Treasury Today Country Profiles in association with Citi

Doing business in Poland

Located at the heart of Europe, Poland is the largest of the recent entrants to the European Union. The country also has one of the fastest growing economies in the region: GDP grew by 6.7% in 2007 (above the global average) and 4.7% in 2008. Although recent European Commission estimates suggest that Poland’s economy will see a contraction of 1.4% in 2009, the Polish government has refuted these claims and believes that the country will continue its growth trend, despite the economic turmoil.

Map of Poland

Key facts

Geography and society
38.5 million
Population growth rate:
Time zone:
Land boundaries:
Belarus, Czech Republic, Germany, Lithuania, Kaliningrad Oblast (Russian enclave), Slovakia, Ukraine
Polish zloty (PLN)
GDP per capita:
FX regime:
free float
Member of:
Fiscal year:
Calendar (or 12 month period of choice)
History and politics
Government type:
Bicameral parliamentary republic
Lech Kaczynski
Prime Minister:
Donald Tusk
Ruling party:
Civic Platform (Platforma Obywatelska, PO) – conservative liberalism
Country credit rating
  • A-
Trading partners
Top import sources:
Germany, Russian, Federation, Italy, China, France
Top export destinations:
Germany, Italy, France, UK, Czech Republic

A seasoned economy

Negotiations to join the EU began when Poland became the first of the central European countries to overthrow communist rule in 1989. In September of that year, a new Solidarity trade union-led government came to power. The new government then set about transforming Poland’s centrally planned economy into a free market economy via the Balcerowicz Plan, which was introduced in 1990.

Under the Plan, the country’s economy was quickly turned around as state-controlled prices were lifted, subsidies to industry were largely retracted and the Polish markets were opened up to international competition. The reform journey was not easy, however, as the state had kept many prices artificially low, and prices of goods and services reportedly rose by as much as 600%.

By the mid 1990s, the Polish economy was one of the most rapidly developing economies in Europe. This growth was backed up by new reforms introduced in 2002, which were designed to complete the country’s economic transformation.

Although Poland was criticised at the time for being so heavy-handed in its reform measures, these have proven to be invaluable in the current climate. The tight monetary regulations mitigated an asset bubble similar to those seen in other European economies in recent months.

The Polish zloty has been freely floating since 12th April 2000. In September 2008, the Polish government indicated that it is working towards a euro adoption date of 1st January 2012. It is envisaged that the adoption of the euro will make Poland even more attractive to inward investors, though the country’s EU membership, competitive advantages for businesses and good geographical links to the East are already appealing to outside investors.

Foreign direct investment into the country, which reached €10.7 billion between January and October 2008, has been helped by the investment incentives offered by the Polish government in the form of state aid, tax exemptions and financial grants. Poland has also established a number of Special Economic Zones, which offer preferential business conditions, including grants for the creation of new jobs and exemption from real estate tax.

Recently, the Polish economy has been in the headlines as the country secured a $20.6 billion loan from the IMF. The government has fought off speculation that the funds are to aid a struggling economy by issuing statements saying that the funds are purely precautionary. As the country has a history of sound economic policies and experience of battling previous crises, the Polish economy looks well positioned to withstand the turmoil.

Doing business in Poland means adhering to simple principles and regulations, as would be expected in any developed economy. Help with understanding these requirements is available from the Polish Information and Foreign Investment Agency.

  • As Poland’s independent central bank, the National Bank of Poland is responsible for the stability of the country’s banking sector and currency, the development of monetary policy and payment systems and the management of official reserves. Central bank reporting requirements apply to transactions between residents and non-residents, with details of the reason for payment required for transactions in excess of €12,500. When a resident opens an account abroad, this must be reported to the central bank. If the account abroad is held in foreign currency, the account holder must provide the central bank with quarterly balance reports.

  • As of 1st January 2008, supervision of the Polish banking sector has been conducted by the Polish Financial Supervision Authority (PFSA). Prior to this, supervision was the responsibility of the Commission for Banking Supervision, though the Commission’s scope was relatively limited and less intent on the evolution of the Polish financial markets.

  • Polish GAAP do not differ widely from IFRS and companies listed on the Warsaw Stock Exchange must ensure that their accounts adhere to IFRS.

  • Foreign exchange controls are generally not imposed for transactions within the EU, EEC or OECD. However, certain transactions with other jurisdictions may require authorisation from the Polish Securities and Exchange Commission. In addition, any transactions totalling more than €10,000 must be transacted through a bank account.

  • There are two main Acts governing business activities in Poland: the Economic Freedom Act of 2nd July 2004 and the Commercial Partnerships and Companies Act of 15th September 2000. According to the Economic Freedom Act, foreigners from the EU/EEA may establish and conduct business in Poland under the same conditions as local enterprises.

Taxation framework

Polish Corporate Income Tax (CIT) Law states that a company is deemed to be resident in the country if its seat or place of management is located in Poland.

