Motto: Si fueris Romae, Romano vivito more When in Rome do as the Romans do this Roman proverb applies perfectly to the objective that we were guided by while creating this information leaflet. FAQ Bookkeeping and tax compliance Poland 2015
Doing business in a given country requires adherence to its specific internal legislation. Illogical and impractical as some internal regulations may seem, they should neither be disregarded nor completely ignored. Ignoring regulations may lead to unpleasant consequences and entail substantial costs, time, and, most of all, effort. As your advisors, we try to direct you away from such risks, therefore, we wish to acquaint you with the basic requirements concerning accounting and tax obligations, so that you can do what you do best developing your business; and we will do the rest.
1. Books of account in Poland, what are they exactly? What do the books of account comprise according to the Polish regulations? Books of account include the sets of bookkeeping entries, turnovers and balances, which form the following: the journal, the general ledger, subsidiary ledgers, statements of: turnovers and balances of the general ledger accounts and subsidiary ledger accounts and also the list of assets and liabilities (inventory). The Polish Accounting Act specifies the detailed conditions to be met for the books to be considered correct. 2. Are accounting books sufficient for tax purposes? Do I need to keep other records or registers apart from the above-mentioned, which would satisfy tax purposes? The accounting books are sufficient for the settlement of income tax, if revenues that are not considered tax revenues as well as expenses/costs that are not deductible for tax purposes, are kept in separate accounts or kept separate from other accounting records in a very clear and unambiguous way. Answers: In respect of the tax on goods and services one should maintain VAT registers, which include: the data necessary to determine the object of taxation and the tax base, the amount of output VAT, the amount of input VAT reducing the amount of output VAT, and the tax amount to be paid to the tax office or the refund from the tax office, as well as other data needed for the proper preparation of a tax return; In case of a sale to a natural person it may be necessary to receipt such an operation (sale) with the use of a cash register. 3. Is it sufficient to dump the books kept e.g. in SAP in English to Excel and translate the descriptions into Polish? The Polish Accounting Act imposes an obligation to keep the books of account in the Polish language. The obligation to keep the books in the Polish language does not refer, however, to the necessity to use the software in the Polish language version but to the contents introduced to the programme and in particular the following data: account names, descriptions of the types of transactions, posting orders etc., names of the business transactions, names of currencies. The accounting programme should provide for the possibility of generating reports in the Polish language, the said reports including information
being in compliance with the information content of the books of account, that include: the journal, the general ledger and subsidiary ledger account entries, statements of turnovers and balances of the general ledger and the subsidiary ledger account balances, inventory. There is no obligation to generate the other reports in the Polish language. The aforesaid means that the transfer (copying) of the contents of the books of account in a foreign language e.g. to Microsoft Office Excel file and the translation of the selected elements (such as headers or descriptions) into the Polish language is not sufficient in accordance with the Polish regulations. 4. What are the components of the financial statements in accordance with the Polish Accounting Act? The financial statements comprise the following: balance sheet, profit and loss account and notes (divided into the introduction to the financial statements and additional information and explanations). The entities, the financial statements of which are subject to the mandatory audit, shall draw up additionally, the funds flow (changes in equity) statement and the cash flow statement. The selected entities (including joint-stock companies and limited liability companies) append the report on the activities of the company to the annual financial statements. 5. Who should sign the financial statements drawn up in accordance with the Polish Accounting Act? The financial statements shall be signed by the person responsible for keeping the books of account and the manager of the entity. In the case that the entity is managed by a collective body, for instance the management board in a joint-stock company or a limited liability company, the financial statements should be signed by all members of that body. 6. Who is obligated to audit the financial statements and when? The mandatory audit is required with regard to the annual consolidated financial statements of capital groups and annual (unit) financial statements of, among other entities, the following: 1. banks, insurance companies, 2. entities the operations of which are based on the regulations on public trading in securities, investment funds and pension funds, 3. joint-stock companies,
4. other entities, which in the preceding financial year met at least two of the following conditions: average annual number of employees was at least 50 people, total assets as at the end of the financial year amounted to at least EUR 2,500,000, net income from the sale of goods, products and financial transactions for the financial year amounted to at least EUR 5,000,000. The annual financial statements drawn up in accordance with IAS are also subject to auditing. The audit must be conducted in the period preceding the approval of the financial statements, which should be granted within 6 months of the balance sheet date 7. May I have two charts of accounts, e.g. in accordance with the Polish standards and in accordance with the group standards (US GAAP, IAS, other)? The Polish regulations do not prohibit the keeping of two charts of accounts (for various purposes) simultaneously. It is significant that the list of accounts used for the statutory purposes comply with the requirements of the Polish Accounting Act. 8. What is the chart of accounts used for statutory purposes? The chart of accounts used for the statutory purposes is the list of the bookkeeping accounts adjusted to the kind of business activities of the entity, the said bookkeeping accounts being the sets enabling the recording and arrangement of all the business transactions and constituting the component of the financial accounting system. The chart of accounts comprises the principal accounts - the control accounts, which specify the principal transaction groups and analytical accounts, which enable detailing the entries on the control accounts. 9. Can I use the group chart of accounts in Poland? The standard chart of accounts for other entities than banks and budgetary units is not applicable in Poland. The standard chart of accounts for the said entities, being promoted in professional publications, with the adopted balance grouping (0 for fixed assets, 1 for cash and other short-term financial assets, 2 for settlements, 3 for materials and goods, 4 and 5 for costs etc.) is a suggestion only and it is not mandatory. This means that the other entities may use the chart of accounts of the dominant company (or the chart of accounts of the group). However, the contents of the individual balances on the accounts in the said chart of accounts must comply with the Accounting Act, and the adopted chart of accounts must enable the preparation of the statements stipulated in the Accounting Act, statistical reports and tax returns.
