Branch vs subsidiary in Poland – comparison

A Polish holding company is expanding its domestic operations into a new region. The board faces a familiar fork in the road: register a branch of the existing entity, or incorporate a separate spółka z ograniczoną odpowiedzialnością (limited liability company, sp. z o.o.)? The choice shapes tax exposure, liability containment, regulatory compliance, and the eventual exit route – sometimes irreversibly.

For Poland-based groups expanding within Poland, a branch is not a separate legal entity and leaves the parent fully exposed to the branch's liabilities, while a sp. z o.o. subsidiary creates a distinct legal person with liability capped at the share capital contributed. Registration of both forms runs through the National Court Register (KRS), but the subsidiary requires a notarial deed of incorporation, a minimum share capital of PLN 5,000, and a management board appointment before filing. The branch requires only a KRS filing with supporting corporate resolutions – no new legal entity, no notarial deed.

This guide walks through the step-by-step procedure, realistic timelines, cost benchmarks, and the three most common business scenarios where the choice between branch and subsidiary matters most. It also flags the mistakes that groups make when they treat the decision as purely administrative rather than strategic.

What is the structural difference between a branch and a subsidiary in Poland?

The answer here is foundational. A branch (oddział) is a separated part of the parent company's enterprise. It has no independent legal personality. The parent company – even if itself a Polish sp. z o.o. – bears unlimited liability for every obligation the branch incurs. There is no liability shield between the branch's creditors and the parent's assets. Under Polish commercial legislation, the branch must operate under the parent's business name with a suffix identifying it as a branch.

A subsidiary sp. z o.o. is a fully separate legal entity registered in the KRS under its own name. The parent's liability is ordinarily limited to its contribution to share capital. That capital floor is PLN 5,000, though in practice most advisers recommend at least PLN 50,000 for a trading subsidiary to maintain credibility with suppliers and counterparties. The subsidiary has its own management board, its own tax identification number (NIP), and its own set of accounting obligations.

The National Court Register (KRS), maintained by the Ministry of Justice, is the single registration point for both forms. The Polish Financial Supervision Authority (KNF) becomes relevant only when the subsidiary or branch operates in a regulated sector – banking, insurance, or investment services. The Central Statistical Office (GUS) issues a separate statistical number (REGON) to both forms after KRS registration.

Branch: no separate legal personality, parent fully liable, no minimum capital requirement
Subsidiary: separate legal entity, liability limited to share capital, minimum PLN 5,000
Both registered at KRS; branch filing is simpler and faster
Subsidiary requires notarial deed; branch requires only a corporate resolution
Tax treatment diverges significantly at the group consolidation level

One parenthetical point that practitioners often overlook: a branch of a Polish company operating in another Polish city is not the same legal instrument as a branch of a foreign company. The rules are similar, but the foreign-branch regime carries additional disclosure requirements under European Union law. This guide focuses on the intra-Poland scenario – a Polish parent establishing a presence in another Polish location.

How does the step-by-step registration procedure compare?

Procedurally, a branch is the lighter path. The parent company passes a management board resolution (or shareholders' resolution, depending on the articles of association) authorising the branch, designating a registered address, and appointing a branch representative. That package – resolution, power of attorney, KRS form – goes to the competent district court registry. Processing typically takes 7 to 14 business days. There is a KRS filing fee of PLN 250 and a publication fee of PLN 100 in the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy).

Incorporating a subsidiary involves more steps. The founders (which for a wholly owned subsidiary means the parent acting alone) sign a notarial deed of incorporation. Notarial fees are regulated and scale with share capital; for a PLN 50,000 capital subsidiary, expect notarial costs of roughly PLN 1,000 to PLN 1,500. The management board then opens a bank account, deposits the share capital, and files the KRS application. The full KRS registration of a new sp. z o.o. – from notarial deed to certificate – realistically takes 14 to 21 business days under standard processing, though the online S24 procedure (available only for standard-form articles of association) can compress this to 3 to 5 business days.

We obtained KRS registration for a subsidiary of a Mazowieckie-based logistics group in under five business days using the S24 route (autumn 2025). The group had previously used the notarial route and assumed three weeks was unavoidable. The S24 path requires that the articles of association conform to the Ministry of Justice template – no bespoke provisions. For groups that need customised governance, the notarial route remains necessary.

