How Foreigners Can Register a Business in Poland Without Getting Lost in Taxes

Registering a business in Poland has long been a popular option for foreigners looking to relocate their business, work as freelancers, or enter the European Union market.

In practice, however, entrepreneurs often face strict legal and tax regulations. The main question that arises at the very beginning of the business registration process is how to choose the right legal form for a business and comply with all legal requirements, so that they can not only operate legally but also qualify for a temporary residence permit in Poland.

When You Are Not Eligible for JDG: Spółka z o.o. as the Only Legal Option

Under Polish law, not every foreigner is eligible to register a sole proprietorship (Jednoosobowa Działalność Gospodarcza, or JDG). Citizens of EU countries, holders of a permanent residence permit (Karta Stałego Pobytu), EU long-term resident status, a Pole’s Card (Karta Polaka), as well as Ukrainian citizens covered by special protection arrangements, can generally register a JDG on the same terms as Polish citizens.

However, if a foreigner is staying in Poland on the basis of a standard work visa, a visa issued for other purposes, or a temporary residence permit (pobyt czasowy) granted for work or study, they may not be eligible to register a JDG. In such cases, the main alternative for conducting business legally is a Spółka z o.o. (a limited liability company, broadly comparable to an LLC).

Key Features and Advantages of a Spółka z o.o. for Foreigners

Registering a limited liability company offers foreigners several important advantages:

A citizen of any country can generally become a shareholder and a member of the management board of a Spółka z o.o., regardless of their visa type or current immigration status, subject to applicable legal requirements.
Shareholders are generally not personally liable for the company’s obligations. Their financial risk is limited to their investment in the company, although certain exceptions may apply. The minimum share capital is PLN 5,000.
A company can be registered through the government-operated S24 electronic system using a Trusted Profile (Profil Zaufany) or a qualified electronic signature, including while the founder is outside Poland.
A Spółka z o.o. makes it relatively straightforward to bring in new shareholders, sell shares, or attract investors, offering greater flexibility than a sole proprietorship.

Potential Pitfalls and the Tax Burden of a Limited Liability Company

Despite its flexibility, a Spółka z o.o. requires a more disciplined approach to business management and accounting.

Under the standard taxation model, the company first pays corporate income tax (CIT): 9% for eligible small taxpayers and qualifying income, subject to statutory conditions and limits, or the standard rate of 19%. When dividends are subsequently distributed to shareholders, a further 19% personal income tax (PIT) is generally withheld.
Unlike businesses eligible for simplified accounting, a Spółka z o.o. must maintain full accounting records, prepare annual financial statements, and submit the required information to the Central Register of Beneficial Owners (CRBR). Accounting services for a limited liability company typically cost two to three times more than for a JDG.
Company funds cannot simply be transferred from the corporate account to a shareholder’s personal account without a legal basis. Payments must be properly documented and justified, for example, as dividends, official remuneration under an employment contract, management board remuneration based on appointment (powołanie), or payments under a B2B contract, where the relevant legal and tax requirements are met.

Obtaining a Residence Permit Through Business Activity (Pobyt czasowy w celu prowadzenia działalności gospodarczej)

Obtaining a temporary residence permit on the basis of business activity is one of the more closely scrutinized procedures handled by Poland’s regional authorities (Urząd Wojewódzki). The authorities want to establish that the business is genuine, contributes to the Polish economy, and pays taxes rather than existing solely on paper for immigration purposes.

Polish law sets out specific criteria that a company or an eligible sole proprietor must meet to obtain a positive decision on a residence permit application.

Minimum Revenue and Employment Requirements

For a voivode to approve a residence permit application based on business activity, the enterprise must demonstrate that it meets at least one of two key criteria:

In the previous tax year, the company or JDG must have generated income exceeding 12 times the average monthly gross salary in the voivodeship where the business is registered, or the national average, as applicable under the relevant statutory provisions and current data published by Statistics Poland (Główny Urząd Statystyczny, GUS).
The company must employ at least two employees on a full-time basis under employment contracts for an indefinite period. These employees must be legally entitled to work in Poland without a separate work permit, for example, Polish or EU citizens or foreigners with permanent residence status. The relevant employment arrangements must meet the applicable statutory requirements.

What If the Company Is New and Has Not Yet Reached the Required Income Level?

New companies and startups do not always achieve the required income thresholds or create two jobs during their first year of operation. In such cases, a foreign entrepreneur may be able to demonstrate that the company has genuine potential and sufficient resources to meet the required criteria in the future.

To support the application, it is important to prepare a business plan with financial projections for the next one to three years, demonstrate that sufficient funds and investment capital are available, and provide evidence of actual business activity. This may include contracts with clients and suppliers, issued and paid invoices, preliminary cooperation agreements, a commercial website, and a portfolio of completed work.

Additional evidence of business viability may include increased share capital in the Spółka z o.o., a lease for genuine office or production premises, the engagement of subcontractors, and contracts with service providers, including civil-law contracts such as Umowa zlecenie or Umowa o dzieło.

Together, these documents can help demonstrate to the Urząd Wojewódzki that the company is genuinely operating, has resources for further development, and has a realistic plan for meeting the statutory requirements. However, submitting such evidence does not, in itself, guarantee that a residence permit will be granted. The decision depends on the applicable legal requirements and the assessment of the individual case.

Summary

Registering a Spółka z o.o. provides foreigners with a solid legal framework for conducting business in Poland, including those who are not eligible for other forms of business activity. When planning their residence status, entrepreneurs should consider the company’s tax structure in advance and build a transparent financial track record.

For a newly established business, properly documented contracts, a well-supported business plan, and documentary evidence of investment can help demonstrate the company’s growth potential and support an application for a temporary residence permit.

Find out more and submit an application on the website magfin.pl.