Branch vs subsidiary in Poland – comparison for Netherlands groups

A Rotterdam-based distribution group decides to expand into Poland. The commercial logic is clear: a central European market of 38 million consumers, strong logistics infrastructure, and growing B2B demand. What is less clear is the legal vehicle. Should the group open a branch of the Dutch parent, or incorporate a separate Polish subsidiary? The choice shapes tax exposure, liability, governance, and the speed of the entire setup.

Netherlands groups entering Poland face a binary choice: a registered branch (oddział przedsiębiorcy zagranicznego) or a limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.). The branch is a dependent extension of the Dutch parent, carrying full parental liability, while the sp. z o.o. is a separate legal entity with liability capped at share capital. Registration in both cases runs through the National Court Register (KRS), but the procedures, timelines, and ongoing compliance obligations differ substantially.

This guide walks through the two structures step by step. It covers the registration procedure, timeline, costs, tax treatment, liability exposure, and three concrete business scenarios drawn from Dutch-Polish practice. It also flags the most common mistakes and answers the questions we hear most often from Netherlands-based groups preparing their Polish market entry.

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

The branch and the subsidiary occupy different positions in Polish corporate law. Understanding that distinction upfront prevents costly restructuring later. The branch operates under the parent's legal personality. The subsidiary is a new Polish company – legally independent from day one.

A branch (oddział) is registered in the National Court Register (KRS) as a dependent unit of the foreign enterprise. It has no separate legal personality. Every contract the branch signs is, in law, a contract of the Dutch parent. Every liability the branch incurs is the parent's liability. The branch must use the parent's name, supplemented by the phrase "oddział w Polsce" (branch in Poland). It must also appoint a representative resident in Poland.

A sp. z o.o. is incorporated under the Kodeks spółek handlowych (Commercial Companies Code, KSH). It requires a minimum share capital of PLN 5,000. It has its own management board, its own bank account, and its own tax identification number (NIP). The Dutch parent's liability is limited to its contribution – unless it provides upstream guarantees or the corporate veil is pierced under KSH provisions on wrongful trading.

One practical consequence: a branch cannot enter into contracts with its own parent, because there is only one legal person. A subsidiary can. For groups that intend to charge management fees, licence intellectual property, or lend funds to the Polish entity, a subsidiary is structurally necessary. Transfer pricing rules under Polish corporate income tax law then apply to those intra-group transactions.

• Branch: no separate legal personality, full parental liability, no share capital required
• Subsidiary (sp. z o.o.): separate legal entity, liability limited to PLN 5,000 minimum capital
• Branch must replicate parent's name and appoint a Polish-resident representative
• Subsidiary can contract with the parent; transfer pricing documentation required above PLN 10m threshold
• Both structures require KRS registration and a Polish tax identification number

How does the registration procedure differ – and how long does it take?

Registration timelines matter when a Dutch group is racing to fulfil a contract or respond to a tender. The branch procedure is lighter on corporate formalities but heavier on document preparation. The sp. z o.o. can be incorporated online in under 24 hours – or in four to six weeks if a notarial deed is used.

A branch registration requires filing with the KRS district court. The application must include the parent's current excerpt from the Dutch commercial register (Kamer van Koophandel, KvK), a certified Polish translation of the parent's articles of association, and a resolution of the parent's competent body authorising the opening of the branch. The KRS processes branch applications within seven to fourteen business days in most cases. The Polish Financial Supervision Authority (KNF) has no role unless the parent operates in a regulated sector.

A sp. z o.o. can be incorporated using the S24 online system of the Ministry of Justice in as little as one business day, provided the shareholders use a standard-form articles of association. If the group requires bespoke governance provisions – for example, reserved matters requiring Dutch parent consent, or a supervisory board – a notarial deed is mandatory. Notarial incorporation typically takes three to five weeks, including the KRS registration period of seven to fourteen days.

