Investment in Poland Kpmg

8/2/2019 Investment in Poland Kpmg

1/188 2010 KPMG Sp. z o.o., a Polish limited liability company and a member rm of the KPMG network of independent member rms afliated with

KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

Investment

in Poland

kpmg.pl

KPMG IN POLAND


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2010 KPMG Sp. z o.o., a Polish limited liability company and a member rm of the KPMG network of independent member rms afliated with



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III

Preace

Investment in Poland is one o a series o booklets published by KPMG to provide

inormation to those considering investing or doing business in various

countries. This publication has been prepared by KPMG in Poland to assist those

contemplating investment or commencing operations in Poland.

The inormation in this booklet is o a general nature and should be used

only as a guide or preliminary planning purposes. Because o the continuallychanging legislative environment in Poland, the complexity o Polish corporate,

tax and social laws and regulations and the steadily evolving nature o the Polish

economy, comprehensive proessional advice and assistance should always

be obtained beore implementing any plan to invest in or immigrate to Poland.

KPMG and its several hundred proessionals in Poland can render such assistance

and would be pleased to provide more detailed inormation on matters discussed

in this publication.

Every care has been taken to ensure that the inormation presented in this edition

is correct and accurate as o 1 June 2010.

KPMG in Poland

Warsaw, June 2010


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V

Contents

Chapter 1 Poland a Brie Survey 1

Geography and Climate 1

History 2

Government and Constitution 4

opulation and Language 6

Currency 6

Main Cities 7

Coming to and Living in Poland Practical Tips 23

Chapter 2 Business Opportunities 30

Incentives or Foreign Investment 30

Grants and incentives or Poland 2007-2013 33

Other Incentives 39

Privatisation 40

Chapter 3 Forms o Carrying out Business Activity Availableto Foreign Entities in Poland 44

Legal Status 44

Establishing a Company 46

Capital 48

Participation in Existing Companies 50

The Management Board 50

Supervisory Bodies 51

The General Assembly 51

Dissolution and Liquidation 54

Branches and Representative Oces 55


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VI

Chapter 4 Business Environment 58

Accounting, Financial Statements and Auditing Requirements 58

Banking System 69

Insurance Industry 72

Leasing Regulations 75

Exchange Control Regulations 77

Intellectual and Industrial Property 78

Anti-Monopoly Law 82

Labour Law 85

Real Estate 94

Chapter 5 Business and Personal Taxation 98

Taxes in Poland 98

General Rules o Taxation 99

Taxation System 99

VAT 100

Customs Issues 107

Excise Tax 112

Corporate Income Tax 115

Corporate Income Tax (Representative Oces) 120

Personal Income Tax 121 Social Security (ZUS) 125

Social Security ater Polands Accession to the EU 126

Local Taxes and Charges 127

Stamp Fees and Tax on Civil Transactions 128

Appendix A Permits and Licences or Conducting Economic Activity

in Poland 130

Appendix B List o Central Agencies Involved in Foreign InvestmentProcedures 133

Appendix C Basic Dierences between Limited Liability Company

(Sp. z o.o.) and Joint Stock Company (SA) 141

Appendix D Procedures or Establishing a Company 145

Appendix E Contents o Financial Statements 148

Appendix F Selected Data rom Double Taxation Treaties between

Poland and Other Countries, Relating to Withholding Tax 170


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Investment in Poland 1



CHAPTER 1

Poland a Brie Survey

Geography and Climate

Poland is situated in the heart o Central Europe and is the ninth-largest country

on the continent, with an area o 312,679 square kilometres, and a population

o 38.1 million.

The country borders Russia, Lithuania, Belarus and Ukraine in the north and east,the Slovak and Czech Republics in the south, and Germany in the west. Its borders

extend or almost 3,600 kilometres, including 530 kilometres on the Baltic Sea.

Its capital, Warsaw together with its immediate suburbs, has a population

o 2.6 million. Polands largest cities besides Warsaw are Cracow second largest

metropolis and Polands ancient capital, d the biggest industrial city, Wrocaw,

Pozna and Gdask the largest port.

Poland consists o mainly lowland areas, with 75% o the land less than 200 metres

above sea level. The countryside is nevertheless varied: there are beautiul lake

regions (9,300 in excess o one hectare in size), orests and mountains. Polands

highest peak, Rysy, in the Tatra Mountains, rises 2,499 metres above sea level.

The Wisa (Vistula), Polands longest river, measures 1,050 kilometres in length.

The second longest, the Odra (850 kilometres), fows along the border with

Germany.


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and was approximately 25% larger than it is today. In 1939, there were already

35 million Poles, although a third o them had a mother tongue other than Polish.

Between the two World Wars, Poland had ample time to consolidate its national,political and legal identity; economic consolidation was harder to achieve because

o the worldwide depression.

Following Germanys invasion o Poland on 1 September 1939 which gave

rise to World War II the country was divided between Nazi Germany

and the Soviet Union. The government was orced to fee Poland, and eventually

resumed operations in England. Despite strong oppression by their invaders Poles

maintained a strong underground resistance throughout the war. Approximately

six million Poles lost their lives during the war, including some 2.7 million Jews.

Subsequent to World War II, Poland once again regained its independence, although

it was signicantly restricted by a strong Soviet infuence over the countrys economic

and political systems. In 1945, it had 24 million inhabitants and covered an area o

311,700 square kilometres. Following the war, it lost signicant territories and cities

in the East (including Lww and Wilno, now called Lviv and Vilnius respectively), butacquired some Western ones (Wrocaw and Szczecin), which were historically Polish

cities. During this period, internal migration took place on a massive scale.

According to the prevailing Soviet doctrine, all large arms, and nearly whole

o industry, commerce, transport and banks were nationalised and centrally managed.

In practice this brought more losses than gains, along with a growing discontent

among the population. Activity by the democratic opposition eventually led to several

explosions o social discontent and the creation in 1980 o the Solidarity union the rst

independent union in Central and Eastern Europe since World War II. Determined

to stay in ull control, in 1981 the authorities imposed martial law, which sent

the opposition underground and resulted in numerous economic sanctions by the West.

In 1989, the Communist Party, in the wake o general economic collapse and social

discontent, was eectively orced to step aside in avour o the opposition ollowing

round table negotiations.


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Investment in Poland4



The years ollowing witnessed:

ree presidential and parliamentary elections

the recovery o political and individual reedoms

regained external political autonomy, and the introduction o a market economy.

Since the collapse o communism in 1989, Poland has dramatically transormed

its economy and has enjoyed unsurpassed success in terms o economic growth,

nancial stability and investment attractiveness as demonstrated by Foreign Direct

Investment stock o USD 146 billion, as o December 2008.

Following a successul reerendum on European Union accession and subsequent

approvals o the EU member countries, Poland joined the EU on 1 May 2004.

Along with nine other countries, Poland became a member o an economic

and political organisation that will determine its prospects or decades.

Poland is a member o the United Nations Organisation, UNIDO, the International

Monetary Fund, the World Bank, NATO, the OECD, and the Convention or

the Protection o Intellectual Rights, as well as other international bodies.Until 1 May 2004, Poland was also a member o the ree-trade zone CEFTA.

EU enlargement automatically terminated CEFTA membership or the new

EU countries Poland, Czech and Slovak Republic, Hungary and Slovenia.