10. Who has to keep accounts according to Polish regulations when doing business in Poland? Limited liability companies; Joint stock companies; Limited partnerships; Limited joint-stock partnerships; Branch offices of foreign companies; Representative offices of foreign companies; Any other entities, if their previous year s income exceeded EUR 1.2 mln (value in zlotys in 2014 amounts to PLN 5,059.560).* *The amount in EUR should be converted into PLN based on the average exchange rate as of 30 September of the year preceding the financial year, as stated by the National Bank of Poland. 11. In which language do I have to keep the accounts when doing in Poland? 12. May I keep the accounts in a language other than Polish? When doing business in Poland, you should keep your accounts in Polish. Yes, you may keep the accounts in a foreign language as long as the accounting software you use is bilingual, and Polish is one of its languages. You are not allowed to keep the accounts in a foreign language and foreign currency only. All transaction descriptions on invoices, in agreements etc., as well as account names, statements and registers generated by accounting software must be available in Polish, whenever needed. They must also include Polish currency, so that it is possible to read them in PLN (foreign documents must include both the currency indicated by the language of the document, and the Polish currency). 13. In which currency do I have to keep the accounts when doing business in Poland? 14. May I keep the accounts in a currency different from PLN? When doing business in Poland, you must keep the accounts in the Polish currency. For bookkeeping and tax purposes in Poland you are not allowed to keep the accounts in a foreign currency. It is an obligation that the accounting software you use enables you to convert each invoice into PLN, based on exchange rates imposed by Polish legislation. 15. Where do I have to keep the accounts? The accounts may be kept in a company s registered office in Poland, in Poland outside the registered office, or in a territory of any other EU member state. 16. May I keep the books outside Poland? Yes, you may. It is possible to keep the books in any EU member state.
17. Are there any additional problems to deal with when keeping the accounts outside Poland? In such case, you are obliged to inform the Polish Tax Office about the location of keeping and storing the accounts. Each time you receive an official request from the tax office, you are obliged to present the accounts and original source documents (e.g. during a VAT-related tax inspection, audit activities, and cross-audit inspections). You are obliged to adhere to Polish bookkeeping regulations and Polish tax rules. 18. What if I do not fulfil the abovementioned requirements? If you do not keep the accounts, do not prepare financial statements or do it with no respect to the Polish rules and regulations, you may be punished by a fine, or imprisonment for no more than 2 years, or by both. Other painful consequences may also results from ignoring the tax obligations. 19. Who in the company takes the responsibility for adhering to Polish regulations? 20. What does the responsibility mainly refer to? The Management Board of the entity (the President/ Members of the Board, business partner/partners). The responsibility, among others, refers to: fulfilling the requirement to keep the accounts according to the Polish Accounting Act; adopting and updating an accounting policy; preparing financial statements and management activity reports according to the Polish legislation; submitting financial statements to respective institutions within the right deadlines; supervising the company s accounting if it is an external entity that keeps all the accounts. 21. How to obtain information on how to keep the accounts in Poland? 22. When do I have to start keeping the accounts in Poland? Bookkeeping in Poland is regulated by the Accounting Act. On the basis of the Act, each company prepares a document referred to as Accounting Policy, which includes all the accounting principles adopted by the company that comply with the Accounting Act, as well as with the rules and regulations of related parties. Within fifteen days from: the first day of your business activity, i.e. the first event with financial or economic impact e.g. payment of the share capital to the bank account based on an entity s deed of establishment; the first day of a financial year; the day of changing the form of business activity;
the day of entering the merger or demerger resulting in the formation of a new company (companies) in the National Court Register; the day of opening the liquidation process or declaring a company s bankruptcy. 23. What elements should an invoice include? A sales invoice should include: an identification invoice number which is unique and follows on from the number of the previous invoice; the seller's name or trading name, address, and the seller's VAT registration number; the customer's name or trading name, address, and the customer s VAT registration number; the date the goods or service were provided (in the case of continuous sales, a tax payer specifies only the month and year of sale on an invoice); a description sufficient to identify the goods or services supplied to the customer; the quantity of goods or the extent of the services; the unit price or rate, excluding VAT; the rate of any cash discount if not included in the net unit price; the tax base (net); the rate of VAT that applies to what's being sold; the total amount of VAT charged; the total amount owed. The list of items mentioned above have to be extended about additional ones in case of specific types of transactions, like reverse charge, self-billing etc. 24. What is the time limit for issuing invoices? In accordance with a general rule, invoices are issued not later than on the fifteenth day of the month following the month of supply of goods or provision of services. 25. Does the total or partial payment of the amount owed made before the supply of goods or services require the issuance of a VAT invoice? 26. Can I issue an invoice in EUR (or any other currencies)? Yes, it does. Yes. It is possible to issue invoices in EUR (or any other currencies) instead of PLN. However the amount o VAT has to be shown in PLN and the applicable exchange rate is determined only by the Polish VAT Act regulations. 27. What are the basic obligations imposed on the entities conducting their business activity in Poland? Obligations referring to the correct registration of an entity (in the National Court Register);
