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Entities obliged to maintain books of account in Poland

 

The most important legal act regulating accounting  in Poland is the Accounting Act of 29. September 1994 (hereinafter referred to as the Act).

 

The Act specifies entities which are obliged to maintain books of account. They include in particular:
 

  • commercial partnerships and companies (including organizations) and civil partnerships, natural person, civil partnerships established by natural person, general partnerships established by natural person and professional partnerships, if their net revenue from the sales of goods for resale, finished goods and financial transactions for the prior financial year amounted to at least EUR 1 200 000 (in Polish zloty),foreign person, branches of a company, foreign entrepreneurs representation (in the meaning of The Freedom of Economic Activity Act provisions).

 

Accounting rules in Poland, Entities | MDDP Outsourcing | Publications

In the case of natural persons, civil partnerships  of natural persons, registered partnerships of natural persons and professional partnerships may apply the accounting policies set out in this Act also from the beginning of the subsequent financial year if their net revenue from the sales of goods, products and from financial transactions for the preceding financial year amounted to less than the equivalent of EUR 1,200,000 in the Polish currency. In such event, the said persons or partners shall be required to notify the tax office competent for income tax matters before the beginning of the financial year . That amount shall be translated into the Polish currency at the average rate of exchange announced by the National Bank of Poland, as at 30 September of the year preceding a given financial year.

In that case, person or partners are obliged to notify this fact before the beginning of the financial year to the Tax Office relevant to income tax matters.

Branches of foreign entrepreneurs
 

General regulations

A foreign entrepreneur branch is one of the forms of conducting a business by a foreign company. Branches of foreign entrepreneurs are obliged to maintain books of account.

Bookkeeping

Books of accounts shall be mantained:

  • in the Polish language,
  • in the Polish currency,
  • in its premises or outside the premises by the entity entitled (accounting office).

The branch is also obliged to prepare the financial statements to which general rules (section: reporting) and specific rules are applied. Specific rules concern in particular:

  • approving of the financial statements. It is considered to be approved when financial statement
  • of foreign entrepreneur (which includes financial statement data of this branch) is approved.
  • publishing the financial statement,
  • filing the financial statements with the National  Court Register  annual financial statement of the branch should be submitted and, in the case of  a branch of a credit institution or financial institution the following documents shall be translated into Polish by the certified interpreter:
  1.  the annual financial statement of a credit or financial institution,
  2.  a copy of the resolution or approval authority for approval of the annual financial statement of credit institutions or financial,
  3.  a copy of the resolution or the provisions of the approval authority of a credit institution about appropriation of profit or loss offset.


Taxation principles

According to the branch taxation special attention shall be paid to:

Income Tax

  • Taxpayer of Corporate Income Tax is a branch of foreign enterpreneur.


Personal Income Tax

  • In case when branch acts as a taxpayer, it means it is obliged to count, collect and pay to the Tax Office an advance for income tax from salaries of employees. A branch shall use given Tax Identification Number and meet a payer's obligations.

VAT

  • A branch of foreign enterpreneur is a taxpayer.


Social Insurance

  • In case of engaging employees, the branch shall be  registered for the social insurance purpose. Obtaining the Tax Identification Number will be necessary.


Representation of foreign enterpreneur
 

General Regulations

The representation is another possible form of conducting business by foreign enterpreneurs. The representation is obliged to maintain book of accounts.

Bookkeeping

Books of accounts shall be maintained:

  • in the Polish language,
  • in the Polish currency,
  • in its premises or outside the premises and by theentity entitled (accounting office).

The representations which bookkeep are obliged to use the Regulation of Ministry of Finance of 15 November 2001 concerning special principles of accounting for selected units which are not commercial companies, not conducting business (hereinafter referred to as „the Regulation”),  which simplifies the use of accounting principles, in particular valuation of assets and liabilities, financial result calculation and preparation of financial statement. The main simplifications in respect to the accounting principles are presented below:

The Income of representation

Income includes (among other things)  cash received from foreign enterpreneur for the purpose of financing the costs of representation (assets received free of charge and other income).


The costs of representation

The costs of conducting business include (among other things) costs concerning realization of statutory representation tasks, that is advertisingand promotion and administrative costs.


The principle of conservatism

Representations may not use the principle of conservatism.


Financial result

Representations calculate financial result as a difference between income and costs. This difference after the approval of annual financial statement – increases income or cost in next financial year. The positive difference may be allocated for increasingthe statutory fund.

Financial Statement

Representations are obliged to prepare the annual financial statement as at the day of ending the financial year and for every other balance sheet date. Financial Statement consists of:

  • balance sheet,
  • profit and loss account,
  • notes to the financial statement.


Principles od taxation

According to the branch taxation special attention shall be paid to:

Income Tax

  • According to prevailing opinion, if representation  conduct only business in promotion and advertising area, it is not a taxpayer of Corporate Income Tax in Poland.


Personal Income Tax

  • If representation acts as taxpayer, it is obliged to count, collect and pay to Tax Office an advance for income tax from salaries of employees and shall use given Tax Identification Number and meet a payer's obligation.


VAT

  • If representation conducts business only in the area of representation and promotion, registration for the purpose of Value Added Tax in Poland shall not be necessary.


Social Insurance

  • In case of engaging employees, the representation shall be registered for the social insurance purpose. Obtaining the Tax Identification Number will be necessary.

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