doing business in poland -...
TRANSCRIPT
© Copyright 2015 by K&L Gates LLP. All rights reserved.
February 2015
Moderator: Maciej Jamka, Administrative Partner, Warsaw
Speakers:Dominika Mizielińska, Corporate, Of Counsel
Lech Najbauer, Antitrust, Competition & Trade Regulation, CounselPatrycja Zawirska, Labor, Employment & Workplace Safety, Of Counsel
Oskar Tułodziecki, Intellectual Property, PartnerHalina Więckowska, Real Estate, Partner
Piotr Augustyniak, Tax, Partner
DOING BUSINESS IN POLAND - WEBINAR
SPEAKERS
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Lech Najbauer Legal Advisor, Counsel, CompetitionT [email protected]
dr Patrycja Zawirska Legal Advisor, Of Counsel, EmploymentT [email protected]
Halina WięckowskaLegal Advisor, Partner, Real EstateT [email protected]
Piotr AugustyniakTax Advisor, Partner, TaxT [email protected]
Maciej JamkaAdvocate, Administrative PartnerT [email protected]
Dominika MizielińskaLegal Advisor, Of Counsel, CorporateT [email protected]
Oskar TułodzieckiLegal Advisor, Partner, Intellectual PropertyT [email protected]
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WHY POLAND?
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POLISH PRODUCTS
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POLAND TODAY
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BASIC FACTS ABOUT POLANDOfficial Name Republic of Poland
Official language Polish
Capital Warsaw (population: 1.716 million)
Area 312 700 sq km (6th largest in the EU)
Population 38.5 million (6th largest in EU)
Currency Polish Złoty1 USD ~ 3.691 EUR ~ 4.18(*as of February 2015)
Time zone UTC +1 (Winter)UTC+2 (Summer)
GNP ca. PLN 1 600 billion= ca EUR 391 billion (2012) (very close to Belgium)
WARSAW
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POLAND TODAY Political Stability – ruling party second term at power High position in the Corruption Perceptions Index 2012 - 38th place
(Hungary 47th, Czech Republic 57th, Slovakia 61st) Membership: EU, NATO, OECD, WTO, IMF, Schengen Zone Poland is knocking on the G20’s door GDP (PPP): 18th place (World Bank) Bond yields: 2 years 3%
4 years 3.5%10 years 4%
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WHY IS POLAND A CRISIS-PROOF COUNTRY?
Low GDP from exports dependence - only 45% (Czech Republic - 73%, Slovakia - 94%)
Low inflation rate - 0.3% (August 2014)
GDP growth in 2014 - 3.3%
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THE COUNTRIES THAT HAVE MADE UP THE LOSSES OF 2007
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INTERNATIONAL RECOGNITION
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WORLD INVESTMENT PROSPECTS SURVEY
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SERVICES AND MANUFACTURING HUBS IN POLAND (1)
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SERVICES AND MANUFACTURING HUBS IN POLAND (2)
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FOREIGN LANGUAGE CAPABILITIES
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POLAND - POSITIVE INVESTMENT FACTORS
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WOULD YOU TAKE THE SAME DECISION ONCE AGAIN?
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2013 TOP 100 OUTSOURCING DESTINATIONS
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BEST EMERGING MARKETS 2014
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INVESTMENT ATTRACTIVENESS AMONG CEECOUNTRIES (2014)
CompetitionCORPORATE
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MAIN LEGAL FORMS AVAILABLE FOR DOING BUSINESS IN POLAND
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FORMS AVAILABLE FOR INVESTORS OUTSIDE EU AND EFTA MEMBER COUNTRIES
Partnerships Limited joint-stock partnership (spółka komandytowo-akcyjna, S.K.A.)
Limited partnership (spółka komandytowa, sp.k.)
Partnerships Limited joint-stock partnership (spółka komandytowo-akcyjna, S.K.A.)
Limited partnership (spółka komandytowa, sp.k.)
