Establishing an R&D Office in Poland: Subsidiary or Branch?
- The Subsidiary (sp. z o.o. - LLC): Your Strategic Base
- The Branch: Simple Setup, Major Limitations
- The Verdict
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Ready to scale your R&D in the EU? Poland is the premier choice for setting up tech offices, driven by its talent pool and unbeatable tax incentives.
International companies typically choose one of two models: the Subsidiary (LLC) or the Branch.
The Subsidiary (sp. z o.o. - LLC): Your Strategic Base
A subsidiary is an independent Polish legal entity, usually 100% owned by the foreign parent company.
It can:
- Hire employees directly.
- Sign contracts, and hold assets in its own name.
- Limit the parent company’s liability.
- Crucially: Qualify for Poland's best incentives: up to 200% R&D deduction AND the powerful 5% IP Box tax rate on qualified IP income, including software development.
Incorporation is fast (around 2–3 weeks) and requires minimal share capital (€1,200).
A subsidiary is subject to corporate income tax (CIT) in Poland — 19% standard rate, or 9% for small taxpayers — but can benefit from generous R&D relief (up to 200% deduction) and IP Box (5% tax) on qualified IP income, including software.
The Branch: Simple Setup, Major Limitations
A branch is not a separate legal entity; think of it as a temporary extension of your foreign company.
It is limited because it:
- Can only perform activities identical to those of the parent company.
- Must keep separate accounting for Polish operations.
- Has its profits taxed in Poland as part of the parent’s income.
While initially simpler to register, Branches are far less flexible for long-term hiring, investment, and complex contracting. They are typically used for temporary projects or representative functions, while subsidiaries are chosen for long-term operations and IP development.
The Verdict
In nearly all R&D investment cases, the Subsidiary (sp. z o.o. - LLC) is the structure of choice due to its legal independence, simplicity in banking, and direct access to major Polish innovation tax reliefs.
The decision between an LLC and a Branch is foundational and will determine your tax base for years to come.
Contact REVERA Polska today for a consultation. We will analyze your R&D goals and help you design the optimal structure that guarantees your maximum tax advantage in Poland.
Author: Aleksander Skirpan
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