Different, often difficult, but not impossible

Nobody would describe Poland as a particularly easy place in which to start or run a business. Indeed, the World Bank’s Doing Business 2010 which ranks countries by ease of doing business from 1 (best) to 183 (worst) ranks Poland at 72 and Transparency International’s Corruption Perception Index 2009 which similarly ranks countries from 1 to 180 ranks Poland at 46. These rankings are disappointing for a modern EU member state but, as with most statistics, they fail to give the whole picture.

Certainly, as I wrote in an earlier article (Justice Denied is Justice Delayed) both the Polish company registration system and the courts system, to name but two, leave much to be desired especially in terns of bureaucracy, cost and speed but all is not gloom and doom. There is now in Poland a climate of stability and opportunity unprecedented in recent history. It is possible to establish and run a successful business in Poland provided some simple rules are followed.

First, do your homework and seek appropriate professional help. This sounds obvious (it is) but you would be surprised how many folk seem to forget to do so. After all, Poland has a different legal system and speaks a different language from at home so you will need some help. Of course, you also need to be sensible about where you look for help. You would not, I imagine, set up business in a neighbouring region at home based on the advice of a “consultant” with no definable skill set but with alleged access to local contacts who are able to make the investment process go more smoothly, so why fall for such characters in Poland? Whosever interests they have at heart it is unlikely to be yours. Please remember that despite the differences in the system and the difficulties with bureaucracy it is simply not the case that you have to rely on middlemen or bend to the rules to achieve your objectives in Poland. Duly completed applications for everything from new companies to planning permission and passports will happily work their way through the system without any financial lubrication or helping hands.

Second, make sure that everything is writing. Polish law does admit the possibility of oral agreements but it is always better in this regard to err on the side of caution since thee is no better evidence of an agreement than an agreement signed by both each party. If in doubt, write it out – why make it more difficult for yourself than it need be? This should include the obvious such as contracts of employment, contracts with customers and suppliers, and any shareholder loans from the parent to the subsidiary – do not assume a simple balancing of inter company accounts at the year end will suffice, rental agreements for office space and so forth.

Third, if you do establish a business in Poland, ensure that you employ the services of a suitably qualified book keeper to make the monthly tax and VAT returns – indeed it is practically impossible to register for tax without indicating the name of the book keeper in the application. However tiresome this process may appear now, not having the paperwork in order will make the position much worse later on and prevention is always better than cure, especially when dealing with the Polish tax authorities.

Fourth, the people. Remembering that all generalisations are dangerous – including this one – most Poles, in common with folk elsewhere, are honest and helpful although there is a different collective mentality. Employees tend to tell you what they think you’d like to hear and are slow to accept responsibility for mistakes which mistakes are sought to be are avoided by trying to avoid or delay taking any decision at all (less of a problem with the younger generation). When it suits, obtuseness is elevated to an art form and kindness (really what you and I would consider normal behaviour) may be considered to be an indication of weakness to be taken advantage of accordingly. When it comes to businessmen, there is a different mindset, and dictum meum pactum is, alas, not the generally prevailing philosophy. Make sure you are absolutely sure what has been agreed – especially if money is involved – and document that agreement since no quarter will be shown if there is an opportunity to take advantage and there is no scruple in denying what was said or promised if there is no evidence to support your position.

I will expand on some of these themes in future articles but if you keep your wits about you and seek appropriate professional help there is no reason why you shouldn’t overcome these differences and difficulties and establish a successful business in Poland.

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