Poland: Company suspension rules proposed

A draft of an act amending the freedom of business activity act has recently been introduced to the Polish Parliament for consideration.

The project aims at, inter alia, making it easier for business entities to suspend their business activity. introducing the possibility of suspending business activity results from postulates of business entities.

As there is no relevant or clear legal regulation in this respect at the moment, the interpretation and practice of tax authorities and the Social Insurance Institution (ZUS) is not consistent.

Often a business entity which has suspended its activity is treated by tax authorities and ZUS as an entity that still conducts business activity (until it is liquidated) and therefore its scope of rights and obligations arising from tax and social insurance regulations does not change during this time.

According to the draft, a business entity will be allowed to suspend its activity under the following conditions:

• not employing any employees;
• not conducting business activity and, as a rule, not gaining any income in the period of suspension (except for income of a financial character, such as interest);
• filing a written application to an appropriate registry authority (municipality or National Court Register).

A business entity will be allowed to suspend its activity for a period of one to 24 months.

Suspension of business activity will have consequences mainly with regard to obligations resulting from tax and social insurance regulations (such as an obligation on tax advance payment and social insurance fees payment, obligation on submitting tax returns).

Bogdan Duda and Zuzanna Jurge are lawyers at the Warsaw Office of CMS Cameron McKenna