Government and Constitution

Today, Poland is a parliamentary democracy headed by a president elected

in general elections. The presidential term o oce is 5 years rom the date

o swearing in. The presidents role, the election procedures, the unctions

and responsibilities o the parliament and government are determined by

the provisions o the Constitution o the Republic o Poland o 2nd April 1997.

The president is the commander o the armed orces and may veto legislation

passed by the parliament. These vetoes can be overturned by a minimum

o a three-ths vote in the Sejm (the lower house o parliament). The president


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Main Cities

Warsaw

Warsaw is Polands capital and one o the astest

growing cities in Europe. It is one o the most

important nancial centres o the CEE and a driving

orce in the development o the entire countrys

economy.

Geographic location Warsaw is situated in central Poland, 523 km east o Berlin.The city straddles the Vistula River, which divides it into twoparts.

Population 1,709,781 (end o 2008).

Major industries Financial services, B2B services, retail, electronicsand high-tech industry, e-commerce.

Key investment drivers Warsaw is the capital o the largest country in CentralEurope. It has a huge domestic market and well developed

connections to other markets;

The city is one o the most important nancial centreso the CEE, with the most developed nancial servicesand B2B services industry in the country;

Warsaw is a seat or all governmental and many businessinstitutions and think tanks;

Warsaw has a huge supply o high standard oce space.A large variety o hotels are also available. As the city will

host the European Football Championship in 2012, newinvestments are booming and the city will see urtherdynamic inrastructure development and improvementin the coming years;

It has the largest pool o experienced employees in Poland,oering unique proessional skills and expertise;

Warsaw is the largest academic city in Poland,with internationally recognized business schools,universities and technical universities;

The citizens o Warsaw have good language skills,especially in English, German and Russian.

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Human resources In Warsaw over 1,107.6 thousand people are o working age,683 thousand o which are between the age o 18 and 44.The current unemployment rate is very low (1.9%). Around829.2 thousand people are employed in Warsaw, among them75.6 thousand in nance and 169 thousand in real estateand business services. Salaries in Warsaw, averaging aroundEUR 1,200 a month (2008), are higher than in most othe large cities in Poland, however still much lower thanin Western Europe.

Warsaw is the main academic centre o Poland. Currentlythere are 87 higher education institutions located in the cityand its close surroundings, educating more than 292 thousandstudents. 56.5 thousand graduated in 2008, among them

16.6 thousand majoring in economics and administration, morethan 2 thousand in inormation technology, mathematics andstatistics and 1.8 thousand in engineering and technical studies.

Oce space Modern oce space in Warsaw totals approximately

3.25 million sq m, with 35% located in the city centre. In 2009,

270,000 sq m o oce space was delivered to the market and

approximately 217,000 sq m is under construction. Prime rents

in the city centre are at the level o EUR 21 23 / sq m / month.

In non-central locations, or the best projects, headline rents

oscillate around EUR 14 16 / sq m / month. Oce vacancy rate

is around 4.5%.

National

and international

connectivity

Warsaw Frederic Chopin Airport, situated 10 km romthe city centre, oers fights to 70 international and domesticdestinations. Warsaw has rail connections to all Voivodeshipcities and numerous European capitals, including Berlin,Moscow, Vienna, Budapest, Prague and Vilnius. Internationalroads connect Warsaw with major European cities.

Cost o living Warsaw is the most expensive city in Poland, however,compared to other capital cities in the CEE region, cost

o living is quite avourable. Moreover, it is much lessexpensive than Western European capitals. For a onebedroom apartment in the city centre one will payaround EUR 450 per month.

Ease o commuting Trac in Warsaw is heavy, especially since transit is directedinto the city due to the lack o a bypass. On the other hand,public transport is well developed. It includes one undergroundline, trams (30 lines), city railway and busses (140 routes).

Hotels There are 67 hotels in Warsaw. They provide around 30,000

beds. Four and Five star hotels account or 40% o the totalsupply. The occupancy rate amounting to 49.5% is rather high.


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Cracow

Cracow is Polands second largest city and the

capital o the Maopolskie Voivodship (province).

Along with Warsaw, Cracow is the countrys mostimportant scientic and business centre.

The city is also considered the cultural capital

o Poland.

Geographic location Cracow is located in the southern part o Poland on the VistulaRiver, approximately 300 km south o Warsaw and 100 km

north o the Tatra Mountains.

Population 754,624 (end o 2008).

Major industries B2B services, nance, BPO/SSC, e-commerce, metallurgic,tobacco, and pharmaceutical industries.

Key investment drivers One o the largest pools o highly skilled and experiencedproessionals in Poland;

More than 30,000 well-educated graduates leaving

Cracows highly esteemed universities every year, amongthem 1.4 thousand specializing in inormation technology,mathematics and statistics and 2.5 thousand engineeringand technical science majors;

A number o innovative research and developmentinstitutions;

A network o institutions supporting investors, includingCentrum Business in Maopolska (CeBiM), providingintegrated service or investors, as well as the Cracow

Special Economic Zone Cracow Technology Park, oeringtax exemptions;

Very good international connectivity;

A large number o inrastructure modernization projectsin progress in connection with the European FootballChampionship hosted by Poland in 2012.

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Human resources Over 497.9 thousand people in Cracow are o working age.O the 278 thousand employed, around 9.6 thousand workin nance and 44.2 in real estate and business services.Salaries in the city are still much lower than in WesternEurope, amounting to around EUR 907 a month (2008).The current unemployment rate is moderate (2.8%).

Cracow is Polands second largest academic centre, oeringits 185.9 thousand students 22 tertiary education institutions.The largest o them, Jagiellonian University, was oundedin 1364 and is the oldest and one o the best knownuniversities in Poland. Other highly esteemed universitiesinclude AGH University o Science and Technology in Cracow,Cracow University o Technology and Cracow University o

Economics. From about 32.4 thousand graduates in 2008,more than 8 thousand graduated in nance and administration,1.4 thousand in inormation technology, mathematicsand statistics and 2.5 thousand in engineering and technicalscience majors.

Oce space Modern oce space in Cracow totals approximately430,000 sq m. Most o the oce buildings are situatedon the outskirts o the city centre. Currently there arearound 60,000 sq m under construction. Prime rentsin the city (both centrally and non-centrally located)

are at the level o EUR 13 16/sq m/month. The ocevacancy rate in Q1 2010 was 8.5%.

National

and international

connectivity

Cracow oers a well-developed network o internationaland national roads as well as railway and airline connections.Through the A4 highway Cracow is connected to Katowice,Wrocaw and Dresden in Germany. The John Paul IIInternational Airport Cracow-Balice located 11 km rom the cityoers regular fights to 3 domestic and over 50 internationaldestinations.

Cost o living Costs o living are relatively high when compared to otherlarge Polish cities, although still lower than in Western Europe.Cost o renting one bedroom apartment in Krakow totalson average EUR 340.

Ease o commuting Public transport is well developed, currently oering 136 busand 27 tram lines.

Hotels Cracow oers more than 120 hotels with 12.7 thousand beds.Among them there are 6 ve star, 14 our star, 71 three starand 23 two star hotels.