Branch registration: PLN 350 total fees, 7–14 business days
Subsidiary (notarial route): PLN 1,000–1,500 notarial fee plus PLN 500 KRS/gazette fees, 14–21 days
Subsidiary (S24 online): PLN 350 KRS fees, 3–5 days, standard articles only
Both require NIP and REGON registration post-KRS (typically automatic within 5 days)

The timeline differential matters for groups operating on a project deadline. A branch can be operational in two weeks from board decision. A fully customised subsidiary may take five to six weeks when notarial scheduling and KRS processing are combined.

What are the tax and liability consequences that groups most often underestimate?

This is where the branch-versus-subsidiary choice becomes genuinely consequential. A branch has no separate corporate income tax (CIT) identity. Its income is consolidated directly into the parent's CIT return. That simplicity is attractive for internal accounting, but it also means the parent absorbs any branch losses immediately – and any branch liabilities without limit. If the branch operates in a sector with elevated litigation or regulatory risk, the parent's entire balance sheet is exposed.

A subsidiary files its own CIT return. Losses are trapped in the subsidiary and cannot automatically offset the parent's profits. However, Polish tax legislation introduced a tax group (podatkowa grupa kapitałowa, PGK) regime that allows consolidated CIT filing between a parent and qualifying subsidiaries. The PGK requires, among other conditions, that each member company hold at least 75% of shares in the next tier, that the group maintains average share capital of at least PLN 500,000 per company, and that it operates for a minimum of three tax years. Groups that qualify can effectively achieve the loss-consolidation benefit of a branch while retaining the liability shield of separate legal personality.

Transfer pricing obligations arise only with a subsidiary, not with a branch of the same legal entity. Intra-group transactions between the parent and a subsidiary must be documented and priced at arm's length. The Polish Tax Administration (KAS) has intensified transfer pricing audits since 2023. Groups that set up subsidiaries without establishing a transfer pricing policy face penalties of up to PLN 720,000 per undisclosed transaction under current regulations.

Value added tax (VAT) treatment also diverges. A branch and its parent share a single VAT registration. A subsidiary requires its own VAT registration. For groups with significant intra-Poland supply chains, this creates either simplicity (branch, single VAT number) or flexibility (subsidiary, separate VAT recovery position).

Which structure suits each of the three main business scenarios?

Three scenarios dominate the instructions we receive from Poland-based groups. Each points toward a different answer – and the wrong choice in each case creates costs that are difficult to reverse once the structure is embedded in contracts, financing arrangements, and tax filings.

Scenario 1: Manufacturing group opening a production facility in Silesia. The facility will employ 150 workers, carry significant fixed assets, and operate under environmental permits tied to the site. Here, the subsidiary is the standard choice. Environmental liability, employment disputes, and permit revocations should be ring-fenced from the parent. A branch structure would leave the parent's entire asset base exposed to a single facility's regulatory risk. The subsidiary also allows the group to bring in a minority investor at the facility level without restructuring the parent's ownership.

Scenario 2: IT services company opening a sales office in Kraków. The office will employ five people, generate revenue under the parent's existing contracts, and share the parent's IT infrastructure. Here, a branch is often the more efficient choice. There is no meaningful liability to ring-fence, transfer pricing documentation is avoided, and the parent's existing VAT and CIT infrastructure handles the branch's activity without duplication. Setup cost is under PLN 500 and the branch is operational in two weeks.

Scenario 3: A Wielkopolska-based holding company preparing for an M&A Poland transaction. The group intends to sell one line of business within 18 months. The subsidiary structure is almost always preferable here. A buyer performing due diligence Poland will want to acquire a clean legal entity with defined assets, liabilities, and employees. Carving a branch out of a parent for sale requires a business transfer agreement and is considerably more complex than a share transfer of a subsidiary. We secured a smooth share transfer for a Wielkopolska manufacturing group in spring 2026 by ensuring the target subsidiary had been properly ring-fenced 18 months before the transaction – avoiding a last-minute restructuring that would have delayed closing by at least three months.