Obligations referring to the obtainment of identification numbers (e.g. in the tax office); Obligation of keeping the accounts of the entity; Tax obligations (referring, among others, to calculating and paying taxes and contributions, submitting declarations, paying local fees, and being subject to tax inspections); Obligation to use cash registers (imposed on people selling goods or services to legal persons who are not conducting business activity); Obligations referring to annual tax settlements; Employment related obligations; Obligations referring to the creation of a Company s Social Benefits Fund and National Disabled Persons Rehabilitation Fund; Obligations regarding retention of documents; Statistical obligations (e.g. Central Statistical Office, the National Bank of Poland (e.g. GUS, NBP, Intrastat, VAT-EU). 28. What is the legal basis that governs functioning of business entities in Poland? Obligations in respect of functioning of business entities in Poland are regulated by: the Accounting Act; the Tax Ordinance Act; the Corporate Income Tax Act the Goods and Services Tax Act; the Labour Code; the Personal Income Tax Act; the Social Insurance System Act; other specific acts, ordinances and secondary legislation. 29. Is it possible to submit electronic tax return? 30. Who shall sign a tax return? Yes, it is. It is the members of the Management Board of a company registered in Poland who, as a taxpayer, sign the tax return. It is also possible to grant power of attorney to an employee of the company or to an external accountant. 31. What are the changes in a business entity that require reporting to the Tax Office? The changes, among others, are: moving to a different registered office or changing the location of a business entity (any address); changing/opening/closing any bank account; moving the accounting books to a different place of retention.
32. What is the time limit for reporting the abovementioned changes? You are obliged to report any of such changes within seven days from the date of their occurrence. You are not allowed to do it electronically. 33. Is it obligatory to have a bank account in Poland? 34. I report to a Group according to a group operating policies (e.g. US GAAP); what do I have to do? Yes, it is. You still have to keep the accounts according to the Polish regulations. For the reporting purposes you should: create a model of a report (e.g. in Excel), which will enable you to transfer the data from the accounting software of the company in Poland to the right grouping based on the Group policy or; make relevant overlays of the Group s software available to a Polish accountant, or accounting company, for the purpose of converting the data from the software used in Poland, together with the description of the Group s accounting rules or; implement your own financial accounting software for the whole Group, and make it possible to adjust the part concerning the company in Poland, according to the local regulations, as well as; provide an accountant, or accounting company, with the Group s chart of accounts it will help to set a bilingual chart of accounts and make ad-hoc data inspections easier. 35. Is it enough to have scanned versions of documents in order to enter them? Theoretically yes. However, each time you receive an official request from the tax office, you are obliged to present original source documents. What is more, a company that provides an accountant (or an accounting company) only with the scanned documents, takes full responsibility for keeping the original versions, and assures that the scans are true copies of the documents. The company also undertakes to present the originals immediately after the official request from the tax authorities has been received. In such a situation, it is a client who takes responsibility for signing tax returns. 36. Is it possible to calculate the income tax once a year? It is a general rule that the income tax is calculated on a monthly basis. Similarly, advances for corporate income tax are also to be paid monthly. On certain specified conditions, it is possible to calculate the tax quarterly and pay the fixed amount of advances within a year.
37. What about VAT? Value added tax is declared monthly, or quarterly. 38. Are the same people keeping the accounts and calculating VAT and CIT in Polish accounting offices? Yes, they are both keeping the accounts and calculating the taxes. The price is usually calculated as a part of ongoing book-keeping services. Contact our expert: Bartosz Miłaszewski Managing Partner E: bartosz.milaszewski@rsmi.pl Kontaktieren Sie unseren Experten: Przemysław Powierza Tax Partner E: przemyslaw.powierza@rsmi.pl Mettiti in contatto con il nostro esperto: Piotr Nowatkowski International Department Supervisor E: piotr.nowatkowski@rsmi.pl Contactez notre expert: Anna Lehmann International Department Director E: anna.lehmann@rsmi.pl
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