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d

d is the capital o dzkie Voivodship (province)

and the third largest city in Poland. The city has

traditionally been known as an industrial centre.However, this has changed over the years

and currently new technologies and outsourcing

centres, as well as home appliance manuacturing

and logistics have gained utmost signicance

or the city.

Geographic location d is situated in the centre o Poland, 130 km rom Warsaw,on the crossing o international routes. It has many small citiesand towns in close proximity.


Major industries BPO, logistics, household appliance manuacturing,electronics, B2B services, retail.

Key investment drivers d is located in the very centre o Poland,

on the crossing o international transport routes; Very good connection to the capital, together with much

lower rents, labour costs and costs o living make da decent alternative to Warsaw;

The d Special Economic Zone oers scal incentivesand consulting services or investors;

The Municipality has a coherent strategy, developedtogether with business partners, with a major goal to maked an attractive place or investments, with a ocus onBPO/SSC/IT;

Large number o graduates in inormation technology,mathematics and statistics.

Human resources Among the citys inhabitants 486.7 thousand are o workingage and 221.5 are employed. The current registeredunemployment rate is relatively high (6.7 %), especiallycompared to other large Polish cities. Employment costs,compared to other Polish cities, are low average wagesamount to EUR 802 per month (2008).

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d is an important academic centre with 36 researchinstitutes and 25 higher education institutions locatedin the city and its close surroundings (i.a. University o dand Technical University o d), educating 127.8 thousandstudents. 25 thousand students graduated in 2008, amongthem 6.9 thousand majoring in economics and administrationand 0.9 thousand in engineering and technical studies.Especially large is the number o graduates in inormationtechnology, mathematics and statistics, amountingto 2.3 thousand a year.

Oce space Modern oce space in d is estimated at around184,000 sq m, the majority o which is located in the citycentre. However, only 30% o this gure is o A/B+ class.

Currently almost 66,000 sq m in eight projects are underconstruction. Prime rents in the city centre are at the levelo EUR 12 14/sq m/month or existing and planned buildings.Oce vacancy rate is very high it equals 24%.

National

and international

connectivity

d is easily accessible rom western and southern partso Europe by two main transit roads that pass throughPoland. The already well-developed transport inrastructurewill soon be extended by an intersection o two Trans-European motorways. d also oers the largest cargorailway station in Poland, as well as railway connections to

the majority o Polish cities. The train journey to Warsawtakes 90 minutes (it will decrease to 65 minutes in 2012).The Wadysaw Reymont Airport, located 6 km rom the citycentre, oers about 10 national and international destinations.The International Warsaw Frederic Chopin Airport is also easilyaccessible.

Cost o living Cost o living in d is one o the lowest among major Polishcities. Average monthly rent or a one bedroom apartmentequals EUR 240.

Ease o commuting d and its surrounding area have a dense regional roadnetwork. Public transport is well developed. There are 16 tramlines and 56 bus routes.

Hotels There are 17 hotels operating in d, including internationalchains.

Human resources


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Human resources Over 420 thousand people in the city are o working age,262 thousand o which are between 18 and 44. The currentunemployment rate is moderate (3.5%). Around 234.2 thousandpeople are employed in Wrocaw. A particularly large number opeople are employed in nance (19 thousand), making Wrocawthe second-largest source o experienced nancial proessionalsin Poland. Salaries are comparable to other large Polish cities(EUR 903 a month in 2008), however still lower than in Warsawand much lower than in Western Europe.

Wrocaw is one o Polands most important and largestacademic centres, with 24 higher education institutionslocated in the city and its close surroundings, educating morethan 144.5 thousand students. The most important ones

include: the University o Wrocaw, Wrocaw University oTechnology and Wrocaw University o Economics. In 2008there were nearly 28 thousand graduates, among them7.6 thousand majoring in economics and administration,1.3 thousand in inormation technology, mathematics andstatistics. Especially high is the number o graduates romengineering and technical studies aculties (2.3 thousand).

Oce space Modern oce space in Wrocaw totals around 360,000 sq m.54% o the space is located in the city centre.In 2009 40,000 sq m were delivered to the market.

There is 36,500 sq m o oce space under construction.Prime rents in the city centre are at the levelo EUR 14 16/sq m/month. Oce vacancy rate is 7.5%.

National

and international

connectivity

Wrocaw is an important railway hub with direct connections

to many European capitals and other major cities in Europe.

An international road network connects Wrocaw to European

capitals. The international Copernicus Airport Wrocaw is located

6 km rom the city centre and oers fights to 19 European cities.

Cost o living Wrocaw is the second most expensive city in Poland,

however still much cheaper than Western European ones.Rent or a one bedroom apartment amounts on averageto EUR 360 per month.

Ease o commuting As in most large Polish cities, trac in Wrocaw is heavycompared to available inrastructure. The public transportsystem includes bus and tram lines. Wrocaw has a strategyor dynamic development o rail transport that shouldbe implemented by 2012.

Hotels There are 36 hotels operating in Wrocaw, including

international chains.


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Pozna

Pozna is the administrative capital o Wielkopolskie

Voivodship (province) and the th Polish city

in terms o population. The city is consideredthe trade capital o Poland and one o the countrys

most important business, education and cultural

centres.

Geographic location Pozna is situated in the central-western part o Polandin the Warta River valley, halway between Warsaw and Berlin

and approx. 160 km rom the Polish-German border.


Major industries Trade, ood processing, chemicals, electro-mechanicalindustry.

Key investment drivers One o leading Polish cities in terms o economy, locatedat crossroads or major transportation routes, in closeproximity to the German border;

Highly skilled and experienced workorce with very goodoreign language skills;

Nearly 30 thousand well educated graduates leavinguniversities every year, among them more than 1 thousandrom inormation technology, mathematics and statisticsand 1.7 thousand majoring in engineering and technicalscience;

About 50 research and development institutions readyto cooperate with business;

Support or investments rom local and regionaladministration and tax exemptions oeredby Kostrzyn-Subice Special Economic Zone;

A large number o inrastructure modernization projectsin progress due to the European Football Championshiphosted i.a. by Pozna in 2012.

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Gdask

Gdask is the capital o the Pomeranian

Voivodship (province), one o the largest

metropolitan areas in Poland and the countrysmajor seaport. Gdask, together with Gdynia

and Sopot orm a closely integrated urban area

(the Tricity).

Geographic location Situated in northern Poland on the Baltic Coast, it can bereached rom Warsaw in about an hour by air.

Population Gdask: 455,581, Tricity: 743,7 (end o 2008).

Major industries Maritime, high-tech, logistics, tourism, petrochemicals,cosmetics.

Key investment drivers More than 20 thousand people graduate rom tertiaryeducation institutions in the Tricity every year, amongthem 0.8 thousand majoring in inormation technology,mathematics or statistics and 1.5 thousand in engineeringand technical studies;

The talent pool with multiple language skills, is well suitedto provide services in English, German and Russian;

The largest Scandinavian language aculty in Polandwith over 200 students studying Swedish, Danishand Norwegian annually;

A number o institutions supporting investors (PomeraniaDevelopment Agency, Investor Assistance Centre,Gdask Economic Development Agency), as well as tax

exemptions in the Pomeranian Special Economic Zone; Progressive policies and a good standard o living making

the city an attractive place to live and work;

Gdask is to co-host the European Football Championshipin 2012, due to which a number o inrastructureimprovement projects are currently in progress.