FORMS AVAILABLE FOR INVESTORS NOT BASED IN EU AND EFTA MEMBER COUNTRIES
FORMS AVAILABLE FOR INVESTORS BASED IN EU AND EFTA MEMBER COUNTRIESFORMS AVAILABLE FOR INVESTORS BASED IN EU AND EFTA MEMBER COUNTRIES
Registered partnership (spółka jawna, sp.j.)Professional partnership (spółka partnerska, sp.p.)Registered partnership (spółka jawna, sp.j.)Professional partnership (spółka partnerska, sp.p.)
CorporationsLimited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.)
Joint stock company (spółka akcyjna, S.A.)
CorporationsLimited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.)
Joint stock company (spółka akcyjna, S.A.)
European company (spółka europejska, SE)European company (spółka europejska, SE)
Branch offices of a foreign companyRepresentative offices of a foreign company
Branch offices of a foreign companyRepresentative offices of a foreign company
Sole proprietorship European Economic Interest Grouping (europejskiezgrupowanie interesów gospodarczych, EZIG)
Sole proprietorship European Economic Interest Grouping (europejskiezgrupowanie interesów gospodarczych, EZIG)
SELECTED FEATURES OF CORPORATIONS
Company can be founded by one or more individuals/legal entities
Company has legal personality as well as legal and judicial capacities
Company is liable for its debts and obligations with all of its assets but shareholders’ liability is limited to their contributions made to the company
Minimum capitalization
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limited liability company PLN 5,000
limited liability company PLN 5,000
joint stock company PLN 100,000
joint stock company PLN 100,000
SELECTED FEATURES OF CORPORATIONS Company is represented by its management board. Shareholders can
act through voting at the shareholders meeting or as members of the management board
Limited liability companies are supervised by shareholders individually and / or by the supervisory board. Supervisory boards are mandatory in joint stock companies where individual shareholder control is excluded
Management board and supervisory board are separate governing bodies
Polish law does not know the concept of legal entities serving as directors. Management and supervisory board members must always be individuals. There is no obligation to have Polish citizens on Boards
Joint stock companies can obtain the status of public companies and are eligible for listing on the stock exchange
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SELECTED FEATURES OF PARTNERSHIPS At least two founders are required Partnerships have no legal personality (however they do
have legal capacity and judicial capacity) General partners in limited partnerships and limited joint-
stock partnerships have unlimited liability for the partnership’s obligations. The limited partner in a limited partnership is liable up to the amount of the limited sum, while a shareholder in a limited joint-stock partnership is not liable for the partnership’s obligations
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SELECTED FEATURES OF PARTNERSHIPS A limited partnership has no minimum share capital
requirements. In limited joint-stock partnerships the minimum share capital is PLN 50,000
In general, partners are involved in running the affairs of the partnerships
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SELECTED FEATURES OF BRANCHES AND REPRESENTATIVE OFFICES (AGENCIES)
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Branch conducts business activity within the scope of activity of its founder
Agency conducts business activity solely with respect to advertising and promotion of its activities
Branches and agencies are not entities separate from foreign entrepreneurs and do not have legal personality, legal capacity and judicial capacity
A foreign entrepreneur is a founder of a branch and agency No minimum capital is required Branches and agencies are represented by an authorized person(s)
appointed by the founder A foreign entrepreneur is fully liable for the obligations of branch and
agency
Branches and agencies are not entities separate from foreign entrepreneurs and do not have legal personality, legal capacity and judicial capacity
A foreign entrepreneur is a founder of a branch and agency No minimum capital is required Branches and agencies are represented by an authorized person(s)
appointed by the founder A foreign entrepreneur is fully liable for the obligations of branch and
agency
REGISTRATIONS, PERMISSIONS
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Branches, partnerships and corporations must be registered in the commercial register kept by the district courts. Commercial register is accessible to the public (also on-line)
Representative offices are registered in the register of foreign entrepreneurs’ agencies kept by the Minister of Economy
Partnership may start operating once registered in the commercial register
Corporations may start operating before they are entered into the commercial register
