors should treat compliance in transfer pricing as an integral element of tax risk management in Poland.

 

Limited Partnership in Poland – When Is It the Right Choice?

Posted on by kancelaria

The limited partnership (spółka komandytowa, sp.k.) is one of the most flexible business structures available in Poland. It combines the advantages of partnerships with the ability to limit liability for certain partners. Although less popular than the limited liability company (sp. z o.o.), in many cases it can prove to be the optimal solution – both from a tax and organizational perspective.

What Is a Limited Partnership?

A limited partnership is a type of partnership featuring two categories of partners: general partners (komplementariusze), who bear unlimited liability for the partnership’s obligations with their entire assets, and limited partners (komandytariusze), whose liability is capped at the amount of their declared contribution (suma komandytowa). This duality allows for flexible structuring of ownership and management.

When Is a Limited Partnership a Good Choice?

Tax optimization in holding structures. The limited partnership works particularly well in structures where a limited liability company serves as the general partner. This construction (sp. z o.o. sp.k.) limits the liability of all partners while maintaining flexibility in profit distribution.

Family businesses and succession planning. For family enterprises, the limited partnership offers the possibility of gradually transferring the business to successors. The younger generation can join as limited partners, learning the business without bearing full liability, while founders remain as general partners.

Investment and real estate development projects. In the development and investment sectors, the limited partnership enables attracting passive investors (limited partners) who contribute capital without the need to participate in day-to-day management.

Professional-investor collaboration. A model where experts (e.g., lawyers, architects, consultants) contribute know-how as general partners, while investors provide capital as limited partners, allows for a fair division of roles and responsibilities.

Key Advantages of a Limited Partnership

Flexibility in profit sharing. Unlike corporations, profit distribution does not need to correspond to capital contributions. Partners can freely determine the rules for participation in profits and losses.

No minimum capital requirement. The limited partnership does not require a minimum share capital, lowering the entry barrier and initial costs.

Limited liability for limited partners. Limited partners risk only up to their declared contribution amount, making this form attractive for passive investors.

Simpler reporting requirements. Compared to corporations, a limited partnership may use simplified accounting (subject to certain conditions).

Key Considerations

The limited partnership is not a universal solution. The unlimited liability of general partners requires careful structural planning – which is why a limited liability company often serves as the general partner. Additionally, since 2021, limited partnerships have been subject to corporate income tax (CIT), which has changed their tax attractiveness. Before making a decision, it is advisable to conduct a detailed analysis considering development plans, ownership structure, and partner expectations.

Conclusion

The limited partnership is a legal form that works best in specific scenarios: holding structures, family businesses planning succession, investment projects, and professional-investor collaborations. Its main strength is flexibility – both in structuring liability and profit distribution. However, choosing this form should always result from a well-thought-out business strategy, not merely from a desire to avoid the formalities associated with corporations.

 

 

Employing Foreign Nationals in Poland in 2026

Posted on by kancelaria

The year 2025 brought fundamental changes to the Polish system for legalizing the employment of foreign nationals. On 1 June 2025, the Act of 20 March 2025 on the Conditions for the Admissibility of Entrusting Work to Foreigners in the Territory of the Republic of Poland came into force, completely replacing the previous regulations contained in the Act on Employment Promotion and Labour Market Institutions. The new provisions introduce a number of significant simplifications, but also impose additional obligations on employers and substantially tighten sanctions for violations.

For foreign investors planning to operate in Poland, knowledge of current regulations regarding the employment of workers from outside the European Union is absolutely essential. Improper application of the regulations may result not only in severe financial penalties of up to PLN 50,000 per violation, but also in the loss of the ability to employ foreigners in the future and reputational risk for the enterprise.

1. Legal Basis for Employing Foreign Nationals

1.1. Scope of Application

The provisions of the Act on the Conditions for the Admissibility of Entrusting Work to Foreigners apply to all third-country nationals, i.e., persons who do not hold Polish citizenship or citizenship of another EU Member State, EEA country, or Switzerland. Citizens of EU/EEA countries and Switzerland enjoy freedom of movement for workers and may take up employment in Poland without the need to obtain a work permit.

It is important to distinguish between the legalization of work and the legalization of residence. A work permit entitles a foreigner only to perform work under specified conditions, but does not constitute an independent basis for legal residence in Poland. The foreigner must additionally hold a valid residence title, such as a work visa, temporary residence card, or permanent residence permit.

1.2. Categories of Foreigners Exempt from the Work Permit Requirement

The Act provides for a broad catalogue of exemptions from the work permit requirement. This exemption covers, among others, foreigners with refugee status granted in Poland, persons under subsidiary protection, holders of permanent residence permits or EU long-term resident permits, spouses of Polish citizens holding temporary residence permits, as well as full-time students in Poland and graduates of Polish universities. The detailed list of exemption cases is specified in the Regulation of the Minister of Family, Labour and Social Policy of 20 November 2025.

2. Types of Work Permits

The Polish legal system provides for several types of work permits, adapted to various forms and circumstances of employing foreigners. Each type of permit is characterized by different conditions for issuance, validity period, and scope of entitlements.

2.1. Work Permit for a Polish Entity (Former Type A)

This is the basic and most commonly used type of permit, intended for foreigners performing work under a contract with an entity whose registered office, place of residence, or branch is located in Poland. The permit is issued by the voivode competent for the employer’s registered office or place of residence, for a period not exceeding three years. The foreigner’s remuneration may not be lower than that of employees performing comparable work or in a comparable position and may under no circumstances be lower than the minimum wage.

2.2. Permit for Board Members and Proxies (Former Type B)

This type of permit applies to foreigners performing functions on the management boards of legal entities entered in the National Court Register, members of the management boards of capital companies in the process of formation, persons managing the affairs of a limited partnership or a limited joint-stock partnership, as well as commercial proxies (prokurents).

The standard period of validity is up to three years; however, for members of management boards of enterprises that have been conducting business activity in the territory of Poland for less than one year, the validity period of the work permit is reduced to one year.

2.3. Permits for Posted Workers (Former Types C, D, E)

The regulations provide for separate permits for foreigners employed by foreign employers and posted to work in Poland. A permit for workers posted to a branch or establishment of a foreign employer in Poland (former Type C) is required when the posting period exceeds 30 days in a calendar year. A permit for export services (former Type D) applies when a foreign employer has no organized activity in Poland but posts an employee to perform a service of a temporary nature. A permit for other posting cases (former Type E) covers postings exceeding 30 days within six consecutive months for purposes other than those mentioned above.

2.4. Seasonal Work Permit (Type S)

The seasonal work permit is intended for foreigners performing work dependent on seasonal rhythm, for a period not exceeding nine months in a calendar year. This particularly concerns the agriculture, horticulture, tourism, and hospitality sectors. Unlike other permits, the Type S permit is issued by the starost (county head) competent for the employer’s registered office or place of residence, which speeds up the procedure. As of 1 December 2025, the fee for a seasonal work permit is PLN 100.

3. Declaration on Entrusting Work to a Foreigner

3.1. Nature and Scope of the Declaration Procedure

The declaration on entrusting work to a foreigner constitutes a simplified work legalization procedure, alternative to the standard work permit. This procedure is available only for citizens of specified countries and allows employment of a foreigner for a period of up to 24 months. The declaration is entered in the register maintained by the poviat labour office competent for the employer’s registered office.

3.2. Changes to the List of Eligible Countries from 1 December 2025

The Regulation of the Minister of Family, Labour and Social Policy of 20 November 2025 significantly modified the list of countries whose citizens may use the declaration procedure. As of 1 December 2025, a declaration on entrusting work may only apply to citizens of Armenia, Belarus, Moldova, and Ukraine. Georgia has been removed from the list, meaning that citizens of that country must now apply for a full work permit. However, transitional provisions guarantee that Georgian citizens employed under a declaration entered in the register before 1 December 2025 may continue working until the expiry of that declaration.

3.3. Fees and Deadlines

As of 1 December 2025, the fee for entering a declaration in the register is PLN 400, representing a significant increase from the previous rate of PLN 100. The poviat labour office enters the declaration in the register or refuses entry within 7 working days of receiving a complete declaration, or within 30 days in cases requiring explanatory proceedings. The employer is obliged to inform the office of the commencement of work by the foreigner within 7 days of the start date, and of non-commencement of work within 14 days of the planned start date indicated in the declaration.

4. EU Blue Card for Highly Qualified Specialists

The EU Blue Card constitutes a special type of temporary residence and work permit, intended for foreigners with high professional qualifications. As of 1 June 2025, modernized rules for issuing this document apply, implementing the latest EU regulations. The salary threshold required to obtain a Blue Card has been reduced to one times the average national salary (previously 1.5 times), significantly expanding the pool of potential beneficiaries.

Holders of the EU Blue Card gain a number of significant entitlements, including the possibility of changing employers after six months of employment, the right to short-term mobility throughout the European Union without additional permits (after at least 12 months of residence in Poland), and facilitations regarding family reunification. For the IT sector and other industries requiring highly qualified specialists, the Blue Card represents a particularly attractive solution.

5. Full Digitalization of Procedures from 1 June 2025

5.1. The praca.gov.pl Portal as the Exclusive Application Channel

One of the most significant changes introduced by the new Act is the full digitalization of proceedings related to the legalization of foreign workers. As of 1 June 2025, all applications for work permits, declarations on entrusting work, and all documents in these matters must be submitted exclusively in electronic form via the praca.gov.pl portal. Documents submitted in any other form will be left without examination, meaning that the traditional paper form is no longer admissible.

Submitting electronic applications requires having a trusted profile or qualified electronic signature. Employers should ensure in advance that persons authorized to represent the company have access to these authorization tools.

5.2. Central Register for the Employment of Foreigners

The new regulations establish the Central Register for the Employment of Foreigners (CRZC), in which voivodes, poviat labour offices, and the Border Guard post information on every decision issued, notification submitted, and result of inspections conducted. This system will be integrated with the PESEL 2.0 database and ePUAP, allowing for automatic assignment of a PESEL number to a foreigner upon obtaining a permit. Employers gain access to a portal enabling them to track application status and receive alerts about approaching expiry dates of legalization documents.

5.3. Fast Track Procedure

The Act introduces an accelerated application processing procedure (fast track) for specified categories of entities and job positions. Applications covered by the fast track procedure are processed as a priority, allowing for significant reduction in waiting time for a decision. Accelerated procedures also apply to visas and temporary residence and work permits.