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Human resources In Gdask over 296.9 thousand people are o working age(482.6 thousand in the whole Tricity area) and 139.9 thousandare employed 5.1 thousand in nance and 17.1 thousandin real estate and business services. The average salariesare relatively high compared to other large cities in Polandand amounted to EUR 1,094 a month at the end o 2008(EUR 1,061 in the Tricity). The current unemployment ratein Gdask is low (2.5%).

Gdask together with its neighboring cities Gdynia and Sopot(the Tricity) has 21 higher education institutions educating93.9 thousand students. In 2008, more than 20 thousandpeople graduated rom these institutions, among them4.8 thousand majoring in economics and administration,

0.8 thousand in inormation technology, mathematicsor statistics and 1.5 thousand in engineering and technicalstudies. The most important universities include the Universityo Gdask, Gdask University o Technology and GdyniaMaritime University.

Oce space Modern oce space in Gdask totals approximately191,100 sq m. Together with other cities rom the Tricity, ocespace supply is estimated at over 318,500 sq m. An additional53,000 sq m are currently under construction. Prime rentallevels or high quality oce buildings in the Tricity range

between EUR 13 and 15 /sq m/month. The vacancy rateequals 7.5%.

National

and international

connectivity

The Gdansk Lech Walesa Airport oers direct fights to 38European destinations, including Warsaw and Cracow. Railwayconnections are available with the main cities and industrialcentres in Poland.

Cost o living Costs o living in Gdask are lower than in Warsaw or Cracowand much lower than in Western European cities. Averagerent or a one bedroom apartment in Gdask is ca. EUR 315

per month.

Ease o commuting Public transport is well developed, currently oering 74 busroutes and 10 tram lines within Gdask. In addition, the Tricityhas a well-developed common transport system.

Hotels Currently there are 18 hotels in Gdask and 42 in the whole Tricity.

In 2009, the new Radisson Blu Hotel was opened and several

new locations are scheduled to launch in the coming years,

including a ve star Hilton Hotel and a our star Qubus Hotel.


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Lublin

Lublin is the capital o the Lubelskie

Voivodship (province) and the economic,

cultural and academic centre o eastern Poland.Lublin is a recognized higher education centre,

with nearly 86 thousand students.

Geographic location Lublin is situated near the eastern border o European Union,161 km rom Warsaw, 220 km orm Lvov, 610 rom Kievand 509 km rom Minsk


Major industries Food processing, machine industry, BPO, transport & logistics

Key investment drivers Very low labour and oce space costs compared to otherPolish cities;

One o the most important Polish academic centres,with a strong educational, scientic and research baseand nearly 86 thousand students in a city o 350,000inhabitants;

More than 18 thousand well educated people with verygood oreign language skills graduating rom Lublinsuniversities every year;

0.6 thousand graduates in inormation technology,mathematics and statistics every year. Ater the plannedconstruction o the new building o the IT Institute atLublins Maria Curie-Skodowska University, the number oavailable IT specialist will urther increase;

Close proximity to Eastern border and good commando Slavic languages make Lublin a suitable locationor investment ocused on Eastern markets;

Investment support provided by the local administration,tax exemptions or companies investing in the EURO-PARKMIELEC Special Economic Zone, as well as grants and realestate tax exemptions or companies creating new jobs;

Extensive investment in transport inrastructurein progress.

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Human resources Over 233.4 thousand people in Lublin are o workingage. Around 112.6 people are employed. The currentunemployment rate is relatively high compared to other largecities in Poland and equals 7.4%. In 2008, the average salaryin the city amounted to EUR 792 per month, much less thanin most large Polish cities and below the countrys average.

Lublin is the largest educational centre o Eastern Poland,known or its developed educational base as well as researchand scientic acilities. The city oers 10 universitiesand polytechnics institutions, educating more than85 thousand students and supplying the labour marketwith about 18 thousand highly skilled graduates every year.In 2008, over 3.2 thousand people graduated in Lublin

in nance and administration, 0.6 thousand in inormationtechnology, mathematics and statistics and 0.8 in engineeringand technical science majors.

Oce space Oce space in Lublin totals approximately 50,000 sq mwith about 30.000 sq m under construction and several largebuildings planned. Oce costs, at the level o approximatelyEUR 11 / sq m/ month, are among the lowest in Poland.

National

and international

connectivity

The Lubelskie Voivodeship is traversed by major Europeanroad and railway routes leading rom Berlin through Warsaw

to the largest cities o Eastern Europe: Minsk, Moscow,Kiev, Lvov and Odessa. The nearest airport currentlyin operation is in Warsaw, 161 km rom Lublin.

Cost o living Cost o living in Lublin is one o the lowest among large Polishcities and is signicantly lower than in Western Europeanones. Average rent or a one bedroom apartment in Lublinvaries between EUR 200 and EUR 250.

Ease o commuting Public transport is well developed, with nearly 70 bus linescurrently available.

Hotels The city oers 11 hotels.


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Katowice

Katowice, the capital o lskie Voivodeship

(province), is the centre o the Metropolitan

Association o Upper Silesia, with a populationo 2 million. Historically, the city itsel

and the surrounding area are heavily industrialized.

However, currently the city is shiting toward small

business and knowledge intensive investments.

Geographic location Katowice is located in the southern part o Poland in the UpperSilesia region. Katowice lies between the Vistula and Oderrivers in close proximity o the Sudetes mountains. Within600 km o Katowice are the capitals o six countries: Berlin,Vienna, Prague, Bratislava, Budapest and Warsaw.

Population 309,621 (end o 2008); the Metropolitan Association o UpperSilesia: 2 million.

Major industries Coal industry, metals, machine manuacturing.

Key investment drivers Katowice, being the central city o the MetropolitanAgglomeration o Upper Silesia with more than 2 millioncitizens, has the second largest workorce in Poland;

Dense urban area with highly developed inrastructure;

Developed manuacturing industry with highly skilledtechnical specialists;

One o the best technical universities in Poland witha large number o graduates in IT and technical majors;

Katowice Special Economic Zone, oering incentivesor investors such as tax exemptions, investment and legaladvisory services.

Human resources Over 200.4 thousand people in Katowice are o working age.The average salaries in the city are relatively high (EUR 1,240a month in 2008) mainly due to the large number o peopleemployed in the mining sector. However, in other sectorsthe wages are closer to the countrys average. The currentunemployment rate is very low (1.9%).

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Katowice oers its 81.7 thousand students 20 highereducation institutions, including the Universityo Silesia in Katowice, The Karol Adamiecki Universityo Economics in Katowice, as well as the nearbySilesian University o Technology in Gliwice. In 2008,more than 18 thousand people graduated, among them5.6 thousand majoring in economics and administrationand 0.7 thousand in inormation technology, mathematicsor statistics. In the whole province (lskie Voivodeship),o the 44.7 thousand graduates, 11.7 majored in economiesand administration, 2.5 thousand in inormation technology,mathematics or statistics and a urther 2.5 thousand inengineering and technical studies.