In both cases, the entity must then register for VAT with the relevant tax office, open a Polish bank account, and register with the Social Insurance Institution (ZUS) if it employs staff. VAT registration can take up to 30 days. Budget for that in the project timeline. We secured a smooth dual-track KRS and VAT registration for a Netherlands logistics group entering Mazowieckie region (autumn 2025), compressing the total setup to 19 business days.

What are the tax implications for Netherlands groups choosing between the two structures?

Tax treatment is often the decisive factor for Dutch treasury and tax teams. The branch and the subsidiary are treated differently under both Polish corporate income tax law and the Netherlands–Poland tax treaty. Getting this wrong forfeits treaty benefits and creates permanent establishment exposure that is difficult to unwind.

A branch constitutes a permanent establishment (PE) of the Dutch parent in Poland. Polish corporate income tax (CIT) at 19% applies to income attributable to the PE. The Netherlands–Poland double tax treaty (based on the OECD Model) allocates taxing rights to Poland on that PE income. The parent must file a Polish CIT return and maintain separate accounts showing the branch's results. There is no withholding tax on profit remittances from the branch to the parent – there is no dividend, only an internal transfer.

A sp. z o.o. pays Polish CIT on its own income. When it distributes a dividend to the Dutch parent, Polish withholding tax applies at 19% unless reduced by the treaty or the EU Parent-Subsidiary Directive. Under the Directive, a Dutch parent holding at least 10% of the subsidiary's shares for 24 months qualifies for a 0% withholding rate – subject to the principal purpose test and a substance check at the Polish tax authority level. The Polish tax authority (KAS) has intensified scrutiny of holding structures since 2022. Groups relying on the Directive exemption must document genuine economic substance in the Netherlands.

One often-overlooked point: a branch does not benefit from the 9% reduced CIT rate available to small taxpayers (annual revenue below EUR 2m). A sp. z o.o. qualifies for that rate in its first year and in years where it stays below the threshold. For a start-up Polish operation, that 10-percentage-point saving on CIT is material. For a detailed comparison of equity structures relevant to incentive planning, see our analysis of ESOP structuring for Polish startups and tech companies.

Three business scenarios: manufacturing, IT services, and market-entry distribution

Abstract comparisons have limits. Three scenarios drawn from Dutch-Polish practice illustrate how the structural choice plays out in practice. Each scenario maps the situation to the recommended vehicle and explains the reasoning.

Scenario 1 – Manufacturing. A Dutch industrial group acquires a Polish production site. The site employs 120 people and has existing contracts with Polish customers. A branch is unsuitable here. The acquired entity is already a separate Polish company. The Dutch group will hold it as a subsidiary, and the subsidiary structure preserves the existing employment contracts, customer relationships, and tax history. The due diligence Poland exercise should verify any contingent CIT or VAT liabilities carried over from the previous owner. Our team obtained interim measures protecting assets worth over EUR 3m for a Dutch investor's manufacturing subsidiary in Lower Silesia (spring 2025).

Scenario 2 – IT services. A Dutch software company wants to second a team of five developers to Warsaw to serve a single key client. The operation is expected to run for 18 to 24 months. A branch is appropriate. The setup cost is lower, the governance is minimal, and there is no intention to build a permanent Polish corporate structure. The branch is wound up when the engagement ends. The main risk is PE characterisation in the Netherlands if the Polish operation is later argued to have exceeded the branch's scope – a point requiring upfront legal analysis.

Scenario 3 – Distribution entry. A Netherlands consumer goods group is entering the Polish retail market with a five-year horizon. Revenue in year three is projected above EUR 2m. The group intends to licence its brand to the Polish entity and charge a management fee. A subsidiary is the only workable vehicle: the branch cannot contract with the parent, and the group needs the transfer pricing framework to document the licence and fee arrangements. The sp. z o.o. should be incorporated with bespoke articles of association giving the Dutch parent reserved-matter veto rights. For staff relocation planning, see our guide on global mobility: relocating employees to Poland from Netherlands.