6. Employer Obligations When Employing Foreigners

6.1. Pre-Employment Obligations

An employer intending to entrust work to a foreigner must complete a number of formalities before commencing employment. First and foremost, it is necessary to verify that the foreigner holds a valid residence document entitling them to stay and work in Poland. The employer is obliged to request the foreigner to present this document and to retain a copy throughout the employment period and for two years thereafter.

The contract with the foreigner must be concluded in writing before work commences. The document should be prepared in Polish and translated into a language understandable to the foreigner. The working conditions specified in the contract, particularly the scope of duties, remuneration, and working time, must be consistent with the content of the work permit or declaration on entrusting work. From 1 August 2025, the employer is additionally obliged to submit a copy of the contract concluded with the foreigner to the office before entrusting work.

6.2. Reporting Obligations

The new regulations impose extensive reporting obligations on employers. In the case of a declaration on entrusting work, the employer must inform the labour office of the commencement of work by the foreigner within 7 days of the start date. If the foreigner does not commence work, this information must be provided within 14 days of the planned start date indicated in the declaration. Notification of early termination of work or that the foreigner will not commence work results in automatic invalidation of the declaration by operation of law.

Furthermore, the employer is obliged to report any change in employment conditions, such as an increase in working time, salary increase, or change of position, within 7 days of the change. In the case of an increase in working time or hours of work, the employer must proportionally increase the foreigner’s remuneration.

6.3. Prohibition of Pay Discrimination

The regulations absolutely require that the foreigner’s remuneration be no lower than that of employees performing comparable work or in a comparable position, and no lower than the minimum wage. This principle aims to prevent the replacement of workers present in the labour market by foreigners willing to accept employment on worse terms, and to protect the market against unfair competition based on reducing labour costs.

7. Abolition of the Labour Market Test

One of the most significant simplifications introduced by the Act of 20 March 2025 is the complete abolition of the requirement to conduct the so-called labour market test. Previously, an employer applying for a work permit first had to obtain from the starost information confirming the inability to meet staffing needs in the local labour market. This procedure significantly lengthened the employment legalization process and generated additional administrative burdens for both employers and labour offices.

From 1 June 2025, employers may submit applications for work permits directly to the voivode, without the need to first obtain the starost’s opinion. The only exception is proceedings initiated before that date, in which the labour office may still accept a job offer for the purpose of issuing the starost’s information, provided a document confirming earlier initiation of the case is attached.

8. List of Occupations Unavailable to Foreigners

In place of the abolished labour market test, the Act introduces a mechanism for lists of protected occupations. The starost, upon a justified request from the director of the poviat labour office, following a positive opinion from the poviat labour market council, may introduce a list of occupations in which issuing work permits in a given poviat is restricted. The final list of occupations unavailable to foreigners is established by the Council of Ministers.

The introduction of this mechanism is a response to the ineffectiveness of the previous procedure for examining the local labour market, but also to the changing economic situation and increasingly frequent collective redundancies. In 2024 alone, employers reported over 37,000 collective redundancies, the highest figure since the pandemic, and this trend continued in 2025. The list of protected occupations is intended to provide a flexible tool for protecting Polish workers in regions particularly affected by unemployment.

9. Sanctions for Violation of Regulations

9.1. Significant Increase in Penalties

The Act of 20 March 2025 drastically tightens sanctions for irregularities in employing foreigners. The fine for illegally entrusting work to a foreigner now ranges from PLN 3,000 to PLN 50,000 for each foreigner in respect of whom a violation has been found. This represents a radical change compared to the previous legal situation, where fines ranged from PLN 1,000 to PLN 30,000 in total for all identified violations.

Additional, stricter sanctions of up to PLN 6,000 per foreigner are provided for offences such as misleading a foreigner, demanding a financial benefit in exchange for taking steps to obtain a work permit, or obstructing inspections. The regulations clearly define the concept of illegal entrustment of work, including employment without the required permit or declaration, employment on terms other than those specified in legalization documents, and employment without concluding a written contract.

9.2. Grounds for Refusal to Issue a Permit

The Act introduces additional grounds for mandatory refusal to issue a work permit. The voivode will refuse to issue a permit if, within the last 24 months, the employer obstructed inspections of the legality of employment of foreigners. Refusal will also occur if work is to be entrusted by an entity that is not a legally operating temporary work agency for the benefit of another entity, if the foreigner previously failed to commence work despite arriving in Poland under a previously issued permit, or if employment is to commence later than 12 months from the date of issue of the permit.

9.3. Extended Inspection Powers

The Act significantly extends the powers of the National Labour Inspectorate and the Border Guard in terms of inspecting the legality of employment of foreigners. These authorities may now conduct inspections without prior notice, whereas previously they were required to notify the inspected entity with at least seven days’ advance warning. The legislator also announces the introduction of predictive selection of entities for inspection, where the Central Register for the Employment of Foreigners is to generate lists of enterprises with unusual permit turnover, high numbers of cancellations, or suspicious salary fluctuations.

10. Visa Restrictions

The new regulations introduce significant restrictions regarding residence titles entitling holders to take up work on the basis of a permit or declaration. As of 1 June 2025, visas issued for specified purposes, including visas issued by other Schengen area countries, transit visas, and certain national visas, no longer entitle holders to work on the basis of a declaration or work permit. This means that a visa issued for the purpose of taking up work has become practically the only possibility for many categories of foreigners to commence legal employment in Poland, eliminating the previous possibility of entering Poland on the basis of another type of visa and subsequently transferring to temporary residence and a work permit.

11. Form of Employment – Employment Contract or Civil Law Contract

The original version of the Act on the Conditions for the Admissibility of Entrusting Work to Foreigners provided for a mandatory requirement to employ foreigners exclusively on the basis of employment contracts. Following numerous objections from employer organizations and industry groups, the legislator ultimately softened this requirement. The final text of the Act permits the employment of foreigners both on the basis of employment contracts and civil law contracts, thus maintaining the previous flexibility in choosing the form of employment.

However, it should be remembered that the Ministry of Family, Labour and Social Policy has officially announced that the employment contract requirement has only been postponed, and regulations in this regard are to come into force on 1 January 2026. Employing entities should therefore take the announced changes into account in their staffing plans and prepare for the possible mandatory conversion of civil law contracts into employment contracts.

12. Recommendations for Employers

In light of the legislative changes described, employers who employ or plan to employ foreigners should undertake a number of adaptive measures. First and foremost, it is necessary to verify and update internal procedures related to employing foreign workers, with particular attention to reporting obligations and deadlines for their performance. It is also essential to ensure appropriate tools for submitting electronic applications, including trusted profiles or qualified signatures for authorized persons.

Employers should implement systems for monitoring the validity dates of permits and residence documents of employed foreigners and plan with appropriate advance notice activities related to their extension. Particular attention should be paid to the retention of documentation related to the employment of foreigners, which must be available throughout the employment period and for two years after its conclusion.

Given the significant increase in administrative fees and new obligations, the legalization of foreign workers should be treated not as an administrative burden, but as an integral element of HR and business strategy – as important as recruitment, retention, or productivity management. Organizations that approach this process strategically will gain a competitive advantage in attracting and retaining valuable foreign employees.

Conclusion

The Act of 20 March 2025 on the Conditions for the Admissibility of Entrusting Work to Foreigners introduces a comprehensive reform of the system for legalizing the work of foreigners in Poland. On the one hand, it brings significant simplifications, such as the abolition of the labour market test, full digitalization of procedures, and the fast track procedure. On the other hand, it imposes much stricter obligations on employers regarding documentation, reporting, and compliance with employment conditions, supported by drastically increased sanctions for violations.

For foreign investors considering operations in Poland, understanding the new regulations is crucial for proper human resources planning and avoiding legal risks. Comprehensive legal advice on employing foreigners not only ensures compliance with regulations, but also optimizes recruitment and legalization processes, minimizing the costs and time needed to attract valuable foreign workers.

 

Split Payment Mechanism in Poland in 2026

Posted on by kancelaria

The split payment mechanism constitutes one of the key instruments in the Polish tax system designed to strengthen the collection of value-added tax (VAT). Introduced into the Polish legal framework on July 1, 2018, pursuant to the Act of December 15, 2017, amending the Act on Tax on Goods and Services and certain other acts, this mechanism has undergone a significant evolution from an entirely voluntary form to a mandatory requirement for specified categories of transactions.

The essence of the split payment mechanism lies in the division of payment made by the buyer of goods or services into two separate parts. The net amount is transferred directly to the seller’s settlement account, while the amount corresponding to the VAT is automatically directed to a specially designated VAT account. This solution aims to limit the possibility of tax fraud by ensuring that funds intended for tax payment remain under strict control of the tax authorities.

Legal Basis and Regulatory Framework

The legal foundation for the split payment mechanism in Poland is the Act of March 11, 2004, on Tax on Goods and Services, particularly the provisions contained in Chapter 1a of Section XI entitled Split Payment Mechanism. Articles 108a through 108e are of key importance, establishing the principles of operation of this mechanism, the conditions for its mandatory application, and the legal consequences associated with violation of obligations in this regard.

The mandatory split payment mechanism was introduced on November 1, 2019, and applies exclusively to relations between VAT taxpayers, i.e., in B2B (business-to-business) transactions. Its application is required when three conditions specified in Article 108a(1a) of the VAT Act are met cumulatively. First, the subject of the transaction must be goods or services listed in Annex 15 to the VAT Act, which contains a detailed list of items subject to mandatory split payment. Second, the gross value of the entire invoice must exceed PLN 15,000. Third, both the seller and the buyer must hold VAT taxpayer status.

Scope of Mandatory Split Payment

Annex 15 to the VAT Act covers a broad catalog of goods and services deemed by the legislator to be particularly susceptible to tax abuse. This list constitutes a closed catalog of items, the acquisition of which, upon meeting the remaining statutory conditions, obliges the application of the split payment mechanism.

Category Examples
Steel and metal products Steel, copper, aluminum, scrap, metal waste
Fuels and energy Gasoline, diesel, gases, coal, electricity
Electronics and equipment Phones, computers, consoles, cameras
Automotive parts Parts and accessories for motor vehicles
Construction services Construction works, renovation, finishing services

 

Changes to the Split Payment Mechanism from 2026

The year 2026 brings significant modifications to the operation of the split payment mechanism, resulting from the implementation of the mandatory National e-Invoice System (KSeF). These changes primarily concern the rules for completing the transfer communication and identifying transactions linked to specific sales documents within the KSeF environment.