Oce space Modern oce space in Katowice totals approximately200,000 sq m. Much o the available supply is, however,o low quality. Currently there are six projects underconstruction in Katowice with a total oce spaceo 48,000 sq m. Prime rents in the city centre are at the levelo EUR 12 15/sq m/month.

National

and international

connectivity

Katowice is an important railway and road junction.It is connected by rail with all major Polish cities and manyEuropean capitals. The city is located on the crossingo two motorways (north-south and east-west directions),

which provide connections to major Polish cities (Wrocaw,Krakow, d, Gdask), as well as Germany, the CzechRepublic and Slovakia. Katowice International Airport locatedin Pyrzowice, around 30 km rom the city centre, oers20 international and domestic fights daily.

Cost o living The general cost o living is lower than in major Polish citiesand much lower than in Western Europe. The monthly rentor a one bedroom apartment in Katowice varies betweenEUR 190 and EUR 250.

Ease o commuting The city public transport includes buses, trams and regional rail.The Silesian Interurban tram system, with 33 routes and totallength o 342 km, which connects Katowice with othertowns in the Metropolitan Association, is one o the largestin the world. There are around 200 bus routes in the city.

Hotels The number o hotels in Katowice totals 13 and is lowcompared to other important Polish cities.

Human resources

Source: KPMG, national and regional statistics, municipalities, investor inormation ofces, CB Richard Ellis.


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A permanent residence permit will be granted to an EU citizen who has resided

in Poland continuously or at least 5 years. The residence is deemed continuous

i the absence rom the country was no longer than a total o 6 months annually.

Residence and temporary residence permits issued to EU citizens will cover amily

members (excluding relatives in the case o students).

Generally a temporary residence permit or non-EU citizens grants permission

to reside in Poland rom 3 months up to 2 years provided that he or she:

intends to perorm or perorms work or a liberal proession or business activity

on the territory o Poland, or

is a student or a trainee (in this case a residence permit up to 1 year applies), or

intends to join his/her amily residing in Poland.

Persons willing to obtain a temporary residence permit need to have health

insurance and sucient resources to nance their stay in Poland. For stays longer

than 2 years (1 year in case o students and trainees), the temporary residence

permit has to be extended. Having resided continuously and legally on Polish

territory or preceding 5 years, a non-EU citizen may apply or a permanentresidence permit, provided that an applicant has a stable, regular and sucient

source o income as well as health insurance. The residence is deemed continuous

i absence rom Poland during the period o 5 years was no longer than a total

o 10 months and no longer than 6 months at a time (business trips excluded).

This permit cannot be granted to students or trainees.

Persons planning to work in Poland need to obtain a work permit unless they ull

one o the ollowing conditions:

they are EU/EEA residents or residents o countries which have signed bilateral

agreements with either EU or Poland regarding ree movement o people (they

only need to register their stay exceeding 3 months, as specied above)

they are employed by a company or another institution with a seat in a EU/EEA

member state and temporarily sent to perorm work in Poland

they hold a residence permit obtained in order to perorm work or a liberal

proession or business activity in Poland


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in the major cities and by the younger generation, whereas German predominates

amongst older people and in Western Poland.

TelecommunicationsThe Polish telecommunications sector has experienced signicant improvements

in recent years. Several major investments in telecommunication aimed at oering

users a choice between dierent xed-line telecom operators have been

completed. Poland now has our leading mobile phone operators (operating under

brands ERA, PLUS, ORANGE and PLAY). The MNVOs on the market include:

Heyah, Sami Swoi, mBank mobile, Simonia, Ezo Mobile, Mobilking, Carreour

Mova and others. The licenses or providing UMTS services have been granted

to all leading mobile operators, but commercial use o 3G services is still limited.

Internet services are provided by telecom operators, a number o ISPs and cable TV

operators.

Healthcare

Foreigners are liable or all health treatment costs, with the exception o citizens

o countries with which Poland has signed bilateral agreements on ree-o-charge

medical care. Ater Polands EU accession, a person entitled to health care underEEA rules who presents an E111 orm issued by the competent institution,

a European Health Insurance Card or a certicate, receives ree services within

the general health care system in Poland.

Cost o living

The cost o living varies, depending on location. Rent is approximately USD 15 to

USD 20 per square metre per month or average quality apartments in major cities,

and payment in advance o at least 2 months rent is typically requested. Oce

accommodation ranges rom USD 15 to USD 30 per square metre per month, net.

Currently, in most large cities there are enough apartments and oce space or

rent and one can nd and rent acceptable premises in a comparatively short time

through specialised agencies. Lease agreements are similar to those in other

countries.


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grants rom the Polish government (R&D projects, Multi-Annual Support

Programmes)

income tax exemption in Special Economic Zones

real estate tax exemption technological parks, which oer inrastructure or high-tech and R&D companies

preerential tax deductions or purchase o new technology

preerential tax deductions or R&D centres.

European Union structural unds 2007-2013 allocation (million Euro)

0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000

Belgium 2 258Bulgaria 6 853

Czech Republic 26 692

Denmark 613

Germany 26 340

Estonia 3 456

Greece 20 420

Spain 35 217

France 14 319

Ireland 901

Italy 28 812

Cyprus 640

Latvia 4 620

Lithuania 6 885

Luxembourg 65

Hungary 25 307

Malta 855

Netherlands 1 907

Austria 1 461

Portugal 21 511

Slovenia 4 205

Slovakia 11 588

Finland 1 716

Sweden 1 891

United Kingdom 10 613

Romania 19 668

Interregional 445

Technical

Assistance

868

Poland 67 284

Source: KPMG study based on European Commission data.


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Incentives obtained by investor in Poland are governed Polish and European Union

state aid rules which determine, among others, the maximum level o support,

beneciaries and detailed conditions o support.

Grants and incentives or Poland 2007-2013

Overview

European Structural Funds are designed to support regions with GDP per capita

lower than 75% o EU average (see map on the next page).

Businesses in Poland can be supported by grants within the ramework o state

aid provided in one o the Operational Programmes. Operational Programmes are

co-nanced rom structural unds assigned or Poland or the years 2007-2013

European Regional Development Fund and European Social Fund.

Polish Operational Programmes are:

Innovative Economy

Inrastructure and Environment Human Capital

Development o East Poland

European Territorial Cooperation

Technical Support

16 Regional Operational Programmes.

Under the above programmes, grants are awarded or investments, R&D projects,

training, environment protection, transport and logistics, renewable energy etc.


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Eligible areas in the EU under the Convergence Objective and the European

Competitiveness and Employment Objective

Source: http://ec.europa.eu/regional_policy/atlas2007/index_en.htm

Convergence Regions

Phasing-out Regions (gradually exiting the support program)

Phasing-in Regions (temporarily included in the support program)

Competitiveness and Employment Regions


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Grants rom EU Structural Funds 2007-2013

Grants or investments

Investors planning to start or expand their business in Poland may apply or grantsrom European Union sources. There are limits o state aid an entrepreneur may

receive. The limits depend on voivodeship the project is located in and amount

rom 30 to 50% o total eligible costs or large companies.

Eligible costs may be either costs o acquisition o xed assets and intangible

assets as well as new sta costs or two years.