What are the most common mistakes – and how do you avoid them?

The most expensive mistakes in Polish market entry are not made during registration. They are made in the weeks before, when the Dutch parent's internal teams make assumptions that Polish law does not support. Three patterns recur.

Underestimating the branch's compliance burden. Groups often choose a branch expecting minimal Polish compliance. In fact, a branch must maintain separate accounting records in Polish, file Polish CIT returns, and comply with the same labour law obligations as a Polish employer. If the branch employs staff, it registers with ZUS and runs a Polish payroll. The compliance cost difference between branch and subsidiary is smaller than most Dutch finance teams expect – often less than PLN 20,000 per year in accounting and filing fees.

Assuming the Directive exemption is automatic. Dutch holding companies frequently assume that the Parent-Subsidiary Directive eliminates Polish withholding tax on dividends without further action. Since 2019, Polish tax law requires the subsidiary to verify the beneficial owner of the dividend and confirm that the Dutch parent has genuine substance. A "look-through" analysis is mandatory above PLN 2m in annual payments. Failure to conduct it triggers a 19% withholding tax charge plus interest – an irreversible cost if the payment has already been made.

Choosing the wrong share capital level. The PLN 5,000 minimum is legally sufficient but commercially inadequate for most operations. Polish banks and counterparties view a PLN 5,000 capitalised company as a credit risk. Groups entering distribution or manufacturing should capitalise at PLN 50,000 to PLN 500,000 depending on the scale of operations. For a comparison of capitalisation norms across French and Dutch market-entry structures, see our sp. z o.o. vs SA decision matrix for France investors.

What to prepare before filing:

• Current KvK excerpt (apostilled and translated into Polish within the last three months)
• Parent's articles of association with certified Polish translation
• Board resolution authorising the Polish structure and naming the representative
• Proof of registered address in Poland (lease or virtual office agreement)
• Draft articles of association for sp. z o.o. (if notarial route is chosen)

For legal advice tailored to your group's structure, contact info@kordeckipartners.com. A specific choice made without M&A Poland context – particularly where an acquisition follows the initial entry – can foreclose restructuring options that are straightforward to preserve at the outset.

To receive an expert assessment of your Polish market entry structure, contact info@kordeckipartners.com. We will map your group's situation against both vehicles, flag the tax and liability consequences, and manage the KRS filing from start to finish.

Frequently asked questions

Q: Can a Netherlands group convert a branch into a subsidiary later without interrupting operations?

A: Polish law does not provide a direct conversion mechanism. The group must incorporate a new sp. z o.o. and then transfer the branch's contracts, employees, and assets to it. Employment contracts transfer automatically under labour law continuity rules, but commercial contracts require counterparty consent unless assignment clauses are already in place. The process typically takes three to four months and should be planned well in advance to avoid gaps in operations.

Q: How long does it take to set up company Poland operations from scratch, and what does it cost?

A: A branch registration typically completes within three to four weeks including document preparation, translation, and KRS processing. An S24 sp. z o.o. can be operational in five to seven business days. A notarial sp. z o.o. takes four to six weeks. Legal and notarial fees for a standard incorporation range from PLN 3,000 to PLN 15,000 depending on complexity. State fees at the KRS are PLN 500 for a new entity and PLN 250 for subsequent changes. VAT registration adds up to 30 days to the timeline.

Q: Does a Dutch parent need to conduct due diligence Poland procedures before incorporating a subsidiary?

A: For a greenfield incorporation, formal due diligence is not required. However, if the Dutch parent intends to acquire an existing Polish company or merge the new subsidiary with a local business within 12 to 24 months, conducting at least a legal and tax review before incorporation is strongly advisable. The review identifies contingent liabilities, existing pledge registers, and any KRS irregularities that could affect the acquisition price or structure. Skipping this step is one of the most common – and costly – mistakes in M&A Poland transactions.

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. 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.