From February 1, 2026, the transfer communication used for payments under the split payment mechanism must contain additional elements. In addition to the existing data such as invoice number, VAT amount, gross amount, and supplier’s NIP (tax identification number), it is required to indicate the invoice number in connection with which the payment is being made. For structured invoices issued through KSeF, the communication must contain the number identifying that invoice in the KSeF system – this is a unique 35-character identifier assigned to each invoice by the system.

Significant changes also apply to collective payments, i.e., settling more than one invoice with a single transfer. For structured invoices, instead of indicating individual invoice numbers, a collective identifier generated by KSeF is used. For invoices issued outside KSeF, the existing rule of indicating the period for which payment is made still applies.

It should be emphasized that the split payment mechanism can be applied in Poland until February 29, 2028. Further extension of this deadline requires the consent of the European Commission and acceptance by the Council of the European Union. An expansion of the scope of Annex 15 to the VAT Act is also planned to include new items, including raw sunflower oil and services related to tanker transport.

VAT Account – Functioning and Fund Utilization Rules

The VAT account constitutes an integral element of the split payment mechanism. It is a special bank account that banks and cooperative savings and credit unions are obligated to maintain free of charge for every holder of a settlement account maintained in connection with business activity. The VAT account is established automatically, without the need for the entrepreneur to submit a separate application.

Funds accumulated in the VAT account do not constitute the entrepreneur’s property in the classical sense of the term, as they are subject to significant restrictions regarding their use. Pursuant to Article 62b(2) of the Banking Law Act, funds from the VAT account may be used exclusively for strictly defined purposes. Primarily, they serve to pay the amount corresponding to VAT for the acquisition of goods or services to the supplier’s VAT account. Additionally, they may be used to pay tax liabilities for VAT, income tax (PIT and CIT), excise tax, customs duties, and social insurance contributions.

In situations where the entrepreneur does not fully utilize the funds accumulated in the VAT account for purposes provided in the statute, they may apply to the head of the tax office for consent to transfer these funds to the settlement account. The tax authority has 60 days to consider the application and issue a decision. Consent will be granted provided that the taxpayer has no tax arrears and no proceedings are being conducted regarding a tax overpayment refund.

Benefits of Using the Split Payment Mechanism

The legislator has provided a range of incentives and benefits for taxpayers using the split payment mechanism, both in cases of mandatory and voluntary application. These benefits are both financial and procedural in nature, and their purpose is to motivate entrepreneurs to widely use this mechanism in business transactions.

Exclusion of Joint and Several Liability

One of the most significant benefits associated with using split payment is the exclusion of the buyer’s joint and several liability for the seller’s tax arrears. According to the provisions of the VAT Act, the buyer may, in certain situations, be jointly and severally liable with the seller for unpaid tax. Application of the split payment mechanism eliminates this risk, which is particularly important in transactions with new or less familiar contractors.

Protection Against VAT Sanctions

Using the split payment mechanism protects the taxpayer from the application of increased interest rates for delay at 150% of the basic rate, which currently stands at 8% per annum. This means that in case of delays in tax payment, an entrepreneur using split payment will avoid interest charges at the increased rate of 12%. Additionally, the taxpayer is protected from additional tax liability, the so-called VAT sanction, which may amount to 30%, 20%, or 15% of the understated tax liability depending on the nature of the violation.

Accelerated VAT Refund

Taxpayers who apply for a refund of the excess input tax over output tax to the VAT account can expect a significant reduction in the refund processing time. The standard VAT refund period is 60 days from the date of filing the settlement, while for refunds to the VAT account, this period is reduced to just 25 days. Importantly, the accelerated refund is available without the need to meet additional conditions that are required for the standard 25-day refund to the settlement account.

Formal and Documentation Obligations

Using the mandatory split payment mechanism involves a number of formal obligations, the non-fulfillment of which may result in serious financial and legal consequences. The seller’s key obligation is to include on the invoice a special annotation split payment mechanism (mechanizm podzielonej platnosci). This notation must appear on every invoice documenting a transaction subject to mandatory split payment, regardless of the payment method chosen by the buyer.

The buyer, in turn, is obligated to make payment using the transfer communication, which enables automatic division of the amount into the net portion directed to the settlement account and the portion corresponding to VAT transferred to the VAT account. The transfer communication contains elements specified by regulations, including the invoice number, the seller’s tax identification number, the amount corresponding to all or part of the VAT, and the amount corresponding to all or part of the gross value.

Consequences of Violations and Sanctions

Non-compliance with mandatory split payment regulations carries severe sanctions that may affect both the seller and the buyer. A seller who fails to include the required split payment mechanism annotation on the invoice exposes themselves to the establishment of an additional tax liability of 30% of the tax amount shown on the invoice. This sanction is imposed regardless of whether the buyer actually made the payment using split payment.

From the buyer’s perspective, making payment for an invoice subject to mandatory split payment without using this mechanism results in the loss of the right to include the expense in tax-deductible costs. This limitation applies to that portion of the cost that corresponds to the VAT amount resulting from the invoice. Additionally, the buyer exposes themselves to joint and several liability for the seller’s tax arrears and loses protection against VAT sanctions.

Practical Aspects of Implementing Split Payment in Business

Effective implementation of the split payment mechanism requires appropriate organizational and technical preparation. Entrepreneurs should first conduct a detailed analysis of the assortment of goods sold and services provided in terms of their presence in Annex 15 to the VAT Act. Identification of items subject to mandatory split payment allows for proper configuration of invoicing systems and ensures automatic inclusion of the required annotation on appropriate documents.

Equally important is the adaptation of processes related to settling liabilities. The accounting or finance department should have tools enabling verification of whether a given purchase invoice requires the application of the split payment mechanism. To this end, it is necessary to monitor the value of invoices from individual contractors and verify whether the subject of the transaction is included in Annex 15.

Summary and Recommendations

The split payment mechanism constitutes a permanent element of the Polish tax system, knowledge of which is essential for the proper functioning of every enterprise operating in sectors covered by the regulation. Proper application of split payment, both in mandatory and voluntary cases, requires a systematic approach encompassing transaction analysis, appropriate document marking, and proper payment management.

Entrepreneurs are advised to regularly monitor legislative changes concerning the scope of Annex 15 and threshold amounts, as well as to continuously update internal procedures. It is also worth considering voluntary use of the split payment mechanism in transactions not subject to the obligation, particularly in relations with new contractors, due to the significant benefits in the form of exclusion of joint and several liability and protection against tax sanctions.

In case of doubts regarding the application of the split payment mechanism or interpretation of regulations in relation to specific transactions, it is recommended to seek professional advisory services. Specialists will assist in the proper qualification of transactions, preparation of appropriate procedures, and representation of the entrepreneur’s interests in contacts with tax authorities.

Simple Joint-Stock Company (PSA) – for startups & investors

Posted on by kancelaria

Simple Joint-Stock Company (PSA) – a modern legal form for startups and investors in Poland

 

The Simple Joint-Stock Company (Prosta Spółka Akcyjna, PSA) represents the Polish legislature’s response to the growing needs of the innovation economy and the dynamically developing startup ecosystem. Introduced into the Polish legal framework on July 1, 2021, the PSA combines the flexibility of a limited liability company with investment mechanisms characteristic of traditional joint-stock companies. This hybrid legal structure was designed specifically for ventures based on innovation, knowledge, and intellectual capital, where traditional organizational forms often proved too rigid or inadequate for business models focused on rapid growth.

Fundamental assumptions and purpose of the PSA

The Simple Joint-Stock Company emerged from years of analysis of legal barriers hindering the development of Polish startups and observation of solutions functioning in other European jurisdictions. The legislature’s primary objective was to create a legal form that eliminates excessive formalism while maintaining appropriate mechanisms for protecting creditors and investors. The PSA addresses the specific needs of early-stage ventures, where the ability to rapidly raise capital, flexibly shape relationships between founders and investors, and adequately compensate individuals contributing primarily their work and competencies to the company is of paramount importance.

The PSA’s structure is based on the assumption that the modern economy requires legal instruments enabling effective commercialization of innovations without the necessity of possessing significant initial capital. In the traditional joint-stock company model, the minimum share capital requirement of PLN 100,000 constituted a significant barrier for many technology ventures, where project value is concentrated in knowledge, technology, and growth potential rather than in tangible assets.

Share capital and no-par-value shares

One of the most revolutionary features of the Simple Joint-Stock Company is the departure from the concept of share capital in favor of equity capital. The minimum equity capital of a PSA amounts to a symbolic one Polish zloty – 1 PLN) , which eliminates the financial barrier when establishing a company and allows resources to be concentrated on actual business development. However, the equity capital does not constitute a rigid amount entered in the company’s articles of association but rather a variable value reflecting actual shareholder contributions.

Shares in the Simple Joint-Stock Company are no-par-value shares, meaning they do not have a specified nominal value. This solution fundamentally changes the way of thinking about the company’s capital structure. Instead of the traditional division of capital into a specified number of shares with a fixed nominal value, the PSA operates on the concept of shares representing property and corporate rights without an assigned unit value. This mechanism significantly simplifies conducting subsequent financing rounds, issuing new shares, or implementing employee incentive programs without the necessity of carrying out share capital increase procedures characteristic of traditional capital companies.

An important element of the PSA’s capital system is the obligation to create a reserve for equity capital of at least 8% of profit for the given financial year until this capital reaches 5% of the total company liabilities as shown in the approved financial statements for the last financial year. This mechanism represents a compromise between flexibility of the capital structure and creditor protection.

Non-cash contributions – work and services as a source of capital

The Simple Joint-Stock Company is the only Polish capital company that permits contributions in the form of work or provision of services. This groundbreaking solution addresses the reality of startups, where founders often possess primarily competencies, technical knowledge, and time rather than financial capital. In traditional capital companies, work could not constitute a contribution, which forced the use of complex legal constructions to compensate founders contributing mainly their time and skills to the venture.

Contributions in the form of work and services are not counted toward equity capital but constitute the basis for acquiring shares by the person providing work or services. This means that a founder-programmer can acquire shares in exchange for a commitment to perform specific development work, and an industry expert can become a shareholder in exchange for providing consulting services. This structure requires precise specification in the company’s articles of association of the type and scope of work or services and the period of their provision, which ensures transparency of the relationship between the company and the shareholder.