Manuacturing investments may receive unding rom the Operational Programme

Innovative Economy (OP IE) nanced by EU structural unds. Within OP IE, grants

are available or:

investments o high innovative potential worth PLN 8 to 160 million

(Measure 4.4)

investments o major importance to the economy with total investment costs

more than PLN 160 million (Measure 4.5.1)

investments in service centres and research and development centres(Measure 4.5.2). The grant is paid in the orm o reimbursement o expenditures

incurred or in the orm o advance payments up to 30% o eligible costs,

For R&D centres in accordance with regional aid map.

It is important that the cash grants may be combined with other orms

o assistance, such as exemption rom income tax in a special economic zone,

up to allowed limits o state aid.

Grants or R&D

Foreign investors who would like to improve their products or services or even

create new products on the basis o R&D works, may also benet rom state

aid to support research and development activities. These activities are supported

rom OP IE, Measure 1.4-4.1 managed by the Polish Agency or Enterprise

Development (PARP). State aid is granted or activities aiming to develop


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new or signicantly modied products, services or technologies, as well

as or implementation o research results in investors own businesses.

In accordance with the EU guidelines, support or R&D is divided into two stages: research and

implementation.

In the research stage a large company may receive up to 65% o eligible costs,

while assistance or implementation is limited to 50% o investment costs.

It is worth mentioning that R&D centres or international corporations which carry out

research in Poland as a part o an international project, may also apply or R&D grants.

Grants or trainings

Investors may also obtain unding to improve skills o companys employees

or employees o a dealership network. These grants are available on the regional

or national scale. The amount o unding or large companies is 60% o eligible

costs or general training and 25% or specialized training.

Grants are also available or other types o activities perormed by enterprises,

among others or:

environmental protection and investments in renewable energy

transport and logistics, or establishment o intermodal transport centers

and other activities.

National sources

Foreign investors may also look or nancial support rom Polish budget. Incentives

are available or R&D projects and may be obtained rom the Ministry o Science

and Higher Education or The National Centre or Research and Development under

so-called targeted projects and IniTech Programme.

Large investment projects may be granted aid rom the Polish budget in the orm

o a Multi-Annual Support Programme (MASP) by the Ministry o Economy. Financial

measures under MASP are assigned mainly to investments which create new jobs.


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It is possible to extend SEZ area to include an area located outside the existing SEZ.

In such case, the requirements are more strict: minimum value o investment

expenditures and minimum numbers o newly created workplaces are higher than

in case o obtaining the permit in the existing SEZ (particulars depend on typeo investment and region where it is carried out).

The investment and newly created jobs resulting rom the project should be

maintained or at least ve years (three years or SMEs).

List o SEZ existing in Poland:

SEZ Address

SEZ Euro-Park Mielecul. Partyzantw 2539-300 Mielechttp://www.europark.com.pl/pl/

Katowicka SEZul. Wojewdzka 4240-026 Katowicehttp://www.ksse.com.pl/

Suwalska SEZul. Noniewicza 4916-400 Suwakihttp://www.ssse.com.pl/

Legnicka SEZul. Kardynaa B. Kominka 959-220 Legnicahttp://www.Isse.eu/

dzka SEZul. Tymienieckiego 22/2490-349 dhttp://www.sse.lodz.pl/

Wabrzyska SEZ Invest-Park

ul. Uczniowska 21

58-306 Wabrzychhttp://www.invest-park.com.pl/

Kamiennogrska SEZul. Jana Pawa II 11A58-400 Kamienna Grahttp://www.ssemp.pl/

Kostrzysko-Subicka SEZul. Ora Biaego 2266-470 Kostrzyn n. Odrhttp://www.kssse.pl/


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Supska SEZul. Poznaska 1A76-200 Supsk

http://www.sse.slupsk.pl/

Starachowice SEZul. Radomska 2927-200 Starachowicehttp://www.sse.com.pl/

Tarnobrzeska SEZul. Zakadowa 4839-405 Tarnobrzeg Machwhttp://www.tsse.pl/

Warmisko-Mazurska SEZ

ul. Kasprowicza 1

10-219 Olsztynhttp://www.wmsse.com.pl/

Krakowska SEZul. Jana Pawa II 3731-864 Krakwhttp://www.sse.krakow.pl/

Pomorska SEZul. Wadysawa IV 981-703 Sopothttp://www.strea.gda.pl/

Other Incentives

Apart rom the EU structural unds, national sources and the tax incentives

in SEZs, investors in Poland can also take advantage o other sources o state aid,

or example:

grants or investments rom the European Economic Area Funds, Swiss

and Norwegian Funds

grants or R&D under 7. Framework Programme or Research and Developmentin Europe

environmental grants rom national resources (or example, National

Environmental Fund, Ministry o Environment)

tax incentives or research and development activity

technological loan

real estate tax exemption.

SEZ Address


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Capital (Indirect) Privatisation

The capital privatisation method, otherwise reerred to as indirect privatisation,

involves the disposal o shares outside state ownership by sale resulting rom:

publicly-announced oering public tender

negotiations undertaken pursuant to a public invitation

acceptance o an oer, pursuant to an invitation made under regulations

on public oering, or

publicly-announced auction, i the selling price is not lower than the book value

o the shares concerned

transaction concluded on the regulated market.

The Council o Ministers may agree to a sale procedure other than that described

above. Moreover, the Council o Ministers may express its consent to contribute

shares held by the Treasury to another Treasury-held joint stock company

in exchange or shares taken up in that companys increased share capital.

Detailed procedures applicable to the sale o Treasury-held shares and the conditions

to be met by the sales oer are dened in the regulation dated 17 February 2009,on Detailed Procedure or Selling Treasury-held Shares (JoL U.09.34.264, as amended).

Payment or shares sold in a public tender or as a result o negotiations undertaken

ollowing a public invitation may be made in instalments i the amount outstanding

ater the payment o the rst instalment has been secured (in which case

the rst instalment o the payment represents a minimum 20 % o that price

whereas the remainder is paid in instalments or a period o maximum 5 years).Detailed conditions enabling such instalment payments are dened in the Council

o Ministers regulation o 25 April 2006 on public aid given during privatization

processes (JoL 06.84.580.2666, as amended).

Considering the limitations indicated in the Act on Commercialisation

and Privatisation, the eligible employees are entitled to a ree-o-charge acquisition

o up to 15 % o shares taken up by the Treasury on the day on which the company

is entered into the relevant register.


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CHAPTER 3

Forms o Carrying out BusinessActivity Available to Foreign Entitiesin Poland

Legal Status

Foreign entities rom European Union Member States and rom the European FreeTrade Agreement (EFTA) Member States, parties to the Agreement on the European

Economic Area, as well as oreign entities rom countries which are not parties

to the Agreement on the European Economic Area, but enjoy the reedom o

establishment based on agreements concluded by those countries with European

Community and its Member States enjoy all legal orms o business operation on

the same principles as Polish entities (e.g. individual economic activity, partnerships,

companies). The same rule applies to citizens o other countries who have obtained

e.g: a permit to settle on the territory o the Republic o Poland, a tolerated stay

permit or reugee status granted by the Republic o Poland.

Other oreign entities are allowed to establish the ollowing orms:

limited partnership

partnership limited by shares

limited liability company (sp. z o.o.) in which shareholders receive shares

(interests) in exchange or contributed capital, and


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a joint stock company (SA), which diers rom a limited liability company

(apart rom the required minimum o equity capital and some other eatures)

in that there is a possibility o issuing bearer shares; companies listed

on the Warsaw Stock Exchange must have a joint stock company status.

