Accounting of costs when a Polish company pays foreign providers

First of all, I'm not in Poland and I don't have an accountant, so that's why I'm asking here. The question is about polish Sp.z o.o.

The company is dealing with internet marketing, it has costs and pays to foreign providers for domain names, adwords, hosting services. Providers are mainly from US. Payment is made via Card/Paypal. The questions are:

1) How these costs can be accounted? Most of providers don't provide invoices and if provided such, they are without signatures and in pdf. Will bank/paypal receipts work for accounting those costs?

2) Do we pay VAT on top of that? So, I guess, I pay $100 for hosting to the US comapny and then $22 as VAT? Looks like a huge ripoff...

Anyone?

How can the sp. z o.o. not have an accountant? Who prepares the monthly tax and VAT returns?

Our accountant won't accept anything but an invoice with the company name, address and NIP number on it. It can be a PDF though. And yes, for invoices from other countries where there's a VAT agreement, we had to pay the 7% or 22% VAT on the service to the Polish VAT man.

We don't have an Sp. z o.o. We are learning about polish business conditions right now.

If these companies are supplying services to an EU customer they should be VAT registered in at least one EU country and should be able to provide a VAT invoice to you.

"When a non-EU operator supplies electronic services to an EU customer, the place of taxation, according to the Directive, is within the EU and therefore those services are subject to VAT. For instance, a US e-commerce software company electronically delivering services to an Italian individual or business is subject to VAT because the place of taxation is deemed to be within the EU. For this purpose, the foreign supplier must register with a tax authority in one EU Member state to collect and remit the VAT every three months.Yet, an important distinction exists when non-EU operator supplies electronic services to an EU company (not a final customer), this transaction may not be subject to VAT under the "reverse charge mechanism." Since the EU company will collect VAT when making the final product sale, the non-EU operator sale is exempted from VAT payment."

ibls.com/internet_law_news_portal_view.aspx?id=2121&s=latestnews

Can I ask why you want to start a Polish Sp.z o.o?

delphiandomine
because I'm going to move to Poland. Why not?

Aha, I thought you might be doing it for tax reasons :)

They're not very common here for small businesses - the accounting standards are much stricter and involve considerable headaches and hassle. I'd recommend simply starting as a sole trader to begin with - unless there's significant financial risk to you, it really is a no brainer option compared to the hassle that is a sp. zoo.

The best advice I can give is come to Poland and get a good accountant. It's just not optional here - the laws are so arcane and mind bogglingly stupid at times that you'll want an accountant just to make sense of what you're doing.

Poland is *not* very favourable towards new media enterprises.

Well, you know, of course I will get an accountant, so this headache won't be mine. As for taxes, name me another EU country with lower taxes except Ireland, Cyprus and Bulgaria? I don't think that taxes are big at all, look at Germany, Netherlands, Belgium, France. As for red tape, go to Spain and you will get an idea what the bureaucracy is. As for new media companies, I don't require more than ability to receive money without hassles and paying money for services abroad, this is the only requirement I have.

I thought about Czech Republic also, they have good taxes, etc. But you need to have paper contracts for every transaction/deal and get a formal licence for every type of business...this is kinda nightmare, you know.

PS I'm not EU national, so I can't be a Sole Trader here.

You've got social taxes to think about - which are the killer here. A Sp. Z.o.o will have to pay 20% on top of the gross salary, plus the employee will have to pay 17% of their gross salary in them. Dividends are taxable at 19% - but if you intend to pay yourself a monthly salary, you'll soon find the ZUS (social tax) payments starting to really bite. You'll also lose 18% of the gross salary in income tax too - so some figures.

3000zl gross.
Sp. Z.o.o has to pay 3600zl.
Employee pays 35% of 3000zl - so around 1000zl tax.

Added together, the cost to you will be around 1600zl a month to pay yourself 2000zl a month. Poland really isn't a low tax country, contrary to popular belief. Of course, if you can afford to pay yourself dividends or ride the edges of legality with tax laws, you might be able to pay less - but for an ordinary person trading through a Sp. z.o.o - it really isn't too great a deal.


What country are you from? There are agreements out there that might allow you to be a sole trader in Poland.