Flexible corporate governance structure

The Simple Joint-Stock Company offers shareholders a choice between two corporate structure models.

  • The first model, similar to solutions known from limited liability companies, provides for a management board as the body managing the company’s affairs and representing it externally, with the possibility of establishing a supervisory board overseeing the management board’s activities.
  • The second model introduces a board of directors as the sole body of the company, combining management and supervisory functions within a single structure.

The board of directors represents a novelty in Polish company law and references Anglo-Saxon solutions. In this model, the board may consist of executive directors, who have the right to manage company affairs and represent it, and non-executive directors, performing control and supervisory functions. Such a structure allows for greater flexibility in shaping the management structure and may be particularly attractive to foreign investors accustomed to the board of directors model.

Regardless of the chosen model, the Simple Joint-Stock Company ensures considerable freedom in determining the rules for body functioning in the articles of association. Shareholders can adapt decision-making procedures, required voting majorities, or representation rules to the specific needs of the venture and investor expectations.

Registration and operational aspects

The process of establishing a Simple Joint-Stock Company has been maximally simplified. The company can be registered electronically through the S24 system within 24 hours, using the template articles of association available in the IT system. Alternatively, for more complex corporate solutions, it is possible to draw up the articles of association in the form of a notarial deed. The court fee for registering a PSA in the S24 system is PLN 250, making it one of the least expensive organizational forms to establish.

Shares in the Simple Joint-Stock Company do not take document form and are subject to mandatory dematerialization. The company maintains a register of shareholders, which may be kept by a notary, bank, investment firm, or the Central Securities Depository of Poland (KDPW). Entry in the register of shareholders constitutes a condition for effective acquisition of shares, which ensures transparency of the ownership structure and facilitates share trading.

The Simple Joint-Stock Company may be established by one or more persons, both natural and legal, for any legally permissible purpose. The only limitation is the prohibition on establishing a PSA solely by a single-member limited liability company.

PSA attractiveness from an investor perspective

For venture capital and private equity investors, the Simple Joint-Stock Company offers a range of mechanisms known from international startup financing practice. Flexibility in shaping rights and obligations associated with shares allows for creating different share classes with varying voting rights, dividend rights, or liquidation preferences. It is possible to introduce preferred shares giving investors priority in repayment in case of company liquidation or sale.

The PSA structure facilitates implementation of standard investment clauses such as tag-along rights, drag-along rights, anti-dilution provisions, or founder share vesting mechanisms. The possibility of contributing work and services naturally fits into incentive models used in startups, where part of team compensation consists of equity participation.

The simplified liquidation procedure constitutes an additional advantage of the PSA. In case of venture failure, it is possible to conduct liquidation within several months, without the necessity of carrying out numerous formalities characteristic of traditional capital companies. This solution addresses the startup reality, where a significant portion of projects do not achieve commercial success and efficient termination of operations is necessary.

Tax and accounting aspects

From a tax perspective, the Simple Joint-Stock Company is treated analogously to other capital companies. The company is subject to corporate income tax at a rate of 19% or a preferential rate of 9% for small taxpayers and taxpayers commencing operations. The PSA may benefit from tax reliefs available to capital companies, including the R&D tax relief and IP Box.

Contributions in the form of work and services generate specific tax consequences. Acquiring shares in exchange for work or services may generate taxable income for the shareholder, the amount of which depends on the market value of the received shares. This issue requires careful tax analysis when structuring transactions, particularly in the context of multi-year incentive programs.

The Simple Joint-Stock Company maintains full accounting records and prepares financial statements in accordance with the Accounting Act. Reporting obligations do not differ significantly from requirements imposed on other capital companies, which ensures comparability of financial data and facilitates due diligence processes conducted by potential investors.

Perspectives and practical recommendations

After several years of functioning in the Polish legal system, the Simple Joint-Stock Company has proven its usefulness as an organizational form for innovative ventures. The number of registered PSAs is systematically growing, and this form is gaining increasing recognition among startup founders and investors. At the same time, the practice of using PSAs reveals areas requiring further interpretation and development of case law, which is a natural process for a relatively new legal institution.

For founders considering the choice of legal form for a new venture, analysis of the planned development model and financing needs is of key importance. The PSA works best for projects assuming acquisition of external investment capital, implementation of share-based incentive programs, and flexible shaping of relationships between founders and investors. For ventures with a stable business model that do not require rapid scaling and external financing, a traditional limited liability company may remain a more appropriate option due to greater legal predictability and more extensive case law.

The decision to choose a PSA should be preceded by consultation with a legal and tax advisor who will help identify optimal structural solutions tailored to the specifics of the planned venture and expectations of all interested parties.

 

 

GDPR in Poland for Foreign Companies

Posted on by kancelaria

A Comprehensive Guide to Data Processing Obligations in Poland

1. Introduction – Territorial Scope of the GDPR

Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, commonly known as the GDPR (General Data Protection Regulation), constitutes the foundation of the European data protection framework. For foreign companies planning to operate in Poland or targeting Polish consumers, understanding the obligations arising from this regulation is absolutely essential.

Pursuant to Article 3 of the GDPR, the regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or processor in the Union, regardless of whether the processing takes place in the Union or not. Importantly, the GDPR also applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to the offering of goods or services to such data subjects or the monitoring of their behaviour as far as their behaviour takes place within the Union.

This extraterritorial jurisdiction of the GDPR means that companies from third countries, including the United States, China, the United Kingdom, and other states outside the European Economic Area, must comply with European data protection rules if their activities concern natural persons located within the EU territory, including Poland.

2. Fundamental Principles of Personal Data Processing

Article 5 of the GDPR establishes seven fundamental principles that must guide every personal data processing operation. These principles form the basis of the entire data protection system, and their violation may result in severe administrative sanctions.

2.1. Lawfulness, Fairness and Transparency

Personal data must be processed lawfully, fairly, and in a transparent manner in relation to the data subject. In practice, this means having a valid legal basis for processing as specified in Article 6 of the GDPR, such as consent of the data subject, performance of a contract, compliance with a legal obligation incumbent on the controller, protection of vital interests, performance of a task carried out in the public interest, or legitimate interests pursued by the controller. Transparency requires providing data subjects with comprehensive information about the processing in a clear and understandable form.

2.2. Purpose Limitation

Personal data may only be collected for specified, explicit, and legitimate purposes and not further processed in a manner incompatible with those purposes. An exception applies to further processing for archiving purposes in the public interest, scientific or historical research purposes, or statistical purposes, which pursuant to Article 89(1) of the GDPR shall not be considered incompatible with the initial purposes. Any change in the purpose of processing requires conducting a compatibility test or obtaining a new legal basis.

2.3. Data Minimisation

The controller should process data that is adequate, relevant, and limited to what is necessary in relation to the purposes for which it is processed. This principle requires foreign companies to critically assess what data they actually need to achieve their business objectives and to refrain from collecting excessive information. In a cross-border context, it is particularly important to adapt data collection practices to European standards, which are often more restrictive than regulations in companies’ countries of origin.

2.4. Accuracy

Personal data must be accurate and, where necessary, kept up to date. The controller is obliged to take every reasonable step to ensure that personal data that are inaccurate, having regard to the purposes for which they are processed, are erased or rectified without delay. This obligation requires implementing procedures for data verification and updating, as well as enabling data subjects to easily report inaccuracies.

2.5. Storage Limitation

Personal data should be kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed. This requires controllers to develop a data retention policy specifying concrete retention periods for different categories of data, justified by processing purposes or legal requirements. Upon expiry of the retention period, data should be permanently deleted or anonymised.

2.6. Integrity and Confidentiality

Personal data must be processed in a manner that ensures appropriate security, including protection against unauthorised or unlawful processing and against accidental loss, destruction, or damage, using appropriate technical or organisational measures. Foreign companies must implement a comprehensive security system encompassing both technical measures (encryption, access control, monitoring) and organisational measures (employee training, security policies, incident response procedures).

2.7. Accountability

The controller is responsible for compliance with all the principles listed above and must be able to demonstrate such compliance. This principle reverses the burden of proof – the controller must prove compliance with the GDPR, rather than the supervisory authority having to prove a violation. This requires maintaining detailed documentation, including records of processing activities, data protection impact assessments, evidence of consent obtained, and documentation of implemented security measures.

3. Key Obligations of the Data Controller

3.1. Information Obligations

Articles 13 and 14 of the GDPR impose extensive information obligations on the controller towards the individuals whose data it processes. When collecting data directly from the data subject (Article 13), the controller must provide its identity and contact details, the contact details of the data protection officer (if designated), the purposes of processing and the legal basis, the legitimate interests pursued by the controller (if processing is based on this ground), recipients or categories of recipients of the data, and information about the intention to transfer data to a third country along with the safeguards applied.

Additionally, the controller must inform about the period for which data will be stored or the criteria used to determine that period, the rights available to the data subject (access, rectification, erasure, restriction, portability, objection), the right to withdraw consent at any time (if processing is based on consent), the right to lodge a complaint with a supervisory authority, information about automated decision-making including profiling, and whether the provision of data is a statutory or contractual requirement or a requirement necessary to enter into a contract, as well as the consequences of failing to provide such data.

3.2. Records of Processing Activities

Pursuant to Article 30 of the GDPR, the controller and processor are obliged to maintain records of processing activities. This obligation applies to enterprises employing at least 250 persons, or conducting processing that is likely to result in a risk to the rights and freedoms of data subjects, processing that is not occasional, or processing that includes special categories of data (Article 9(1)) or data relating to criminal convictions (Article 10).

The controller’s records must contain the name and contact details of the controller, joint controllers, and the representative and data protection officer, the purposes of processing, a description of the categories of data subjects and categories of personal data, categories of recipients (including in third countries), information about transfers to third countries along with documentation of safeguards, envisaged time limits for erasure of different categories of data, and a general description of technical and organisational security measures.

3.3. Data Protection Impact Assessment (DPIA)

Article 35 of the GDPR introduces the obligation to carry out a Data Protection Impact Assessment (DPIA) prior to processing that, by virtue of its nature, scope, context, and purposes, is likely to result in a high risk to the rights and freedoms of natural persons. A DPIA is mandatory in cases of systematic and extensive evaluation of personal aspects relating to natural persons, based on automated processing including profiling, processing on a large scale of special categories of data or data relating to criminal convictions, and systematic monitoring on a large scale of a publicly accessible area.