• Entering into register requires application. Any changes in data entered into register must be notified to the court and entered in the register
• In general doing business does not requires governments concessions as the number of business sectors in which entrepreneurs do need such concessions has been reduced to only six categories of exceptional public interest
CompetitionCOMPETITION
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COMPETITION LAW IN POLAND Harmonized with EU law and recently amended Regulating three main sectors:
Polish authority (Competition and Consumer Protection Office, CCPO) cooperates with the EC
CCPO decisions are appealable to the Polish anti-competition court
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Anti-competition
behavior Consumer protection
Merger clearance
MERGER CLEARANCE
Thresholds lower than in the EU and Polish “component” required
Some multinational or foreign M&A deals may require clearance in Poland
Typical M&A deals reviewed by the CCPO:
Certain transactions may be exempted – lower thresholds or intra-group M&As
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share acquisition asset transfer joint-venture (all types)
ANTI-COMPETITIVE BEHAVIORS
Cartels, price fixing, market sharing, bid rigging, abuse of dominant position – forbidden by law
Transactions or acts breaching the regulationare invalid by virtue of law
Some vertical restraints may be exempted
Severe penalties to businesses(recently extended to managers and key officers)
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CONSUMER PROTECTION
Only aggregate consumerinterests are protectedby the CCPO actions
Individual protectionavailable from courts
List of unlawful anti-consumerclauses in the publically accessible register
Public warnings of anti-consumer behavior
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INVESTIGATION, LENIENCY AND PRIVATE ENFORCEMENT
Dawn raids becoming more popular in Poland – businesses should be prepared
Severe penalties for interruptionor disturbance of the investigation
Several leniency types Investigation may end up with an infringement decision Private enforcement not very popular in Poland yet
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ANTI-CORRUPTION REGULATIONS Polish law provides for penalization of individuals as a rule Firms may also be held liable for corruption Broad range of penalties, from imprisonment (individuals)
through monetary punishment to advertisement banning (firms)
Only bribery of public officer is penalized US or UK firms: corruption by Polish subsidiaries -
FCPA or Bribery Act enforcement
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CompetitionEMPLOYMENT
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EMPLOYMENT LAW IN POLAND
rather formalistic and still “paper based” based on statutes (most importantly - on the Polish Labor Code) harmonized with the EU law
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EMPLOYMENT CONTRACTS
main types: for an indefinite period of time fixed-term probationary (up to 3 months) contract for replacement of an absent
employee (e.g. maternity leave) written form in Polish usual track: probation period and then indefinite contract civil contractors are not employees – so they cannot be treated as
employees
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TERMINATION OF EMPLOYMENT (1 of 2)
contract for an indefinite period of time: notice period from 2 weeks up to 3 months
(depending on seniority) notice of termination must indicate specific reasons
for termination – related to employees’ performance or restructuring (redundancy) obligatory consultation with
trade unions (if present at the company)
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TERMINATION OF EMPLOYMENT (2 of 2)
fixed-term contract may be terminated with notice (as a general rule) only if it is concluded for a period exceeding 6 months and the contract provides for such option (the respective rules are to be changed in the near future)
summary (disciplinary) dismissal is possible only in exceptional cases, in case of a serious breach of basic employment duties
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WORKING TIME typically – 8 hours a day / average
of 40 hours per week public holidays – 13 days per year
(including 2 always falling on Sunday) 20/26 days of paid annual leave
(on top of public holidays) overtime – additional allowance
(50% or 100%) or time off employer pays 33 days' sick pay
in a calendar year (approx. 80% of remuneration)
any further periods of sickness are financed by the state
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EMPLOYEE REPRESENTATION
numerous consultation and information obligations
towards employees’ representatives (trade
unions, work councils and representatives appointed
on an ad hoc basis)
internal employment acts (employment regulations,
remuneration policy) must be agreed with trade unions (if
present at the company)
trade unions - usually present at big, former state-
owned companies