  • Resident companies pay CIT at a rate of 19% (for the 2009 tax year) on all earnings, irrespective of their source. Non-resident companies are only charged CIT on the income earned in Poland. Companies must file an estimated tax return to the Polish authorities by 31st March and then pay the difference once the final return has been submitted.

  • Capital gains are taxed as corporate income at a rate of 19%. Any losses may be carried forward for a maximum of five years, although the maximum deduction allowable in any given year is 50%.

  • Dividends received by a Polish company from another company within Poland or the EU/EEA are not subject to tax, subject to certain conditions. However, dividends paid by a resident Polish company to a non-resident company are subject to a 19% tax, unless a tax treaty or the EC parent-subsidiary directive applies.

  • The withholding tax rate levied on interest and royalties paid to a non-resident is 20% unless a tax treaty or the EC interest and royalties directive applies. Under the directive, Poland can apply a 10% withholding tax until 30th June 2009 and a 5% withholding tax until 30th June 2013. After that date, the full exemption will apply.

  • VAT in Poland is levied at a rate of 22%; however, reduced rates of 7% and 3% apply to certain goods and services. If a business has an annual turnover of less than €10,000, VAT registration is not required.

  • Thin capitalisation rules apply in Poland, using a debt-to-equity ratio of 3:1, to interest on loans and debt securities as well as irregular deposits and bank accounts. However, if the Polish bank debt is guaranteed by a parent company, the thin capitalisation rules do not apply.

  • The arm’s length transfer pricing principle must be applied to transactions between a related Polish entity and a foreign taxpayer where one company participates in the control of another, or a third party controls both.

  • Inter-company loans are subject to stamp duty at a rate of 0.5%. This levy is also referred to as the Tax on Civil Law Transactions. However, as of 1st January 2009, several exemptions to this levy have been introduced, including loans granted to companies by their shareholders.

Treasury activities

Local banking sector

Poland has the largest banking industry in Central Europe and the majority of the sector is foreign-owned. The country’s banking sector has grown in terms of capabilities, with corporate banking becoming of increasing importance. With this growth, the level of regulation has also become more sophisticated.

Although growth in the Polish banking sector is expected to slow as a result of the financial crisis, analysts predict that the sector will end 2009 in positive figures, which is an illustration of the country’s resilience.

Chart 1: Banks operating in Poland
Chart 1: Banks operating in Poland

A variety of payment instruments are still in everyday use in Poland. These include:

  • Cash.

    Particularly popular for conducting retail transactions, cash continues to play an important role in the Polish payments landscape.

  • Credit transfers.

    The most widely used non-cash payment method in Poland, credit transfers are popular for business-to-business transactions and for high-volume and high-value payments. Although electronic facilities are in place for credit transfers, many are still carried out according to a manual, paper-based process.

  • Direct debits.

    Poland’s central bank introduced the direct debit system in 1997 and usage has increased significantly since its introduction. However, the percentage of payments processed by direct debit still remains small.

  • Debit/credit cards.

    Plastic cards are becoming increasingly popular in Poland and between 1998 and 2008, the number of cards in circulation rose from 3.9m to in excess of 30m.

  • Cheques.

    Rarely used in Poland due to former communist practices, cheques are of little importance in the Polish payments system. Cashiers’ cheques are, however, widely used to withdraw cash.

Case study

A longstanding relationship in Poland


Netia is a leading independent fixed-line telephony and broadband internet operator in Poland. The company provides services via its state-of-the-art, fibre-optic backbone network which covers major Polish cities (over 5,000km) as well as on the basis of local access networks. Citi has supplied Netia with a variety of different cash management services in Poland for over 10 years.

Netia provides a wide range of fixed-line telecommunications services, including voice, data transmission, internet access and wholesale network services. On 29th June 2008, Netia acquired Tele2 Polska. This acquisition was a significant move in realising Netia’s mass market strategy. Netia’s broadband initiatives have resulted in a total of 441,000 customers at the end of March 2009 and the company aims to have more than 525,000 broadband customers by the end of 2009.

With such rapid growth in subscribers, the company needs to have effective cash management solutions in place. Citi helps Netia to manage its cash more efficiently through payments and collection services such as Direct Debit, Speed Collect and Prepaid Services. Malgorzata Babik, Public Relations Director, explains, “Citi provides current account management services for Netia in Poland. Without the services provided to us, Netia simply wouldn’t be able to manage the volume of current receivables from subscribers. Thanks to Citi, Netia is able to effectively manage payments from subscribers and achieve visibility over the company’s bank accounts, which is crucial. Citi is a core banking partner for those corporate treasurers looking to find ways to increase their operational efficiency in the country and region.”