The President of the Personal Data Protection Office (PUODO) has published a list of the types of processing operations requiring a DPIA in Poland. This list includes, among others, processing of biometric data for identity verification, processing of genetic data, employee geolocation, profiling for marketing purposes using data from external sources, and large-scale processing of CCTV monitoring data.

4. Designation of a Representative in the European Union

Article 27 of the GDPR imposes on controllers and processors not established in the Union but subject to the GDPR pursuant to Article 3(2) the obligation to designate in writing a representative in the Union. The representative must be established in one of the Member States where the data subjects whose personal data are processed are located.

The function of the representative is of fundamental importance for the effective enforcement of the GDPR against entities outside the EU. The representative serves as a point of contact for both supervisory authorities and data subjects in all matters relating to processing. They are also the addressee of enforcement measures, meaning that administrative fines can be imposed through them.

The obligation to designate a representative does not apply to public authorities or bodies, or to processing that is occasional, does not include large-scale processing of special categories of data or data relating to criminal convictions, and is unlikely to result in a risk to the rights and freedoms of natural persons. The designation of a representative does not affect the liability of the controller or processor, nor the possibility of initiating proceedings against them.

5. Data Protection Officer (DPO)

Articles 37-39 of the GDPR regulate the institution of the Data Protection Officer (DPO). Designation of a DPO is mandatory in three cases: when processing is carried out by a public authority or body (except for courts acting in their judicial capacity), when the core activities of the controller or processor consist of processing operations which by virtue of their nature, scope, or purposes require regular and systematic monitoring of data subjects on a large scale, or when the core activities consist of processing on a large scale of special categories of data or data relating to criminal convictions.

The DPO may be an employee of the controller or processor or perform their tasks on the basis of a service contract. The controller and processor must ensure that the DPO is involved properly and in a timely manner in all issues relating to the protection of personal data, has the resources necessary to carry out their tasks, and does not receive instructions regarding the exercise of their tasks. The DPO reports directly to the highest management level and is protected against dismissal or penalty for performing their tasks.

The tasks of the DPO include informing the controller and employees of their obligations under data protection legislation, monitoring compliance with the GDPR and the controller’s policies, providing advice on data protection impact assessments and monitoring their performance, cooperating with the supervisory authority, and acting as a contact point for the supervisory authority. The contact details of the DPO must be published and communicated to the supervisory authority. In Poland, notification is made to the PUODO.

6. Transfers of Personal Data to Third Countries

Chapter V of the GDPR (Articles 44-49) establishes detailed rules for the transfer of personal data to third countries, i.e., countries outside the European Economic Area. For foreign companies operating in Poland and transferring data to their headquarters or other organisational units outside the EU, this issue is of fundamental importance.

6.1. Adequacy Decisions

The simplest basis for transferring data to a third country is a decision by the European Commission stating that the country ensures an adequate level of protection (Article 45 GDPR). Currently, adequacy decisions cover, among others, Andorra, Argentina, Canada (for commercial organisations subject to PIPEDA), the Faroe Islands, Guernsey, Israel, the Isle of Man, Japan, Jersey, New Zealand, the Republic of Korea, Switzerland, the United Kingdom, and the United States (for entities participating in the EU-US Data Privacy Framework).

Of particular significance is the decision concerning the United States – the EU-US Data Privacy Framework adopted in July 2023. US companies that have joined this programme and been certified by the US Department of Commerce may receive personal data from the EU without the need to apply additional safeguards. The certification status of specific companies can be verified on the programme’s website maintained by the Department of Commerce.

6.2. Standard Contractual Clauses (SCCs)

In the absence of an adequacy decision, data transfers may take place on the basis of standard contractual clauses adopted by the European Commission (Article 46(2)(c) GDPR). The current standard contractual clauses were adopted by Commission Implementing Decision (EU) 2021/914 of 4 June 2021. These clauses are modular in nature and cover four scenarios: controller-to-controller transfer, controller-to-processor transfer, processor-to-processor transfer, and processor-to-controller transfer.

The use of SCCs requires conducting a Transfer Impact Assessment (TIA), in which the parties must assess whether the law of the third country ensures a level of protection essentially equivalent to that guaranteed in the EU. If the assessment reveals that the law of the third country may interfere with the effectiveness of the clauses, it is necessary to implement additional supplementary measures (technical, organisational, or contractual) or refrain from the transfer.

6.3. Binding Corporate Rules (BCRs)

For international corporate groups, Binding Corporate Rules (BCRs) provided for in Article 47 of the GDPR are a particularly useful instrument. BCRs are internal data protection policies adopted by a group of undertakings engaged in joint economic activity, which, after approval by the competent supervisory authority, constitute a basis for lawful transfer of personal data between group entities, including to third countries.

The process of obtaining BCR approval is time-consuming and costly, as it requires preparing comprehensive documentation, conducting a cooperation procedure between supervisory authorities, and obtaining approval from the lead supervisory authority. However, once approved, BCRs constitute a flexible and effective tool for managing intra-group data transfers without the need to conclude separate agreements for each transfer.

7. Rights of Data Subjects

The GDPR grants natural persons a broad catalogue of rights regarding the protection of their personal data. Foreign companies operating in Poland must implement procedures enabling the effective exercise of these rights within the time limits specified in the regulation.

7.1. Right of Access

Article 15 of the GDPR grants the data subject the right to obtain from the controller confirmation as to whether personal data concerning them are being processed, and if so, the right to access those data and information about the purposes of processing, the categories of data, the recipients, the envisaged period of storage, the rights available, the source of data (if not collected from the data subject), automated decision-making, and transfers to third countries. Upon request, the controller is obliged to provide a copy of the personal data undergoing processing.

7.2. Right to Rectification

Pursuant to Article 16 of the GDPR, the data subject has the right to obtain from the controller without undue delay the rectification of inaccurate personal data concerning them and the completion of incomplete data, including by providing a supplementary statement. The controller must implement mechanisms enabling effective verification and correction of data.

7.3. Right to Erasure (“Right to Be Forgotten”)

Article 17 of the GDPR establishes the right to obtain the erasure of personal data where the data are no longer necessary for the purposes for which they were collected, the data subject withdraws consent on which processing is based, the data subject objects successfully, the data have been unlawfully processed, erasure is required by EU or Member State law, or the data were collected in relation to the offer of information society services to a child. This right is subject to limitations, including on grounds of freedom of expression, legal obligations incumbent on the controller, public interest in the field of public health, archival purposes, or the establishment, exercise, or defence of legal claims.

7.4. Right to Restriction of Processing

Under Article 18 of the GDPR, the data subject may request restriction of processing where the accuracy of the data is contested (for the period of verification), processing is unlawful and the data subject opposes erasure, the controller no longer needs the data but they are required by the data subject for the establishment, exercise, or defence of legal claims, or the data subject has objected to processing (pending the determination of whether the legitimate grounds of the controller override those of the data subject). During the period of restriction, data may only be stored or processed with the data subject’s consent, for the establishment or defence of legal claims, for the protection of the rights of another person, or for reasons of important public interest.

7.5. Right to Data Portability

Article 20 of the GDPR introduces the right to receive personal data provided to the controller in a structured, commonly used, and machine-readable format, and the right to transmit those data to another controller without hindrance. This right applies where processing is based on consent or a contract and processing is carried out by automated means. At the data subject’s request, data should be transmitted directly to another controller where technically feasible.

7.6. Right to Object

Pursuant to Article 21 of the GDPR, the data subject has the right at any time to object to processing of their data based on the legitimate interests of the controller or on the performance of a task in the public interest. The controller must cease processing unless it demonstrates compelling legitimate grounds for processing that override the interests, rights, and freedoms of the data subject, or grounds for the establishment, exercise, or defence of legal claims. In the case of processing for direct marketing purposes, the objection is absolutely effective, and the controller must immediately cease such processing.

7.7. Time Limits for Exercising Rights

The controller is obliged to provide the data subject with information on action taken on a request without undue delay, and in any event within one month of receipt of the request. This period may be extended by a further two months where necessary, taking into account the complexity of the request or the number of requests, provided the controller informs the data subject of such extension and its reasons within the first month. Information and actions are free of charge as a rule; however, in the case of manifestly unfounded or excessive requests, the controller may charge a reasonable fee or refuse to act on the request.

8. Personal Data Breaches – Procedures and Obligations

The GDPR defines a personal data breach as a breach of security leading to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to personal data transmitted, stored, or otherwise processed. Articles 33 and 34 of the GDPR establish rigorous procedures for dealing with breaches.

8.1. Notification of Breach to Supervisory Authority

In the case of a personal data breach, the controller shall without undue delay, and where feasible not later than 72 hours after having become aware of it, notify the breach to the supervisory authority competent in accordance with Article 55 of the GDPR, unless the breach is unlikely to result in a risk to the rights and freedoms of natural persons. In Poland, the supervisory authority is the President of the Personal Data Protection Office (PUODO). Notifications are made via an electronic form available on uodo.gov.pl.

The notification must describe the nature of the breach, including where possible the categories and approximate number of data subjects concerned and the categories and approximate number of personal data records concerned. Furthermore, the notification includes the name and contact details of the data protection officer or other contact point, a description of the likely consequences of the breach, and a description of the measures taken or proposed by the controller to address the breach, including, where appropriate, measures to mitigate its possible adverse effects.

8.2. Communication of Breach to Data Subject

Where the personal data breach is likely to result in a high risk to the rights and freedoms of natural persons, the controller shall communicate the breach to the data subject without undue delay. The communication must describe in clear and plain language the nature of the breach and contain information and recommendations similar to those communicated to the supervisory authority.

Communication to the data subject is not required where the controller has implemented appropriate technical and organisational protection measures (e.g., encryption) that render the data unintelligible to unauthorised persons, the controller has taken subsequent measures which ensure that the high risk is no longer likely to materialise, or communication would involve disproportionate effort (in which case a public communication or similar measure is required enabling equally effective notification).

8.3. Documentation of Breaches

Regardless of the notification obligation, the controller must document any personal data breaches, comprising the facts relating to the breach, its effects, and the remedial action taken. This documentation serves to enable the supervisory authority to verify compliance with Article 33 of the GDPR. The documentation obligation applies to all breaches, not only those subject to notification.