It is also possible or oreign entities to establish a representative oce or a branch

in some specic areas o operation.

Limited Partnership

A limited partnership is a partnership with at least one partner assuming unlimited

liability and at least one partner whose liability is limited to a specied amount.

Partnership limited by shares

A partnership limited by shares is a partnership with at least one partner assuming

unlimited liability and with at least one partner being a shareholder.

Limited Liability Companies and Joint Stock Companies

The Commercial Companies Code regulates all issues related to the establishment,

activity and dissolution o these companies. The existing legal rameworkallows companies ample fexibility in drawing up their company deeds (limited

liability companies) or statutes (joint stock companies). Certain regulations

o the Commercial Companies Code are not obligatory and can be modied

by the incorporation documents.

The company deed or statute, as well as all subsequent changes, must be prepared

in the orm o a notarial deed, and are otherwise null and void.

Major dierences between the two legal types o companies are illustrated

in Appendix C.

Appendix D sets out the detailed procedures or establishing a company, which

are also briefy discussed below.


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Establishing a Company

Establishing a company with oreign participation in general does not require a prior

permit or license. The only exception is a contribution o real estate to the share

capital o a newly ormed company in which 50% or more o the shares will be

acquired by a oreign party in which case a permit o the Minister o Internal Aairs

and Administration is required. This restriction however does not apply to persons

rom the European Economic Area countries.

In some cases, it is also necessary to obtain the approval o the Oce

or Competition and Consumer Protection or acquiring shares in new or existing

companies. This requirement concerns all o the companys ounders, irrespectiveo whether they are nationals or oreign persons. For details, see the section

Anti-Monopoly Law in this publication.

Finally, it must be remembered that carrying on certain activities in Poland,

or example, banking or insurance, requires a licence or other permit. A detailed list

o the activities and licensing authorities is given in Appendices A and B, respectively.

One or more legal or natural persons may establish a limited liability company

and a joint stock company, but a one-person limited liability company may not

incorporate them. Banks, which must always be joint stock companies (with some

exceptions specied in the provisions o the Banking Law), must be established

by at least three natural or legal entities (unless the ounder is a domestic or oreign

bank, credit institution, domestic or oreign insurance company, oreign reinsurance

company, international nancial institution or the State Treasury).

A company deed or statute must dene the ollowing:

name, place o incorporation and scope o activities o the company

in a joint stock company: number o members o the management board

and the supervisory board, or at least the maximum or minimum number

o such members and the entity authorised to decide on the composition

o the management and supervisory boards

duration o its activity i it is to be established or a denite period


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The possibility o making additional payments arises solely rom a specic

regulation included in the company deed, indicating the value o the additional

payment pro rata to the shares held. I the deed does not provide or such an

obligation, additional payments can only take place ater the company deed hasbeen amended.

Decisions as to the amounts and dates on which the payments are to take place

are let to the shareholders discretion. I the paid-in amounts are not necessary to

cover losses, they may be transerred back to the shareholders.

Participation in Existing Companies

Foreign parties may acquire an interest in Polish companies that are already

established either:

through the purchase o existing shares or stock, or

by taking up new issues o stock or shares.

In the case o oreign entities, this may, however, involve obtaining the appropriate

permits. The most common one is the permit o the Oce o Competitionand Consumer Protections.

Furthermore, in the event that a oreign investor acquires 50% or more shares in

a Polish company or has directly or indirectly 50% o votes at the shareholders

general meetings in a Polish company which is the owner or perpetual usuructuary

o real estate, and as a result the company will be at least 50% owned by the

oreign entity, a permit rom the Minister o Internal Aairs and Administration is

required. The same applies when shares in such a company are acquired by a new

oreign shareholder and existing oreign shareholders already hold one-hal or more

o its share capital. This restriction does not apply to investors rom the European

Union Member States and other states which are members o the European

Economic Area.

The Management Board


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The companys managing body is the management board, consisting o one

or more members who are usually appointed by the shareholders. Members

o the management board may be appointed rom among the shareholders

or other persons, irrespective o whether they are Polish nationals or oreigners.I it has more than one member and the company deed or statute does not provide

otherwise, in its dealings with third parties a company must be represented by two

members o the board, or one member and a proxy acting jointly.

A member o the management board cannot, without the consent o the company,

engage in competitive activities, be a member o managing or supervisory bodies

o a competitor company or be a partner in a partnership which is a competitor.

Supervisory Bodies

The company deed o a limited liability company may provide or the appointment

o a supervisory board or an audit commission, or both. In companies with share

capital in excess o PLN 500,000 and more than 25 shareholders, one o these two

bodies is obligatory. Each body must have at least three members.

In a joint stock company, the supervisory board is an obligatory body and supervises

the activity o the company on an on-going basis. The supervisory board is

composed o at least three members appointed by the shareholders meeting.

A member o the current management board, the companys liquidator and certain

senior employees (e.g. chie accountant, legal counsel, etc.) may not be members

o either o the companys supervisory bodies.

The General Assembly

The general assembly (in a joint stock company) or the shareholders meeting

(in a limited liability company), jointly urther reerred to as the general meeting,

is the decision-making body in matters o major signicance to the company.

Its meetings may be ordinary or extraordinary.


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representing at least one-tenth o the capital may demand that the management

board convenes an extraordinary meeting. In the event that the management board

ails to do so within 2 weeks, shareholders are entitled to convene an extraordinary

meeting ater they receive authorisation rom the Registry Court. On the otherhand, in a joint stock company, shareholders representing at least hal o the share

capital (or who are entitled to 50% o all votes) are entitled to convene an extra

ordinary general meeting.

A general meeting resolution may be also adopted even i the meeting has not

been convened ormally, provided that the entire capital is represented and

none o those present have objected to holding the meeting or including certain

maters in the agenda. It is oten used in case o companies having one or a ew

shareholders, which enables a prompt adoption o resolutions. Shareholders o

limited liability companies may also adopt resolutions without convening a general

meeting, i all shareholders consent in writing to the resolutions to be adopted or to

voting in writing.

Shareholders can participate in meetings either in person or through

representatives. The companys deed o a limited liability company may providerestrictions in this respect. In both a limited liability company and joint stock

company (except or public joint stock company) it is generally orbidden

or a member o the management board or or a companys employee

to be a representative o a shareholder.

For a power o attorney to be valid, it must be made in writing and attached

to the ormal minutes o the meeting. A power o attorney authorizing its holder

to represent the shareholder at the general assembly o a public company may

be also made in electronic orm. Decisions o general assembly meetings are

generally passed by an absolute majority o votes. A qualied majority o votes is

needed only in specic situations. For example, decisions by joint stock companies

pertaining to changes in the statute require a three-ourths majority o the votes

cast. Whenever these changes increase ownership commitments or restrictions o

their rights, all aected shareholders must consent.


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Once the liquidation is terminated, the liquidator is authorised to prepare a nal

liquidation report and le it with the National Business Register with a request

to delete the company rom the register.

