Łukasz Koziński and Bartłomiej Wyjatek from the Corporate Law practice group at Wardyński & Partners discuss why the “one-stop shop” approach to business registrations has not achieved the expected savings in time.
The “one-stop shop” has been in effect for businesses entering the National Court Register since 31 March 2009. (The change was introduced by the Act of 19 December 2008 Amending the Business Freedom Act and Certain Other Acts, Journal of Laws Dz.U. 2009 No. 18 item 97.)
The main goal behind introducing this procedure was to make life easier for companies by saving them time-consuming visits to various institutions in order to carry out registration and notification requirements that are necessary before starting to do business.
Under the one-stop shop approach, documents necessary to register a company in the following state offices are all filed with the registry court (the National Court Register):
- statistical office (for issuance of a REGON statistical number),
- tax office (for issuance of a NIP tax identification number),
- Social Insurance Institution (to register as a remitter of social insurance premiums).
Registration as a VAT payer is made outside of the one-stop shop (by filing form VAT-R).
If a complete set of documents is submitted to the National Court Register upon initial registration, visits to the various institutions may be avoided.
Savings only in theory
When it comes to saving time, the registration procedure in its current form has two weak spots.
Firstly, as mentioned, the one-stop shop does not include registering the business as a VAT payer. This registration still requires a visit to the tax office or filing of the application by post.
Secondly, the circulation of documents among the various institutions is problematic. According to the law, the registry court is required to forward applications and notifications to the statistical office and the tax office within 3 business days after the initial registration is entered.
After the registry court is notified that the business has been assigned a NIP number, it then forwards the notification as a remitter of social insurance premiums to the local office of the Social Insurance Institution.
In practice the whole procedure can be quite time-consuming.
Registration of a company by the registry court can take up to 21 days from filing of the application (although the National Court Register Act requires the registry court to decide the application within 7 days from filing). Then the registry court has 3 days to forward applications to the statistical office and the tax office by post. It can take as long as a month from the date the court forwards the applications until a REGON or NIP number is issued. At the very end, after the registry court obtains confirmation that a NIP number has been issued, it forwards the notification for the remitter to the Social Insurance Institution.
For snails, not tigers
For a company that intends to develop its business at a leisurely pace, waiting for a month or two for full registration may be regarded as a minor inconvenience.But for a company that wants to start business right away, it can be a disaster.
When establishing a capital company, it is necessary to open a bank account where the share capital necessary to begin operations will be paid in. Banks allow an account to be opened for the limited purpose of receiving payments (e.g. for paying in the share capital). The account does not become fully functional until the bank is provided a transcript from the National Court Register and certificates of issuance of REGON and NIP numbers.
A company that wants to start business quickly may have problems making payments during the first few weeks because it does not have full access to its bank account. This can prevent the company from making timely payment of social insurance premiums for staff or withholding of their personal income tax, or remitting VAT to the tax office.
Good in theory, in practice not so much
The one-stop shop is a good idea—a nod in the direction of business start-ups in Poland. Now, however, because of the time gap between filing a combined application with the National Court Register and completion of all the registrations, the supposed shortcut has turned into a roadblock for companies trying to roll out their business quickly.
Hopefully lawmakers will go further to make registration easier for companies, by fixing the existing mechanisms. Now, without professional assistance, a business can get lost in the paperwork, which can drag out the registration period even longer.
We will address the issue of how to avoid delays when it is necessary to have a company up and running quickly in our next report, concerning purchase of shelf companies.