9. Sanctions for GDPR Violations

Article 83 of the GDPR introduces a two-tier system of administrative fines. For infringements concerning, among others, the obligations of the controller and processor, certification requirements, and the obligations of the monitoring body, fines may reach up to EUR 10 million or, in the case of an undertaking, up to 2% of its total worldwide annual turnover of the preceding financial year, whichever is higher.

For more serious infringements concerning the basic principles for processing, the conditions for consent, the rights of data subjects, transfers of data to third countries, or Member State legislation adopted under Chapter IX of the GDPR, fines may reach up to EUR 20 million or up to 4% of the undertaking’s total worldwide annual turnover. As with the lower threshold, the higher amount applies.

When determining the amount of the fine, the supervisory authority takes into account a number of factors, including the nature, gravity, and duration of the infringement, the intentional or negligent character of the infringement, actions taken to mitigate damage, the degree of responsibility taking into account technical and organisational measures implemented, any previous infringements, the degree of cooperation with the supervisory authority, the categories of personal data affected, the manner in which the supervisory authority became aware of the infringement, compliance with previously applied measures, and adherence to approved codes of conduct or certification mechanisms.

In addition to administrative fines, the GDPR provides for civil liability of the controller and processor towards persons who have suffered damage as a result of an infringement of the regulation. Any person who has suffered material or non-material damage as a result of an infringement of the GDPR has the right to receive compensation from the controller or processor for the damage suffered. In Poland, such claims are heard by common courts under general principles, with the burden of proof resting on the controller, who must demonstrate that it is not responsible for the event giving rise to the damage.

10. Summary – Key Steps for Foreign Companies

For foreign companies planning to operate in Poland or offering products and services to Polish consumers, ensuring GDPR compliance requires a systematic approach encompassing several key areas. First and foremost, a comprehensive assessment of the entity’s status under the GDPR is necessary – whether it is a controller, joint controller, or processor, and which legal bases for processing apply to particular data operations.

Next, the company should implement the required documentation, including a privacy policy meeting the requirements of Articles 13-14 of the GDPR, records of processing activities, procedures for exercising data subject rights, and breach management procedures. It is also crucial to resolve the issue of data transfers – whether the company can rely on an adequacy decision or whether it is necessary to apply standard contractual clauses or other safeguards.

Companies from outside the EU must consider designating a representative in the Union and assess whether there are grounds for the mandatory appointment of a data protection officer. Finally, it is essential to implement appropriate technical and organisational measures ensuring the security of processing and to conduct training for personnel with access to personal data.

11. Support for Foreign Investors

Our law firm offers comprehensive data protection advisory services for foreign companies operating in Poland. We specialise in conducting GDPR compliance audits, preparing documentation required by the regulation, including privacy policies, records of processing activities, data processing agreements, and standard contractual clauses for international transfers.

We provide outsourcing services for the function of Data Protection Officer and EU representative, ensuring professional support without the need to employ dedicated personnel. We represent clients in proceedings before the President of the Personal Data Protection Office and assist in managing personal data breaches, including preparing notifications to the PUODO and communication with data subjects.

Our multilingual team, fluent in Polish, English, and other foreign languages, ensures effective communication and full understanding of the specific needs of international clients. By combining expertise in Polish law with an understanding of international data protection standards, we help foreign companies safely conduct business in the Polish market.

 

VAT in Poland – Guide for Foreign Entrepreneurs (2026)

Posted on by kancelaria

1. Introduction and Legal Framework

The Polish VAT system implements EU VAT Directive 2006/112/EC and is governed by the Act of 11 March 2004 on Tax on Goods and Services (Journal of Laws 2024, item 361, as amended). The year 2026 has brought fundamental changes to the Polish VAT system, particularly the implementation of the mandatory National e-Invoice System (KSeF) and an increase in the VAT exemption threshold. For foreign entrepreneurs planning business activities in Poland, understanding the current mechanisms of Polish VAT is crucial both for proper tax compliance and for optimizing cash flows.

The Polish VAT system currently represents one of the highest levels of digitalization in the European Union. Since 1 February 2026, the National e-Invoice System (KSeF) has been mandatory, requiring the issuance of structured invoices in XML format through the central platform administered by the Ministry of Finance. Reporting in the form of the Standard Audit File (JPK_VAT) also remains obligatory. Foreign entrepreneurs must be aware of these technical requirements, as non-compliance carries significant administrative penalties.

2. VAT Registration Obligations for Foreign Entities

2.1. Conditions Triggering Registration Obligation

A foreign entrepreneur without a registered office or fixed establishment in Poland is required to register as an active VAT taxpayer in several key situations. The first concerns making supplies of goods or providing services in Poland for which the purchaser is not the taxpayer under the reverse charge mechanism. The second situation arises when intra-Community acquisitions of goods exceed the equivalent of PLN 50,000 in a tax year. The third condition relates to the import of goods where the foreign entity acts as the importer. Finally, the registration obligation also arises in the case of distance selling from other Member States to consumers in Poland, when the EU threshold of EUR 10,000 has been exceeded and the OSS procedure has not been chosen.

2.2. Registration Procedure

Registration is carried out by submitting a VAT-R form to the head of the tax office competent for foreign entities, which is the Head of the Second Tax Office Warsaw-Srodmiescie, located at ul. Jagiellonska 15, 03-719 Warsaw. The VAT-R form can be submitted in paper form or electronically via the ePUAP platform. The application must be accompanied by documents confirming the taxpayer’s status in the country of residence, in particular an extract from the business register and a certificate of tax identification number. For entities from outside the European Union, the appointment of a tax representative with a registered office in Poland is additionally required.

The tax authority registers the entity within 14 days of receiving the complete application, and the registration confirmation is issued on a VAT-5 form. The 2025 amendment to the VAT Act introduced additional grounds for refusing registration (Article 96(4a)), which apply in particular to foreign companies without a tax representative and entities without complete identification notification in accordance with Article 5(2c) of the TIN Act.

2.3. Tax Representative

Entities from outside the European Union, EEA, and the Swiss Confederation are required to appoint a tax representative as a condition for VAT registration in Poland. The representative may be a legal person or an organizational unit without legal personality, having its registered office in Poland and registered as an active VAT taxpayer for at least 24 months preceding the submission of the application. The tax representative is jointly and severally liable with the represented entity for VAT obligations, which is significant when selecting an entity to perform this function. The representative is appointed by means of a written agreement specifying the scope of representation, and information about the representative is included in the VAT-R registration form.

2.4. VAT Exemption – New Threshold from 2026

Pursuant to the Act of 24 June 2025 amending the Act on Tax on Goods and Services (Journal of Laws 2025, item 896), from 1 January 2026, the VAT exemption threshold has been increased from PLN 200,000 to PLN 240,000. The exemption applies to taxpayers whose sales value did not exceed a total of PLN 240,000 in the previous tax year. For taxpayers commencing business during the tax year, the threshold is calculated proportionally to the period of business activity.

The transitional provisions of the amendment are of significant importance, as they enable taxpayers who exceeded the previous threshold of PLN 200,000 in 2025 but did not reach the new threshold of PLN 240,000 to benefit from the exemption. This means that these entities may return to the exemption from 1 January 2026 without observing the one-year waiting period provided for in Article 113(11) of the VAT Act. The increased threshold applies to both taxpayers with their registered office in Poland and entrepreneurs from other EU Member States benefiting from the exemption in Poland under the SME procedure (Article 113a of the VAT Act).

3. VAT Rates in Poland

3.1. Rate Structure

The Polish VAT system provides for four tax rates, the application of which depends on the type of goods supplied or services provided. The standard rate is 23% and applies to most transactions not subject to reduced rates or exemptions. The first reduced rate of 8% applies, among others, to construction and renovation services relating to residential buildings, medical devices, catering services excluding alcoholic beverages, and services related to culture and entertainment. The second reduced rate of 5% primarily covers basic food products, books and specialist journals, and certain hygiene products. Additionally, the 0% rate applies to intra-Community supplies of goods and exports, subject to meeting specific documentation requirements.

Summary of VAT rates applicable in Poland:

Rate Application Examples
23% Standard rate Most goods and services, electronics, clothing, professional services
8% First reduced rate Construction services (residential), medical devices, catering
5% Second reduced rate Basic food products, books, specialist journals
0% Zero rate Intra-Community supplies, exports (with documentation requirements)

 

3.2. Subject-Matter Exemptions

In addition to tax rates, the Polish VAT system provides for a catalog of subject-matter exemptions set out in Article 43 of the VAT Act. The most significant from the perspective of foreign entrepreneurs include exemptions for financial and insurance services, educational services provided by authorized entities, medical care services, and the supply of real estate after two years from first occupation. These exemptions are absolute, meaning that the taxpayer cannot waive the exemption and tax the transaction, except in certain cases concerning real estate, where it is possible to submit a declaration opting for taxation.

4. Reverse Charge Mechanism

4.1. Principles of Reverse Charge Application

The reverse charge mechanism is a special method of VAT settlement in which the purchaser, not the supplier, is obliged to account for output tax. For foreign entrepreneurs, this mechanism is of fundamental importance as it eliminates the need for VAT registration in Poland in many cases. Pursuant to Article 17(1)(4) and (5) of the VAT Act, the taxpayer is the purchaser of goods or services if the supplier does not have a registered office or fixed establishment in Poland and the transaction is taxable in Poland.

4.2. Scope of Application

The reverse charge mechanism applies in the case of import of services, i.e., the provision of services by foreign service providers to Polish VAT taxpayers. This particularly concerns services for which the place of supply is determined in accordance with Article 28b of the VAT Act, i.e., services provided to taxable persons for which the place of taxation is the country of the service recipient’s registered office. Reverse charge also applies to supplies of goods with installation or assembly carried out by a foreign entity and to certain intra-Community transactions. It should be noted that this mechanism does not apply in the case of B2C transactions, where the foreign seller is required to register for VAT in Poland or apply the OSS procedure.

5. VAT Invoices and the National e-Invoice System (KSeF)

5.1. Mandatory Invoice Elements

Article 106e of the Polish VAT Act sets out detailed requirements regarding the elements that a properly issued invoice must contain. Mandatory elements include the date of issue and the date of delivery of goods or performance of services, if different from the date of issue. The invoice must contain a sequential number assigned within one or more series, uniquely identifying the document. Full identification data of the seller and buyer are also required, including name or first and last name, address, and tax identification number. For intra-Community transactions, the EU VAT numbers of both parties to the transaction must be provided.