relatively low union density –approx. 10% (in 2013) of employees in Poland are
union members - in 1980 –80%; EU average – 23%
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EMPLOYMENT COSTSminimum monthly salary in 2014– PLN 1,680 gross (approx. EUR 395)
reviewed annually – from 2015 –PLN 1,750 gross (approx. EUR 412)
social costs (other than net salary – i.e. taxes, social security dues, etc.) amount to 41% of total employment costs
– average net salary in private sector in 2Q 2014 - PLN 2,810 (approx. EUR 670)– total employment cost for the employer - PLN 4,753 (approx. EUR 1,130)
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MOST COMMON EMPLOYMENT-RELATED CLAIMS
appeal against
termination of employment
bonus payment
overtimebullying and harassment
CompetitionINTELLECTUAL PROPERTY
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INTELLECTUAL PROPERTY LAW -INTRODUCTION
Patents Copyrights Trademarks Data protection Unfair competition
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PATENTS
2000 Industrial Property Law Act Novelty, inventive step and industrial applicability
checked by the Polish Patent Office Separate protection for utility models
and industrial designs Priority checked on the
„first to file” basis Works in the EU to create
a unitary patent protection
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COPYRIGHTS
1994 Copyright Act Economic rights and moral rights No contractual freedom
regarding assignment and licensing Copyright Reform – EU Single EU European title
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TRADEMARKS
Dual system: domestic trademarksand Community Trademarks The role of the Polish Patent Office Counterfeiting – methods of combating Role of customs authorities
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DATA PROTECTION
1997 Personal Data Protection Act basedon the EU personal data protection framework Multiple obligations of data controllers
to secure data Important rules regarding
personal data transfers outsideof Poland Works in the EU to create
a unified data protection system
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UNFAIR COMPETITION
Several types of market behavior prohibited
Protection of trade secrets
Restriction in advertising
CompetitionREAL ESTATE
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Perpetual usufruct (użytkowanie wieczyste) limited in time - 99 years established by the State Treasury or local government units only subject to transfer on the same terms which apply to the transfer of ownership one-off fee payable upon the establishment and annual fees
Ownership - providing the broadest scope of rights to real estate
Leases and other forms of property use lease or tenancy agreement for a non-fixed or fixed term other rights to real estate such as usufruct or easements
LEGAL TITLE
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Construction, technical and environmental
Financial
Legal
VERIFYING LEGAL TITLE Real estate due diligence
A comprehensive review process, to be performcomprising ed prior to its acquisition, the examination of a variety of issues:
Other depending on the type of real estate to be acquired and
purpose of the transaction
Land and mortgage registry (public credibility)
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PERMITTING AND REGULATORY ASPECTS (1 of 2)
Permit for acquisition of real estate by foreigners issued by the Polish Ministry of Internal Affairs required for the acquisition of an ownership or perpetual usufruct by
certain foreigners and with regard to certain properties, as well as for acquisition of shares
applies mainly to foreigners from outside the EEA and Switzerland; entity registered in Poland and EEA does not need a permit (except for agricultural land)
Corporate requirements shareholder meeting’s resolution (unless the articles of association or
statutes state otherwise)
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PERMITTING AND REGULATORY ASPECTS (2 of 2)
Statutory preemptive rights with respect to undeveloped real estate - local municipal authority with respect to real estate located within a special economic zone – the
manager of such zone with respect to certain agricultural properties - the tenant, or the Agency
of Agricultural Properties
Invalidity of the transaction if the requirements regarding the permit for the acquisition, pre-emptive rights or corporate resolution are not observed
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LOCAL PLANNING ZONING DECISIONS
PLANNING AND ZONINGSpecify designation of the property, localization of investments and manner of property development
multi-stage and time-consuming process involving numerous public bodies and public consultations
zoning plan (“MPZP”) preceded by adoption of the zoning program
MPZP becomes officially binding once published
specify conditions for the development of the property for the areas where a MPZP has not been enacted
issued by local municipal authorities as:• decisions on development conditions