Clearing and settlement

There are three main inter-bank clearing systems in Poland:

System Clearing type Transaction types Value dates
SORBNET RTGS High value, above PLN 1m Same day, immediate finality
ELIXIR Multilateral net settlement All payments below PLN 1m Same day, end-of-day finality (depending on payment format)
TARGET 2 RTGS All payments in EUR Same day, immediate finality

The business-to-business direct debit system, known as GOBI and used for clearing values exceeding €10,000, has largely failed to take off as the bank support network for it is limited.

With the introduction of the euro to Poland, SEPA will, of course, impact heavily on the payments landscape, and it is expected that this will also encourage the wider adoption of electronic banking systems.

Cash management

The most commonly used cash management technique in Poland is zero balancing. Domestic cash concentration is widely used, but the legal framework surrounding cash concentration is vague, making set-up difficult from a compliance perspective. It is thought that the government is reluctant to define any legal cash pooling structure as doing so may reduce the revenue gained from charging stamp duty on inter-company lending. However, banks have worked with the Polish tax authorities to create solutions which are deemed satisfactory.

While cross-border sweeping is permitted, it can also be difficult to implement due to stamp duty levies between different legal entities and possible exchange controls, depending on the jurisdiction. Central bank reporting requirements must also be met.

Notional pooling can also be difficult to arrange, as again there is no strict legal definition of this term in Polish legislation. Moreover, under local regulations banks are not allowed to offset debit and credit balances, meaning that cash pooling structures

are often different to those seen elsewhere in Europe. Some banks offer so-called interest enhancement products in Poland to help to overcome these hurdles through group netting of interest. Interest on debit balances is offset against interest on credit balances.

In Poland, interest can be paid on all accounts held by both residents and non-residents, including current accounts. The most popular short-term investment vehicle in use in Poland is bank term deposits. These can be offered in local and major foreign currency and generally have a maturity of one, three, six or 12 months, though some may extend for two to three years.

Aside from bank deposits, the other short-term investment instruments available in the Polish market include:

  • Commercial paper.

    Usually issued by large corporates to domestic investors in Poland as a means of raising funds cheaply. Maturities vary between one month and a year.

  • Certificates of deposit.

    These short-term promissory notes, issued by commercial banks with a maturity ranging from one month to a year, cannot be resold under Polish regulations.

  • Treasury bills.

    Issued by the Polish Ministry of Finance, with maturities usually of three, six and 12 months and a minimum value of PLN 100,000. These are sold at auctions held by the NBP but can also be bought on the secondary market.

  • Repurchase agreements.

    Although rarely used, repos are offered on treasury bills by certain banks operating in Poland.

  • NBP.

    The National Bank of Poland issues its own bills, which have a maturity of one week and are usually issued to banks as a means of managing liquidity.

  • Money market funds.

    Although widely available in PLN, interest in domestic money market funds in Poland has dropped over the past 12 months as corporate bonds and deposits have been giving more favourable returns. The market for foreign funds in Poland, although expanding, is still in its infancy.

Key websites

Ministry of Finance:
Ministry of the Treasury:
Ministry of Economy:
Warsaw Stock Exchange:
Polish Financial Supervision Authority:
National Clearing House:
National Bank of Poland:
Polish Bank Association:

Citi’s capabilities in Poland

Citi has had a presence in Poland since 1991, first through Citibank (Poland) SA and then through Citi Handlowy following the merger in 2001 with Bank Handlowy w Warszawie SA (the oldest commercial bank on the Polish market, established in 1870). Today, Citi is one of the largest financial institutions in Poland, employing over 5,500 people. Offering an extensive range of corporate, investment and consumer banking products and services, Citi serves in excess of 20,000 corporate customers and 1m retail customers through cutting edge distribution channels and a network of over 250 branches throughout Poland.

Over the years, Citi has gained vast experience in providing cash management, trade financing and trade transaction processing for companies, and financing their day-to-day business as well as investments. In fact, Citi Handlowy was the first bank on the Polish market to deliver a one-way, multi-entity, zero-balancing structure to its clients. This is a truly novel and advanced solution tailored for effective management of capital group liquidity. The benefits of using this solution are of particular significance in the current economic climate as it enables the effective use of company cash without the risk of liquidity loss.

In 2005, Citi opened a Centre of Excellence in Poland to provide high quality operations and technology services to the bank’s entities around the globe. Under the initiative, two Citi public limited companies – Citibank International Plc and Citibank Europe Plc – also established their branches in Poland. The branches operate in close collaboration with Citi Handlowy and provide high quality products to customers.

Citi Handlowy’s solutions, global experience and local expertise can significantly reduce operating costs and increase financial efficiency for small, medium and large companies alike. Online banking capabilities and the extensive network of Citi branches all over Poland ensure quick and convenient access to all of the world-class services offered.

Contact details:
Małgorzata Wojciechowska
Cash Management Head
+48 (22) 657-72-98
Sebastian Kucharek
Head of Product Development Department
+48 (22) 692-92-49