Branch of a foreign entrepreneur in Poland

Foreign entrepreneurs who want to enter with their business activity on the territory of the Republic of Poland may do so as a branch based in Poland. Such a solution was already provided for by the Act of 2 July 2004 on the freedom of business activity, while the valid rules regarding the setting-up and operation of branches of foreign entrepreneurs in Poland were included in the Act of 6 March 2018 on the rules of participation of foreign entrepreneurs and other foreign persons in trade in the territory of the Republic of Poland.  This act is the implementation of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market.

Foreign entrepreneurs from the European Union Member States and member states of the European Free Trade Agreement (EFTA) have been granted the greatest scope of freedom – they can conduct business activity according to the same rules as domestic entities. However, other foreign entrepreneurs may establish branches based in Poland on the basis of reciprocity, unless ratified international agreements provide otherwise.

A characteristic element of the branch of a foreign entrepreneur in Poland is that the activity conducted by the branch cannot go beyond the scope of the foreign entrepreneur’s activity. The entry into the register of entrepreneurs of the National Court Register, as well as the appointment of a person authorized to represent a foreign entrepreneur in a branch established in Poland is indispensable for the functioning of the branch. Another requirements imposed by the Act are that to designate the branch, the original name of the foreign entrepreneur should be used along with the name of the entrepreneur’s legal form translated into Polish and the words “oddział w Polsce”. Moreover, it is necessary to conduct separate accounting for the branch in Polish in accordance with the provisions of the Accounting Act.

The above comparison shows that the branch of a foreign entrepreneur is an independent and organizationally separate part of the activity performed by a foreign entrepreneur in Poland. However, this does not prejudge the granting an attribute of legal capacity or judicial capacity to the branch. It is the foreign entrepreneur who remains the subject of all rights and obligations and only it is entitled to the abovementioned. The practical consequence of such a solution is manifested by the fact that in a situation when, in connection with the activity conducted by a branch of a foreign entrepreneur, debt is incurred in Poland, the Polish entrepreneur (being a creditor) is deprived of the opportunity to sue a foreign entrepreneur in a court in Poland. In this situation, bringing an action or an request for an amicable settlement before a Polish court against a branch of a foreign entrepreneur is doomed to failure.

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