How to Run International Payroll for Employees in Poland (2024)

If you’re running payroll for remote employees in Poland for the first time, getting it right means you can hit the ground running with your employees in that country. Miss a step, however, and you could rack up thousands of dollars in penalties—or even risk legal action from the Polish National Revenue Administration. 

Here’s a step-by-step guide to running payroll in Poland, with everything you need to get it right every time. 

Step #1: Decide whether or not to create your own entity in Poland or use an employer of record (EOR)

If you want to hire and pay employees in Poland, you first need to establish a business entity in that country. One way to do this is to use an employer of record (EOR). The other is to create your own legal entity in Poland. 

EORs are third-party companies that allow you to hire and pay employees through their own entities. They’re responsible for calculating and withholding the appropriate taxes and for paying your taxes to Poland’s National Revenue Administration (KAS).

When, why, and how do companies use an EOR?

When companies expand their operations to Poland—and around the world—they typically use EORs like Deel, Papaya Global, and Rippling to run payroll, issue benefits, and navigate international compliance issues.

This is because it can take a long time to set up your own legal entity and payroll system. It’s a significant administrative load that smaller companies seldom have the time or resources to carry.

Why do companies create their own entity?

If you create your own entity, that replaces the EOR as the legal entity hiring employees and running payroll. Companies typically create their own entities once the costs of an EOR outweigh the costs of creating their own entities.

How do I set up my own entity in Poland?

Before you start, you should check whether you need to register a company in Poland at all. If your business is based in another European Union (EU) country and you only provide temporary, occasional services in Poland, you might only need to obtain a permit, concession or entry in a register, depending on the type of commercial activities your business engages in. The Polish Ministry of Economic Development and Technology maintains an online list of these activities, but it’s only available in Polish, so if you’re not fluent, get someone to translate applicable parts of the document for you. 

Once you’ve established that you need to open an entity in Poland after all, you need to check your entitlement to trade in the country. You need to be a citizen of Poland or of another EU or European Economic Area (EEA) member state or be a relative of someone who is a citizen. Alternatively, you need to have a permanent or temporary residence permit, refugee status, subsidiary protection, temporary protection in Poland, a valid Polish Card or a valid Polish Business Harbour Visa.  

If you don’t meet any of these requirements, you can opt for simply opening a Polish branch of your existing company, which involves considerably less paperwork than starting a completely new entity. Alternatively, you can enter a partnership with someone who qualifies, or run a company.

Now you need to decide what type of company you want to open. If you’re going to have employees, you can open a registered partnership, a limited joint-stock partnership, a joint-stock company or a limited liability company (LLC). The latter is the most common type of company in Poland. 

If you decide to open an LLC and have the minimum capital of PLN 5,000, you can set it up in the traditional way by visiting a notary who will prepare articles of Association (AoA). Alternatively, you can set it up electronically by visiting the Portal of Court Registers website, which is in Polish only. Here you register an account, set up a profile, provide the required information and have your application electronically signed. Then you pay the court inscription fees and estimated tax. 

Now you need to register your company in the National Court Register as well as in the Court and Commercial Monitor. As part of this, you need to provide the appropriate Polish Classification of Activities (PKD) code, which you can find here. You will then be issued with a tax identification number (NIP) and a statistical number of companies number (REGON).  

You also need to submit an NIP-8 form to the tax office, within 21 days of entering your company in the National Court Register and within 7 days of starting to do business, and submit an application to the Central Register of Real Beneficiaries within 7 days from the date of incorporation.  

Once you’ve registered your LLC, you’re automatically reported to the Polish Social Insurance Institution (ZUS) as a payer of insurance contributions for your employees and yourself. However, you also need to register yourself and all your employees as insured persons within 7 days after registering your company. Depending on the nature of your business, you may also need to register as a VAT payer. You do this at the tax office. 

You don’t need to set up a local bank account for payroll but you’ll find it more convenient to do so.

Step #2: Pick a global payroll software solution

First, it’s vital to understand the two kinds of international payroll solutions: global payroll processors and global payroll aggregators. You can learn about both in our guide.

• Global payroll processors actually process your payroll, transmit funds, and calculate and file taxes in every country through their own software. Put simply, global payroll processors allow you to pay your international employees just as easily as your local employees: together in a single pay run.
• Global payroll aggregators aggregate local payroll providers in every country and manually transmit your payroll files to them.

See Rippling

Step #3: Determine your workers’ employment status

Before onboarding your new employees, and certainly before you run payroll, it’s crucial to understand who you’re paying in the eyes of Polish labor law: Are your workers employees or contractors?

It’s essential to classify them correctly to avoid big fines. Also, if they’re employees, there are payroll deductions you’re responsible for, including income tax, pension insurance, disability insurance, work accident insurance, and the employee capital plan (PPK).

Employment contracts in Poland can be for a fixed term, which would include a probation period of no longer than 3 months, or they can be for an indefinite period. It doesn’t matter what you call the contract; if the person works according to your instructions and under your control, at a place and time you specified, and you pay them a fixed remuneration, they’re considered employees under Polish labor law. Independent contractors aren’t representatives of your company, and you don’t control how they do the work you pay them for, so they don’t enjoy the same entitlements as employees.

Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.