For groups that need to set up company Poland operations quickly but anticipate a future sale or external investment, the subsidiary is nearly always the right starting point. The branch is the right tool when speed, simplicity, and unified liability exposure are all acceptable.

What are the most common mistakes and how can groups avoid them?

The first mistake is treating the branch as a permanent solution when it was chosen for speed. Branches are easy to open and difficult to convert. There is no statutory conversion mechanism from branch to subsidiary in Polish commercial law. A group that wants to move from branch to subsidiary must effectively close the branch (with all attendant contractual novation, employee transfer, and permit reissuance) and incorporate a new entity. That process typically takes three to four months and carries transaction costs that the original PLN 350 branch filing never anticipated.

The second mistake is underestimating the transfer pricing burden on subsidiaries. Groups that set up a subsidiary Poland operation and then route significant intra-group services through it – IT support, management fees, IP licences – without a documented transfer pricing policy face KAS scrutiny. Under Polish tax legislation, the documentation threshold for related-party transactions is PLN 10 million for capital transactions and PLN 2 million for service transactions per year. Missing that threshold triggers not just penalties but also the reversal of tax benefits claimed on the transaction.

The third mistake is failing to conduct proper due diligence Poland on the branch's existing obligations before converting or closing it. A branch is not a separate legal person, so its contracts, leases, and employment agreements are all obligations of the parent. Closing a branch without systematically novating or terminating those obligations leaves the parent exposed to claims it may not even be aware of.

What to prepare before choosing between branch and subsidiary:

A map of the new operation's liability exposure – regulatory, employment, environmental
A three-year forecast of intra-group transactions to assess transfer pricing thresholds
Confirmation of whether the group qualifies or intends to qualify for a PGK tax consolidation
An exit scenario analysis: sale, merger, or wind-down within five years?
A review of the parent's articles of association for any restrictions on establishing subsidiaries or branches

The branch-versus-subsidiary decision is a law firm Warsaw practitioners handle at the front end of every Poland group expansion. Getting it right at the outset costs a fraction of what restructuring costs later.

For groups with cross-border dimensions, the analysis extends further. If your group structure involves Romanian entities, the structural considerations are explored in our guide on branch vs subsidiary in Poland – comparison for Romania groups. For Cyprus holding structures, see our parallel analysis at branch vs subsidiary in Poland – comparison for Cyprus groups. Groups in regulated sectors should also review DORA compliance – who must comply and by when, as the choice of entity affects which regulatory obligations attach at the Polish operating level.

Every Poland group expansion involves a specific combination of liability exposure, tax position, and exit horizon. That specific combination determines which structure forfeits the least optionality – and acting on the wrong assumption precludes a clean correction later.

To receive an expert assessment of your group's branch or subsidiary options in Poland, contact info@kordeckipartners.com.

Frequently asked questions

Q: Can a Polish sp. z o.o. have both a branch and a subsidiary at the same time?

A: Yes. Polish commercial legislation places no restriction on a company operating branches and owning subsidiaries simultaneously. Many mid-sized groups use branches for low-risk sales offices and subsidiaries for production or regulated activities. The two forms coexist under the same parent without conflict, though each requires its own KRS registration and its own set of compliance obligations.

Q: How long does it realistically take to close a branch versus liquidating a subsidiary?

A: Closing a branch – once all contracts and employment agreements are resolved – typically takes four to eight weeks from the board resolution to KRS deregistration. Liquidating a subsidiary under Polish commercial law requires a formal liquidation procedure with a minimum duration of three months from the liquidation announcement in the Court and Commercial Gazette. The branch closure is faster, but the subsidiary's limited liability shield during its operational life often justifies the longer wind-down.

Q: Is there a misconception that a branch is always cheaper to run than a subsidiary?

A: This is one of the most common misconceptions we encounter. The branch's lower setup cost is real, but ongoing costs often equalise. A branch requires the parent to consolidate its accounting, which can increase audit complexity and cost. A subsidiary under the S24 standard structure has predictable, bounded compliance costs. For groups with annual revenues above PLN 5 million at the new operation, the accounting and tax advisory cost difference between branch and subsidiary is typically under PLN 20,000 per year – far less than the liability exposure differential.

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, M&A, and group reorganisations in Poland. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.