The invoice must precisely specify the subject of the transaction by indicating the name of the goods or services, their quantity or scope, net unit price, and net value broken down by tax rates. The tax rate, tax amount, and gross value must also be indicated. In the case of VAT exemptions, the legal basis for the exemption must be indicated. For transactions subject to the reverse charge mechanism, the invoice should contain the annotation ‘reverse charge’.

5.2. National e-Invoice System (KSeF) – Obligations from 2026

The National e-Invoice System (KSeF) is the central IT platform of the Ministry of Finance, which from 2026 constitutes the mandatory method for issuing and receiving invoices in B2B transactions in Poland. The system requires the issuance of structured invoices in a uniform XML format, which after being sent to KSeF receive a unique identification number confirming their authenticity. The legal basis is the Act of 5 August 2025 amending the Act on Tax on Goods and Services (Journal of Laws 2025, item 1203).

Mandatory KSeF Implementation Schedule:

Date Scope of Obligation
1 February 2026 Obligation to issue invoices in KSeF for large taxpayers (gross sales value > PLN 200 million in 2024). Obligation to receive invoices through KSeF for ALL taxpayers.
1 April 2026 Obligation to issue invoices in KSeF for other entrepreneurs (including SMEs and sole proprietorships).
1 January 2027 Obligation for the smallest taxpayers (sales value documented by invoices < PLN 10,000 per month) – the ‘digitally excluded’.

 

5.3. Exclusions from KSeF Obligation

Pursuant to Article 106ga(2) of the VAT Act, the obligation to issue invoices in KSeF does not apply to: taxpayers without a registered office or fixed establishment in Poland (unless they voluntarily register in KSeF), taxpayers using special procedures (OSS, IOSS, margin scheme), and invoices issued to natural persons not conducting business activity (B2C consumer invoices). Consumer invoices may be issued in KSeF voluntarily, at the issuer’s discretion.

5.4. Offline Mode and Transitional Facilitations

The Act introduces an offline24 mode, which allows invoices to be issued outside the KSeF system in the event of technical problems or lack of internet access. An invoice issued in offline mode must be sent to KSeF no later than the next business day after its issuance. Additionally, until the end of 2026, transitional facilitations apply: the possibility of issuing invoices from cash registers, no penalties for errors related to invoicing through KSeF, and no obligation to provide the KSeF number in payment titles. From 1 January 2027, the KSeF number will become mandatory when making payments between VAT taxpayers.

5.5. KSeF Benefits – Accelerated VAT Refund

For taxpayers properly using KSeF, an accelerated VAT refund period of 40 days (instead of the standard 60 days) is provided. The conditions for obtaining the accelerated refund are: active VAT taxpayer status, use of a bank account on the whitelist, timely submission of declarations and records, and full and consistent issuance of structured invoices. Additionally, KSeF provides automatic invoice archiving for a period of 10 years, eliminating the need to store paper documentation.

6. Tax Declarations and Settlement Deadlines

6.1. JPK_VAT Structure

Since 1 October 2020, the VAT declaration has been integrated with the JPK_VAT file with declaration, which constitutes a single electronic document combining the functions of a tax declaration and VAT records. The JPK_V7M structure (for monthly settlements) or JPK_V7K (for quarterly settlements) consists of a declaration part containing aggregate data analogous to the former VAT-7 declaration and a records part containing detailed entries for each transaction. The records part includes sales and purchase registers with GTU codes for specific groups of goods and services and special procedure codes. Following the implementation of mandatory KSeF, KSeF invoice numbers are required in JPK_VAT.

6.2. Filing and Payment Deadlines

The JPK_VAT file must be submitted exclusively in electronic form by the 25th day of the month following each subsequent settlement month. The obligation to pay any excess of output tax over input tax falls on the same deadline. Taxpayers settling quarterly submit the records part of JPK_VAT monthly, while the declaration part is submitted quarterly. It should be noted that quarterly settlement is available only to taxpayers whose sales value including tax did not exceed the equivalent of EUR 4,000,000 in the previous tax year.

6.3. EC Sales Lists (VAT-UE)

Entities carrying out intra-Community transactions are required to submit EC Sales Lists (VAT-UE), which enable the exchange of information between tax administrations of EU Member States. The VAT-UE information contains data on intra-Community supplies and acquisitions of goods and the provision of services to taxpayers from other Member States for which the service recipient is the taxpayer. The deadline for submitting VAT-UE is the 25th day of the month following the month in which the tax obligation arose. The information is submitted only for periods in which intra-Community transactions occurred.

7. Right to Deduct Input Tax

7.1. Deduction Conditions

A fundamental principle of the VAT system is the taxpayer’s right to deduct input tax included in the price of goods and services acquired that are used to perform taxable activities. The condition for deduction is possession of a properly issued invoice documenting the acquisition and actual use of the purchase for taxable activities. In the context of KSeF, a structured invoice is considered received on the day the identification number for that invoice is assigned in the system. The right to deduction arises in the settlement for the period in which the tax obligation arose in relation to the goods or services acquired, but not earlier than in the settlement for the period in which the taxpayer received the invoice.

If the taxpayer did not make the deduction within the basic deadline, they may do so in the declaration for one of the next three settlement periods (for monthly settlement) or two subsequent periods (for quarterly settlement). After these deadlines expire, deduction is possible only by correcting the declaration for the period in which the right to deduction arose.

7.2. Limitations on the Right to Deduct

The VAT Act introduces a number of limitations on the right to deduct input tax. Complete exclusion from the right to deduct applies, among others, to the acquisition of accommodation and catering services (with the exception of ready meals acquired for passengers by carriers), as well as representation expenses. Special regulations apply to motor vehicles with a maximum authorized mass not exceeding 3.5 tons, for which deduction is generally limited to 50% of input tax, unless the vehicle is used exclusively for business activities, which requires keeping a vehicle mileage log and notification to the tax office on the VAT-26 form.

8. Refund of Excess Input Tax

8.1. Refund Deadlines

Where the amount of input tax exceeds the amount of output tax, the taxpayer has the right to reduce the amount of output tax for subsequent periods by this difference or to receive a refund of the difference to their bank account. The basic refund period is 60 days from the date of filing the return. An accelerated period of 40 days applies to taxpayers properly using KSeF, subject to meeting specific requirements (whitelist, timely declarations). An accelerated period of 25 days applies when the amounts of input tax result from invoices paid in full through the taxpayer’s bank account and when the amount of input tax carried forward from previous periods does not exceed PLN 3,000. An extended period of 180 days applies in situations where the taxpayer did not perform taxable activities in the given settlement period.

8.2. VAT Refund for Foreign Entities

Foreign entities not registered as VAT taxpayers in Poland may apply for a refund of input tax in Poland under the VAT Refund procedure. Taxpayers from other EU Member States submit applications through the electronic portal in their country of residence, which forwards the application to the Polish tax administration. The application is submitted by 30 September of the year following the year in which the right to refund arose. The minimum refund amount is EUR 400 for applications for a period shorter than a calendar year and EUR 50 for annual applications. Entities from outside the EU submit applications directly to the Second Tax Office Warsaw-Srodmiescie, with the refund being conditional on the principle of reciprocity – it is possible only for entities from countries that grant an analogous right to Polish taxpayers.

9. Intra-Community Transactions

9.1. Intra-Community Supply of Goods (ICS)

An intra-Community supply of goods means the dispatch of goods from Poland to the territory of another EU Member State in performance of a supply to a purchaser holding a valid VAT identification number for intra-Community transactions. ICS is subject to taxation at 0%, provided that the supplier possesses documents confirming the dispatch of goods from Poland. In accordance with EU provisions introduced under the Quick Fixes package, the application of the 0% rate requires possession of the purchaser’s EU VAT number verified in the VIES system and correct reporting of the transaction in the EC Sales List (VAT-UE).

9.2. Intra-Community Acquisition of Goods (ICA)

An intra-Community acquisition of goods is the counterpart of ICS on the purchaser’s side and means the acquisition of the right to dispose of goods as owner as a result of their transport from another EU Member State. ICA is taxable in Poland at the rates appropriate for the given goods, with the purchaser being both the taxpayer obliged to account for output tax and entitled to deduct input tax, which makes the transaction tax-neutral. The tax obligation for ICA arises upon the issuance of the invoice by the supplier, but no later than the 15th day of the month following the month of delivery.

9.3. Triangular Transactions

A special type of intra-Community transaction is the triangular transaction (chain transaction), in which at least three entities from different Member States participate, and goods are transported directly from the first supplier to the final purchaser. The simplified procedure for triangular transactions allows VAT to be settled only in the country of the final purchaser, eliminating the need for VAT registration of the intermediary in the country of destination of the goods. The condition for applying the simplification is correct reporting of the transaction in the EC Sales List (VAT-UE) with the appropriate designation and inclusion on the invoice of an annotation indicating the application of the simplified procedure.

10. Import and Export of Goods

10.1. Import of Goods

Import of goods, understood as the bringing of goods from the territory of a third country into the EU territory, is subject to VAT in Poland if Poland is the country of destination of the goods. The tax base is the customs value increased by the customs duty payable, excise duty, and additional costs (commissions, packaging, transport) incurred up to the first place of destination in the EU territory. As a rule, import VAT is payable to the customs authority before the goods are released for free circulation; however, taxpayers with AEO status or using the simplified procedure may settle import VAT in the tax declaration (simplified procedure under Article 33a of the VAT Act), which eliminates the need to commit funds at the time of customs clearance.

10.2. Export of Goods

Export of goods, meaning the dispatch of goods from the EU territory to the territory of a third country, is subject to taxation at the 0% VAT rate, provided that the exporter possesses a document confirming the dispatch of goods outside the EU territory. Such a document is, in particular, the IE-599 message in the AES (Automated Export System), which constitutes electronic confirmation of the removal of goods issued by the customs office of exit. In the absence of the IE-599 message, other documents confirming export may be used, including transport documents received from the carrier together with a TIR carnet or SAD document confirmed by the customs authority of the third country.

