Accounting for a branch office in Poland

Many foreign companies entering Poland opt for operating as a branch office.

When considering this form of business, you should note that a branch office is a business organisation without full legal capacity (i.e. all actions taken within the branch will be performed on account of the foreign business entity).

However, from the accounting perspective, a branch office in Poland is obliged to maintain full accounting records (provided that the turnover for the first year of business exceeds EUR 2 million) and prepare standalone financial statements.

Foreign branch accounting is distinctive insofar as the accounting system has to be structured so as to comply with the requirements imposed by the Polish legislator while also accommodating the requirements of the group and statutory reporting of the parent company. Attention should be given to the relationship-specific transactions between a branch and its parent, in addition to issues related to the structure of the accounting system itself. Doubts may arise as early as the formation of a branch. At the onset of its operation, a branch is usually provided with assets by its parent for its own business use. These may be cash but not only that; fixed assets or tangible current assets are also frequently employed.  If this is the case, doubts may arise as to both the method of keeping accounts and the method of measurement. Correct recognition of mutual transactions considerably reduces difficulties in consolidation of the branch in the parent’s books. 

Tax settlements are yet another issue for foreign branches. Both the corporate income tax and value added tax treatment may raise questions. In practice, we assist businesses right from the start and determine whether a branch has to be registered for tax purposes. We are sometimes approached by business entities who operate branches and have failed to make the relevant registrations. By remaining in default, they not only risk unnecessary burdens of interest but they also face criminal fiscal liability. 

Moore Stephens Central Audit provides support in registration of a branch in Poland in addition to comprehensive accounting and payroll services for foreign branches of companies. Once authorisation is received from you, MSCA takes care of the entire branch registration process for you.

An MSCA lawyer will act on your behalf before the Polish authorities thus minimising your overall involvement in the registration process. Your involvement will only be necessary if any additional information or submissions are required to be made which are not part of the standard registration procedure.

As for the opening of a branch office itself, in our experience the process normally takes two to three months.

The setup/registration process mainly comprises:  
 
  • Preparation of the required documentation: documents usually take about a month to prepare (you also need to allow sufficient time for preparation of certified translations into Polish for some of the documents, e.g. the Articles of Association of a foreign business entity); and
  • registration with the commercial court (combined with registration for statistic and tax purposes, etc.); registration is normally completed within three to four weeks.
Compliance with the registration obligations is by no means the only tricky question. Tax authorities pay particular attention to tax expenses of branches resulting from related party transactions or transactions generated by the parent entity. Our experience in this field helps optimise the tax burden of the branch, thus improving the financial position of the parent. 

And foreign branch accounting services often include reporting to the foreign company, with varying level of detail. Our experience in building reporting models based on the domestic balance sheet laws and the accounting principles adopted by the parent entity is essential in such cases. With our unique skills, we can provide automated reporting of financial information of the branch to the parent company in a format which enables further automated processing. 

Members of the management boards of foreign companies with branches in Poland, who are typically foreign nationals and normally stay abroad, often need an end-to-end support in understanding the local laws in Poland and in ensuring compliance with the obligations imposed on them in relation to operating business in Poland. Drawing on its long experience in accounting services for such entities, MSCA provides the right assistance in the above areas giving you the peace of mind and assurance that all obligations are met as required under the applicable laws.