An Italian manufacturing group decides to expand into Central Europe. Poland is the obvious choice – a market of 38 million consumers, a strong industrial base, and EU membership. The first structural question arrives almost immediately: should the group open a branch or register a subsidiary? The answer shapes tax exposure, liability, and operational flexibility for years ahead.

Italian groups entering Poland face a binary choice between a registered branch (oddział) and a limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.). A branch is faster to open but exposes the Italian parent to direct liability for Polish operations. A subsidiary is a separate legal entity, shields the parent from operational risk, and is the preferred structure for groups with long-term Polish ambitions. Both vehicles must be registered with the National Court Register (KRS) before commencing activity.

This alert sets out the key differences, flags the structural risks that Italian groups most commonly overlook, and identifies the immediate decisions that determine which vehicle fits your group's Polish strategy. The analysis covers registration, tax treatment, liability, and the practical thresholds that should drive the choice.

What are the structural differences between a branch and a subsidiary in Poland?

The branch (oddział) is not a separate legal entity. It is an extension of the Italian parent. The parent bears unlimited liability for all obligations incurred through the branch. Registration with the KRS is required, and the branch must appoint a representative authorised to act in Poland. The branch name must include the Italian parent's name and the phrase "oddział w Polsce." Setup typically takes four to six weeks from filing.

The sp. z o.o. is a separate legal entity under Polish corporate legislation. Shareholders – including the Italian parent – are liable only up to the value of their contributions. Minimum share capital is PLN 5,000, a threshold low enough that it rarely drives the decision. Registration with the KRS takes two to three weeks via the online S24 system for standard structures, or four to six weeks for notarially executed deeds. The Polish Financial Supervision Authority (KNF) becomes relevant only if the subsidiary operates in regulated sectors such as financial services or insurance.

The branch is operationally simpler in one respect: it does not require a separate shareholders' meeting or Polish-law governance documents. However, it cannot issue equity, cannot be sold independently of the parent, and cannot attract Polish co-investors. These constraints close off exit and partnership options that a subsidiary keeps open. For Italian groups running a due diligence Poland process before entry, the subsidiary's clean corporate structure is consistently easier to present to counterparties.

Which structure carries lower tax exposure for Italian groups?

Both a branch and a subsidiary create a permanent establishment in Poland, triggering Polish corporate income tax (CIT) at 19% on Polish-source profits. The critical difference lies in profit repatriation. A subsidiary distributing dividends to the Italian parent is subject to Polish withholding tax at 19%, reduced to 5% under the Italy-Poland double tax treaty, and potentially to zero under the EU Parent-Subsidiary Directive where the Italian parent holds at least 10% of shares for an uninterrupted 24-month period.

A branch remitting profits to the Italian head office does not trigger Polish withholding tax on those remittances – but the Italian parent must account for the Polish profits in Italy under standard consolidation rules. Transfer pricing documentation requirements apply to both structures once intra-group transactions exceed statutory thresholds. Polish tax authorities (the Krajowa Administracja Skarbowa, National Revenue Administration, KAS) have intensified scrutiny of intra-group service charges since 2024, making robust documentation a practical necessity rather than a formality.

Groups planning to reinvest profits in Poland rather than repatriate them often find the subsidiary more efficient. Retained earnings within a Polish sp. z o.o. are not subject to Polish tax until distributed. This deferral benefit disappears in a branch structure, where profits are attributed to the parent in the year they arise.

What are the immediate action items for Italian groups choosing between structures?

The choice of structure should be made before any Polish contracts are signed or employees hired. Operating in Poland without KRS registration exposes the Italian parent to fines and invalidates certain contracts. The KRS registration number is required for VAT registration, opening a Polish bank account, and concluding employment agreements under Polish law.

We secured a smooth market-entry registration for an Italian logistics group establishing a subsidiary in the Mazowieckie region (spring 2025), completing KRS and VAT registration within three weeks of instruction. We also advised an Italian technology group on converting a branch to a subsidiary in Małopolska (autumn 2025), a process that required a formal liquidation of the branch alongside incorporation of the new entity – a sequence that took approximately three months.

The immediate checklist for Italian groups at the decision stage:

  • Confirm whether the Polish operation will involve regulated activity requiring KNF authorisation.
  • Assess the intended profit repatriation model and apply the Italy-Poland treaty withholding rate.
  • Determine whether Polish co-investors or a future M&A Poland exit are realistic scenarios.
  • Instruct a law firm Warsaw-based with Polish corporate and tax capacity to prepare KRS filing documents.
  • Complete due diligence Poland on any existing Polish contracts or liabilities before the structure is finalised.

Italian groups that delay the structural decision often find themselves locked into a branch by operational momentum – contracts signed, staff hired, bank accounts opened. Converting later is possible but costly. The lost opportunity is the clean, flexible subsidiary structure that was available at day one at minimal incremental cost. For further context on how structural choices interact with employment obligations, see our employment law compliance guide for Italy companies in Poland. Groups entering through acquisition rather than greenfield should also review red flags in Polish M&A before committing to a structure. Czech Republic groups facing the same decision will find a parallel analysis in our branch vs subsidiary comparison for Czech Republic groups.

Specific circumstances – group size, sector, repatriation model, timeline – determine which structure best protects the Italian parent's interests in Poland. Delaying that analysis until after operations begin forfeits options that cannot easily be recovered.

To receive an expert assessment of your group's Polish entry structure, contact info@kordeckipartners.com.

Frequently asked questions

Q: Can an Italian group set up company Poland operations using only a branch, without ever incorporating a subsidiary?

A: Yes. A branch is a fully lawful vehicle for conducting business in Poland and many Italian groups use it successfully for limited or short-term operations. The constraint is that the branch cannot be sold independently, cannot issue equity, and cannot attract Polish co-investors. Groups with long-term or growth-oriented Polish strategies typically convert to a subsidiary within two to three years, which involves additional cost and a gap in operational continuity of approximately three months.

Q: How long does KRS registration take for a sp. z o.o. set up by an Italian parent?

A: Registration via the online S24 system takes two to three weeks for standard structures where the Italian parent can execute documents electronically. Notarially executed deeds – required where the articles of association include non-standard provisions – extend the timeline to four to six weeks. VAT registration with the relevant tax office adds a further two to four weeks and should run in parallel with KRS filing to avoid delays in commencing taxable activity.

Q: Is there a minimum investment threshold that determines whether a branch or subsidiary is more appropriate?

A: Polish law sets no investment threshold that mandates one structure over the other. The sp. z o.o. minimum share capital of PLN 5,000 is not a meaningful financial barrier. The decision is driven by liability exposure, tax efficiency, governance preferences, and exit strategy rather than by the size of the initial investment. Groups investing above EUR 1m in Polish operations almost universally choose the subsidiary for liability and governance reasons, but this reflects commercial logic rather than a statutory requirement.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to corporate structuring, market entry, and M&A transactions. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.