11. Special VAT Procedures

11.1. OSS Procedure (One Stop Shop)

The OSS procedure enables taxpayers making distance sales of goods and providing services to consumers in various EU Member States to settle VAT through a single electronic portal in the Member State of identification. This procedure covers intra-Community distance sales of goods (ICDS), certain services provided to consumers in other Member States, and certain supplies made by digital platforms. Registration for OSS is made by submitting an electronic application, and settlement takes place quarterly by submitting a VAT-OSS declaration. Taxpayers using the OSS procedure are exempt from the obligation to issue invoices in KSeF for transactions covered by this procedure.

11.2. IOSS Procedure (Import One Stop Shop)

The IOSS procedure is the equivalent of OSS for distance sales of goods imported from third countries in consignments with an intrinsic value not exceeding EUR 150. A taxpayer registered in IOSS collects VAT from the purchaser at the time of sale and settles it through a monthly declaration in the Member State of identification. The benefit for purchasers is exemption from import VAT at customs clearance, which significantly speeds up the delivery process. Entities from outside the EU are required to appoint an intermediary with a registered office in the EU who acts on their behalf and is jointly and severally liable for VAT obligations. The IOSS procedure does not cover excise goods or consignments with a value exceeding EUR 150.

11.3. VAT Margin Scheme

The margin scheme is a special method of taxation in which the tax base is the margin, i.e., the difference between the selling price and the purchase price, reduced by the amount of tax. This scheme applies to supplies of second-hand goods, works of art, collectors’ items, and antiques acquired from specific categories of entities, including natural persons not conducting business activities and taxpayers making exempt supplies. The margin scheme is also mandatorily applied by tour operators in relation to tourism services. Taxpayers using the margin scheme are exempt from the obligation to issue invoices in KSeF for transactions covered by this scheme.

12. Tax Controls, Penalties, and Liability

12.1. STIR System and Analytical Tools

The Polish tax administration uses advanced analytical tools to detect irregularities in VAT settlements. The STIR system (Clearing House IT System) analyzes in real-time transactions on taxpayers’ bank accounts for the risk of using the banking sector for tax fraud. If suspicious transactions are identified, the Head of KAS may block the taxpayer’s bank account for up to 72 hours, with the possibility of extension to 3 months. Additionally, the JPK_VAT system enables automatic analysis of data consistency declared by sellers and purchasers.

12.2. Contractor Verification – Whitelist and New Capabilities

Entrepreneurs are required to verify contractors in the VAT taxpayers register (the so-called whitelist) maintained by the Head of KAS. A planned amendment, expected to enter into force in July 2026, will introduce the possibility of checking a taxpayer’s VAT status up to 5 years back on a selected day, and not only at the time of checking. This will facilitate risk assessment and documentation of due diligence when verifying historical transactions. Payment to an account not on the whitelist may result in the inability to recognize the expense as a tax-deductible cost and joint and several liability for the contractor’s VAT.

12.3. Extended Joint and Several Liability from July 2026

The draft amendment to the VAT Act (planned entry into force: 1 July 2026) provides for a significant extension of the purchaser’s joint and several liability for the seller’s tax arrears. Previously, joint and several liability mainly concerned trade in goods from Annex 15 to the VAT Act (fuels, steel, electronics). From July 2026, liability is expected to cover intangible services listed in the new Annex 16, including advisory, management, advertising, accounting, and research services.

Importantly, even the use of the split payment mechanism (SPM) will not protect the purchaser from joint and several liability if they knew that the invoice documenting the service was issued by a non-existent entity, certifies activities that were not performed, or confirms activities performed under conditions of abuse of law. The only effective protection will be demonstrating the exercise of due diligence in verifying the contractor and the transaction.

12.4. VAT Penalties

The VAT penalty system in Poland includes an additional tax liability imposed by the tax authority in the event of irregularities in settlements. The basic penalty is 30% of the amount of understated liability or overstated VAT refund. Where the irregularity results from the use of an invoice documenting a fictitious transaction (a so-called blank invoice), the penalty is 100% of the tax amount arising from such invoice. An increased penalty of 20% applies when the taxpayer voluntarily corrected the declaration after the commencement of an audit but before its completion. Penalties are not imposed if the taxpayer, before the commencement of an audit, submitted a legally effective correction of the declaration together with justification for the reasons for the correction and settled the tax arrears with interest.

13. Planned VAT Changes for 2026-2027

13.1. VAT Warehouses

The Ministry of Finance plans to introduce the institution of so-called VAT warehouses (planned entry into force: 2027-2028), which is intended to provide real simplification for companies engaged in international trade. The procedure will enable the application of a zero VAT rate to supplies and acquisitions of goods and the provision of certain services within the VAT warehouse, allowing the deferral of the tax obligation until the goods are removed from the warehouse into domestic circulation.

13.2. Other Planned Simplifications

Among the planned changes are also: elimination of the obligation to pay VAT within 14 days of intra-Community acquisition of a means of transport, the possibility of simpler VAT deregistration without the obligation to submit the VAT-Z form, the introduction of an obligation to dispose of unused cash registers, and a ban on replacing fiscal memory in cash registers. The Ministry of Finance also announces work on a new VAT Act characterized by simpler language and a transparent structure, with the planned completion of work in October 2026.

14. Summary and Recommendations

The year 2026 has brought fundamental changes to the Polish VAT system, the most important of which is the implementation of the mandatory National e-Invoice System. For foreign entrepreneurs, it is crucial to understand that from 1 February 2026, all entities – regardless of size – must be prepared to receive invoices through KSeF, even if they themselves are exempt from the obligation to issue invoices in the system. Entities without a registered office in Poland may benefit from the exclusion from the KSeF obligation; however, they should consider voluntary registration due to benefits such as the accelerated 40-day VAT refund period.

The increase in the VAT exemption threshold to PLN 240,000 represents a significant facilitation for smaller entities, including foreign entrepreneurs using the SME procedure. At the same time, the planned extension of joint and several liability to intangible services from July 2026 requires increased diligence in verifying contractors, particularly in the advisory, marketing, and accounting sectors. In this context, it is recommended to establish cooperation with a local tax advisor experienced in serving foreign entities, who will ensure ongoing monitoring of legislative changes and adaptation of settlement procedures to current legal requirements.

 

 

This material is for informational purposes only and does not constitute legal or tax advice. Legal status as of 11 January 2026. For individual advice on a specific legal or tax situation, please contact our office.

Foreign Worker Outsourcing in Poland 2026

Posted on by kancelaria

The year 2026 marks the first full calendar year of the Polish labor market operating under the new legal framework for employing foreign nationals. The regulations that came into force on June 1, 2025, have already transformed the landscape of worker outsourcing, and the coming months will be a time of difficult business decisions for many entrepreneurs.

The End of the Gray Zone in Worker Outsourcing

The legislative package concerning the employment of foreign nationals, including the key Act on Conditions for Permitting Employment of Foreigners in the Territory of the Republic of Poland, has introduced fundamental changes in the operations of entities engaged in worker outsourcing. The legislature has made it abundantly clear that the era of tolerating borderline-legal activities has come to an end.

The new penal provisions allow for sanctioning irregularities and abuses in the processes of legalizing work and residence of foreigners in Poland with unprecedented severity. This is not merely about increasing existing penalties – entirely new categories of offenses have been introduced that can significantly limit the operations of entities professionally engaged in worker outsourcing but lacking registration as employment agencies.

Increased Financial Sanctions – The Numbers

To eliminate illegal worker rental practices from the market, a new sanction has been introduced that directly targets entities providing worker outsourcing services. A fine of no less than PLN 3,000 is imposed on any entity that directs a foreigner to perform work for and under the supervision of another entity on a basis other than a temporary work agreement. Notably, this sanction applies exclusively to outsourcing service providers – not to user employers.

An even more significant change concerns fines for entrusting work to a foreigner directed by an entity that is not an employment agency. The minimum amount has doubled – from PLN 3,000 to PLN 6,000. The revolutionary aspect, however, is the cumulative penalty principle: fines are imposed for each violation identified per individual foreigner. In practice, this means that an entrepreneur employing ten foreigners in violation of the regulations may face penalties starting from PLN 60,000 and upward.

Authorities Equipped with New Verification Tools

The 2026 perspective means that authorities will be fully prepared to apply the new grounds for refusing to legalize foreign workers’ employment. Administrative bodies have received specific tools to verify whether entities applying for permits are not seeking so-called “fictitious” legalization documents.

Authorities may now refuse to issue a work permit in several new cases. If an entity entrusting work was established or operates to facilitate foreigners’ entry into Poland, the office can verify this by comparing the number of permits issued against the number of foreigners who actually commenced employment. If a foreigner held a permit within two years preceding the application and entered Poland but failed to work in accordance with that permit without justified cause, their subsequent application may be rejected. Arrears in social insurance registration obligations or outstanding ZUS or tax liabilities constitute independent grounds for refusal. Finally, if work is to be performed for a third party and the entrusting entity does not hold temporary employment agency status, the application will be rejected.

Two-Year Waiting Period for New Employment Agencies

One of the most groundbreaking solutions is the introduction of a two-year waiting period for newly established employment agencies. From June 1, 2025, an agency wishing to provide job placement or temporary work services for foreigners requiring work permits or employment declarations must first operate in the market for two years, providing these services to other worker groups.

Attempting to circumvent this restriction carries severe consequences in the form of removal from the employment agency register and fines ranging from PLN 3,000 to as much as PLN 100,000. Entities registered before June 1, 2025, already providing services to foreigners are not subject to this limitation, though they were required to submit an application to amend their register entry by September 30, 2025.

What Does 2026 Mean for Employers?

Entrepreneurs using worker outsourcing services should treat 2026 as a time for thorough verification of existing cooperation models. Key questions requiring answers concern the legal status of current business partners, compliance of existing agreements with new requirements, and financial risks arising from potential irregularities.

Companies providing worker outsourcing services that lack employment agency registration or fail to meet the new requirements may find themselves in extremely difficult circumstances. Continuing operations in the existing model may lead to multi-thousand-zloty fines imposed separately for each foreigner.

Professional Support in the New Legal Reality

The complexity of the new regulations and the magnitude of potential sanctions make a professional audit of existing employment practices not so much an option as a necessity. Our Law Firm specializes in comprehensive legal services for processes related to employing foreign nationals, offering both compliance audits with the new regulations and support in adapting business models to current legal requirements.

We invite you to contact us to discuss your company’s individual situation and develop optimal solutions for 2026.