Reporting obligations for companies with foreign equity participation

Lidia KRYSTMAN
Accounting Supervisor at RSM Poland

An entrepreneur is bound to face many situations that will require contacting Polish authorities, not only in the process of establishing a company and registering it, but also when fulfilling reporting obligations. Today I would like to discuss these basic reporting obligations of business entities with foreign equity participation.

A foreign investor starting a company in Poland has a number of reporting obligations. To start with, every foreign entrepreneur should first and foremost make sure that all official documents issued abroad and used by them in Poland have an apostille. An apostille is a clause given to foreign official documents that allows them to be used in Polish offices and institutions without any need for additional legalisation.

Every entity that must observe the provisions of the Code of Commercial Companies is under obligation to register with the national registry of entities, i.e. the National Court Register.

The primary reporting obligation of companies registered in the National Court Register is to submit annual financial statements within the deadline compliant with the Accounting Act and the Articles of Association. This obligation is vested in the entity’s manager, who (apart from financial statements) must submit the following to the relevant court:

• audit report (if financial statements were audited),
• copy of a resolution or a decision by a competent body of the company approving the annual financial statements and defining the distribution of profit or loss,
• report on operations (if the Accounting Act provides for such an obligation).

Apart from entities that are obliged to have their financial statements audited by statutory auditors, there are entities that must perform an audit once they have reached certain thresholds. These are entities that must have their financial statements audited if they have met at least two out of three conditions listed below in the previous financial year for which the financial statements were prepared:

• average annual headcount in full-time equivalents of at least 50 persons,
• total assets of the balance sheet at the end of the financial year being the equivalent of at least EUR 2,500,000.00 in PLN,
• net revenues from the sale of goods and products and financial operations for the financial year being the equivalent of at least EUR 5,000,000.00 in PLN.

On 15 March 2018, an obligation was introduced to submit reports to the National Court Register only via ICT system, by way of sending scanned documents. Financial statements prepared since 1 October 2018 must be submitted in electronic format in a logical structure included in the Standard Audit File for Tax.

It means that companies whose management board members are non-Polish citizens have additional obligations, i.e. a requirement to obtain an electronic signature or a signature confirmed with an ePUAP trusted profile, and also to obtain an individual PESEL number that must be disclosed in the National Court Register, or to appoint a proxy acting in this respect.

An application to the NCR is filed with a qualified electronic signature or a trusted signature by at least one natural person whose PESEL number is disclosed in the Register, and who has been entered into the register as being entitled to represent the entity, either individually or jointly with other persons, or by a proxy whose PESEL number has been disclosed.

One of the possible paths of submitting the annual financial statements to the National Court Register is the e-krs system, where you set up an account from which the financial statements will be sent. The account can be opened by a person who has a qualified electronic signature or a signature confirmed with an ePUAP trusted profile.

One must also remember about reporting obligations towards the National Bank of Poland and the Central Statistical Office.

The very fact that a company is funded with foreign equity creates obligations to report to the National Bank of Poland and the Central Statistical Office. The key terms that must be known and are derived from the foreign exchange law are ‘resident’ and ‘non-resident’.

A resident is any natural person residing in a given country and a legal person with a registered office in a given country (in Poland, in this case). A non-resident is a natural person residing abroad and a legal person with a registered office outside the territory of Poland, who has the capacity to acquire rights and obligations on their own behalf. Non-residents are also branches, representative offices and enterprises established by residents and located abroad.

Definitions of types of entities obliged to submit reports along with the threshold values that impose the reporting obligation are set forth in the Act of 27 July 2002: Foreign Exchange Law. The reporting obligation applies to all residents performing foreign exchange transactions with non-residents.

The data that must be disclosed in the reports for the National Bank of Poland is obtained from the company’s books of accounts. All data is disclosed in PLN converted at the average exchange rate of the National Bank of Poland of the last day of the period for which the report is being prepared. The first calculation is necessary to determine whether the entity has reached the reporting thresholds, and to establish whether the entity shall submit quarterly or monthly reports. The most convenient form of reporting is in electronic format, with reports being filed via the portal of the National Bank of Poland.

If the company has foreign equity, it must report to the Central Statistical Office, as well. Every year, a company with foreign equity is obliged to submit at least two reports to the CSO:

• SP – Annual Enterprise Questionnaire ,
• KZ – Report for Entities with Foreign Equity.

There are a number of obligations and requirements; thus, it is easy to get lost. If these tasks are outsourced to an external specialised company, the entrepreneur may focus on the core business, with no need to dedicate their time to analyse and check whether the reporting and updating obligations are being fulfilled correctly.

The mission of RSM Poland is to support foreign entrepreneurs in tax, accounting and legal terms, so that they could operate on the Polish market with ease and confidence.