In the event o bankruptcy, the company shall be dissolved upon completion

o bankruptcy proceedings, as o being deleted rom the register. The rules

and conditions o companies bankruptcy are set in the Act on bankruptcy and

rehabilitation law. In general bankruptcy is related to the companys insolvency.

Polish law on economic activity provides also or the possibility to suspend

it or the period o 1 24 months, however only i the entrepreneur (company) does

not employ any employees.

Branches and Representative Oces

Foreign natural and legal persons, including banks, insurance establishments

and oundations can establish representations in Poland. Establishment

and unctioning o all types o representations is governed by Polish law.

Foreign parties can establish two kinds o representations: branches

and representative oces.

The scope o permitted activities or branches is larger than that o representative

oces. Branches may carry out economic activity covering oreign entrepreneurs

ull range o activity (ull-trading branches). Representative oces can operate

only within the scope o advertising and promotion.

Branches are entered into a register held by the National Business Register

on the basis o an application speciying the name, registered oce, legal status

and scope o activity o the branch. Moreover, a oreign entity should:

appoint a person in Poland authorised to represent the oreign enterprise

append a specimen o signature o such person, certied by a notary public


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deposit in the branch registration les a copy o a ounding act together with

its certied translation into Polish, provided that its activity is carried on the basis

o such act

i it exists or carries on activity on the basis o an entry in a oreign register,deposit a copy o the relevant excerpt rom the oreign register in the branch

registration les together with a certied translation into Polish.

Foreign parties coming rom a country outside the European Union (and which are

not rom the countries indicated in the rst paragraph o this Chapter (Legal Status)

may establish the branch on the basis o theprinciple o reciprocity (which states

that Polish entities are allowed to carry out business in the country rom which

the oreign person comes rom on the same terms as local entities). The existence

o reciprocity is not required whenever it is excluded by a treaty.

A representative oce must be entered into the register o oreign representative

oces kept by the Minister o Economy.

The ollowing documents should be appended to the applications led with

the Minister o Economy (inter alia): ounding act o the oreign enterprise

copy o the entry into the local commercial register

statement by the oreign entity concerning the intention

to set up a representative oce on the territory o Poland

a document conrming the legal title o the oreign enterprise to the premises

in which the activity will be perormed.

Branches, as well as representative oces are obliged to:

use the name o the oreign entity, in the language o the state o origin, adding

a Polish translation o the local legal orm status and the words in Polish branch

in Poland or representative oce in Poland

keep separate books in Polish, in accordance with Polands binding accounting laws

report to the Minister o Economy all material changes to the actual and legal

situation o the oreign entity that might have an eect on its Polish operation.

Both branches and representative oces can employ Polish or oreign nationals.


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Branches and Representatives o Banks

Foreign banks can have representative oces and/or branches in Poland. A banks

representative oce may not carry out banking operations.

A branch o a oreign bank can be ully operational. Permits or establishing a branch

or representative oce are issued by the Polish Financial Supervision Authority

acting jointly with the Minister o Finance.

A branch o a oreign bank can oer services and products contemplated

in the banking regulations, which are listed in the said permit.

All credit institutions, including banks, with registered oces in a European Union

country may set up a branch or conduct cross-border activity within the territory

o Poland without the aorementioned permit.

A branch o a European Union bank may commence its activity on the territory

o Poland within 2 months o the date on which the Polish Financial Supervision

Authority has received inormation, as required and specied by Polish banking law,

rom the appropriate regulatory institution o the state o the branchs origin.


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CHAPTER 4

Business Environment

Accounting, Financial Statements and AuditingRequirements

Accounting

Polish accounting principles are governed by the Accounting Act (the Act) dated

29 September 1994 (Ocial Journal rom 2009, No. 152, item 1223 as amended)which regulates general bookkeeping principles, timing and procedures related

to physical verication o assets and liabilities, valuation o assets, liabilities and

equity, and determination o the nancial result, business combinations, nancial

statement ormats, consolidation procedures and audit requirements, publication

and data protection requirements.

Polish accounting regulations are binding or the ollowing entities having theirregistered oce or head oce within the territory o the Republic o Poland:

commercial companies (partnerships and companies, including those

in the process o being established, and civil partnerships, other than those

mentioned below, as well as other legal persons, except or the State Treasury

and the National Bank o Poland)

natural persons, civil partnerships established by natural persons, general

partnerships established by natural persons and proessional partnerships,


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Accounting Records

All accounting books and statements must generally be prepared and maintained

in Polish and in PLN. Source documents to the accounting records may be

in oreign languages and need not be translated into Polish. At the requesto an external review body or an independent chartered accountant, documents

in a oreign language must be reliably translated into Polish.

All source documents, accounting books and interim nancial reports must,

as a rule, be retained or a period o 5 years; however, annual nancial statements

must be kept permanently.

Polish bookkeeping rules do not dier signicantly rom those commonly adopted

worldwide (entries have to be documented, are made on a double-entry basis,

chronologically and mainly on a historic cost basis).

The company may outsource maintenance o the accounting records to a properly

authorised third party (eg. external bookkeeping agency or shared service centre),

registered either in Poland or another European Union/EFTA Member State

or any other country which enjoys reedom o providing services on the basiso agreement concluded by this country with European Community and its

Member States.

I accounting records are maintained outside the companys registered oce

or head oce, the tax oce should be duly inormed and access to the accounting

records by authorized external review bodies at the registered oce or head oce

or other location, as agreed with such bodies, should be ensured.

The nancial year, which usually overlaps with the tax year, consists o 12

consecutive months and may commence in any month. However, i it varies

rom the calendar year the tax oce should be notied. The nancial year or any

changes thereto shall be determined in a companys articles or partnership deed

under which the entity has been established. I the entity commences its activities

in the second part o a nancial year, the accounting books and nancial statements


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or that period may be combined with the accounting books and nancial

statements or the subsequent nancial year. I the nancial year changes, the rst

nancial year ollowing such change shall consist o at least 12 consecutive months.

The Management Board is responsible or the ullment o accounting obligations

specied in the Accounting Act, including a supervisory obligation, even i certain

accounting obligations have been delegated to another person upon that persons

consent.

Starting rom 2008 the Management Board as well as Supervisory Board or other

supervisory body are obliged to ensure that the nancial statements and Report

on the Companys activities comply with the Accounting Act. The members

o the Management and Supervisory Boards are jointly responsible or losses

incurred by the company as a result o an action or lack thereo in violation

o the obligations mentioned above.

Physical Verifcation o Assets and Liabilities

As at the last day o each nancial year, entities shall conduct a physical

verication o: monetary assets (except or cash at bank), securities held in a material orm,

tangible current assets, property, plant and equipment and investment property

as well as machinery and equipment included in property, plant and equipment

under construction by means o physical count, valuation o the counted

quantities, comparison o their values with values in the accounting records,

as well as an explanation o and accounting or any discrepancies

nancial assets deposited in bank accounts or held with other entities

including securities in non- material orm, receivables including loans granted

as well as own assets entrusted to contractors by means o conrmations

o the accuracy o these asset balances recognized in the entitys accounting

records, as well as an explanation o and accounting or any discrepancies

property, plant and equipment which are dicult to access, land, rights

recognized as property, disputable or doubtul receivables, and or banks, non

perorming receivables, receivables and liabilities with respect to persons

Documents

Investment in Poland Kpmg