(decyzja o warunkach zabudowy), or • decisions on localization of a public purpose
development (decyzja o ustaleniu lokalizacji inwestycji celu publicznego)
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DEVELOPMENT PROCESSBUILDING PERMIT to be obtained before construction works can be carried out issued on the basis of the MPZP or - in the absence thereof - a zoning decision obtained required for the construction, reconstruction, assembly, repair or demolition of a majority of constructions certain constructions do not require a building permit (notification to a competent authority is required instead)
CONTRACTING BUILDING PROCESS contracts for construction works corresponding to EU standards and practices (including FIDIC) usually a complex works agreements (performed by a general contractor), or as contracts for specific task(s) specific regulations regarding joint and several liability of an investor and a general contractor
for remuneration due to subcontractors the payment guarantee
OCCUPANCY PERMIT
to be obtained after completion of construction works for which a building permit was required
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COMMERCIALIZATION (1 of 2)
Lease and tenancy agreements for a non-fixed or fixed term up to 30 years a lease agreement applies to e.g. lease of an office, apartment or
premises within a shopping mall a tenancy agreement applies to e.g. agricultural land or the site for
certain types of development
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COMMERCIALIZATION (2 of 2)
Rent and security rent indexation pursuant to the Eurozone CPI index or inflation index of the Polish
Statistical Office a percentage (turnover) rent for premises designated for commercial activity the landlord’s right under the Civil Code to increase the amount of rent payment the security from the lessee in the form of a guarantee, deposit, surety, or voluntary
submission to enforcement
Condition of the premises, fit-out arrangements and other issues in commercial leases the budget provided by the landlord up to the agreed amount detailed provisions to be agreed, e.g. handover, maintenance and repairs, service
fees, insurance, return of the premises and settlement of improvements
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NEW REGULATIONS IN PROCESS
DEVELOPMENT RIGHT(PRAWO ZABUDOWY) NEW BUILDING CODE
under binding regulations, a building is owned by the owner of the land
the development right allows for construction on the land owned by another entity and for retention of the ownership of the building by the entity which has constructed it
to be established for 30 up to 100 years
transferrable and subject to disclosure in the land and mortgage register
unifying the building law, zoning and related regulations in one legal act
simplifying and shortening the administrative procedures
no requirement to obtain a building permit in a wide scope of situations
CompetitionTAX
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TOPICS OVERVIEW
Introduction to general rules of taxation in Poland
Personal Income Tax Transfer tax
Subsidiary vs branch vs representative
EU Tax Law/Double Taxation Treaties
Corporate Income Tax Taxation on profits Loss carry forward Taxation of dividends/WHT Transfer pricing/CFC/
Thin capitalization regime
Procedural aspects (tax rulings)
Value added tax Tax incentives
INTRODUCTION TO GENERAL RULES OF TAXATION IN POLAND
Personal Income Tax Worldwide income Progressive rates of 18%-32% Deductions and Allowances
Subsidiary (S) vs branch (B) vs representative (R) Depends on business activity (S) Taxed in Poland – (B) Taxed but limited - (R)Not taxed
in Poland
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INTRODUCTION TO GENERAL RULES OF TAXATION IN POLAND
Corporate Income Tax Taxation on profits - business income, most
passive income, capital gains - rate - 19% Loss carry forward - for the period of 5 years.
Carryback of losses not permitted Taxation of dividends/WHT – standard rate –
19%, subject to reduction (DTTs) and exemption (EU/EEA/Switzerland)
Transfer pricing/CFC/Thin capitalization regime
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INTRODUCTION TO GENERAL RULES OF TAXATION IN POLAND
Value Added Tax Supply of goods and services, import/export/inter-community
acquisition and supply of goods Standard (23%) and preferential (8%/5%) rates
Transfer tax Certain type of transactions (e.g. sales, loans, exchanges
of rights) generally not covered by VAT Rate 1%/2%
EU Tax Law/Double Taxation Treaties (approx. 80 tax treaties concluded)
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INTRODUCTION TO GENERAL RULES OF TAXATION IN POLAND
Procedural aspects (tax ruling) obtained within 3 months from
submission (low fee) binding on tax authorities
Tax incentives Special Economic Zones Local incentives (property tax exemptions) Tax relief for new technologies R&D centres
CompetitionTHANK YOU
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