Some time ago, I described the 5 main issues a foreign investor must consider when setting up a company in Poland. One was to specify the type of activity the company will perform. At the time of setting up your company, you must provide at least one Business Activity Code, or PKD. Any change in the company’s business means having to update its PKD code(s).
This may be all very confusing if you’re a foreign entrepreneur. I have recently discussed this issue with an American investor, who was desperate to get some help on how to handle the codes. Please read on to find basic info and tips so you can deal with the issue without any hassle.
What is PKD?
PKD is an abbreviation for Polska Klasyfikacja Działalności – “Polish Classification of Activities” – which was introduced in 2007 based on the classification NACE Rev 2. It’s basically a catalogue of socio-economic services provided by business entities. The PKD code must be provided by both self-employed persons and companies. Information provided by entrepreneurs is needed primarily for statistical purposes, such as:
- classification of economic subjects
- presentation of the national economic structure
- making international comparisons
Not just statistics
PKD codes are also important because other obligations may depend on the type of activity, for example specific legal forms, the type of taxation, using cash registers or VAT registration.
They can also be useful when participating in tenders or applying for funding. Often, certain conditions are defined for entrepreneurs with specific PKD codes.
At the same time, businesses related to finance or importing alcohol, for example, may require additional permits. In this case, the PKD code alone would not be enough to start this type of operation.
Where do you enter the PKD code?
If you are setting up a sole proprietorship, you must enter the PKD codes(s) in the Central Register and Information on Economic Activity (CEIDG) application. You provide one main code – for the prevailing activity – and, optional, additional activity codes.
For companies registered in the National Court Register (KRS), the PKD codes must also be entered in the Articles of Association.
You should only enter the PKD codes that actually specify what you do. Do not enter the codes “just in case”. You can update them at any time (within 7 days of the change).
How many PKD codes can I choose?
For registration in the CEIDG, one principal code is provided – for the prevailing activity. You can also add codes for additional activities. There is no limit for additional codes.
If you are registering a company in the KRS, you can indicate a maximum of 10 PKD codes (although there is no limit on PKD codes listed in the Articles of Association).
How do I choose the right PKD code?
Select the codes that most closely describe your operations. If you have any problems, you can submit a written request for clarification to the Statistical Office in Łódź, which is designated to deal with any PKD-related queries (in Polish only). All you have to do is describe the subject of the activity in detail. All you have to do is describe the subject of the activity in detail; the office will then confirm the PKD code within a month (two months in complicated cases).
What if I don’t provide a PKD code?
Failure to provide the PKD code constitutes a breach of administrative obligations. You can be fined, but there are no negative tax consequences. However, failure to update data doesn’t mean that you can’t carry out your operations. It also doesn’t mean that the transactions conducted will be invalid. Lack of proper PKD code may have only negative administrative consequences.
Can I change my PKD codes?
– expand the scope of activity (by adding new codes)
– limit the scope (by removing codes), or
– change the scope of activity (by changing the principal code or additional codes)
Change of data is free of charge.
The changes are entered in CEIDG or KRS. For the latter, the change doesn’t have to be preceded by changes in the company’s Articles of Association, provided that the document already provides for a given type of activity. If the company begins to run a new type of business, shareholders/partners must first amend the Articles of Association, and then the KRS entry.
PKD code search engines
https://bit.ly/2yKrkhf – CEDG page with Polish and English equivalents. What’s important, the list also specifies if a particular type of activity is allowed for natural persons and if there are any additional requirements.
Starting a business activity abroad is a challenge. I heard the strain in the voice of the American entrepreneur who called me the other day. He said he was running back and forth between different government offices trying to get things done. It seemed there were always more questions than answers.
I hope this article will help you answer your questions about PKD codes. To make you feel better, they can be confusing to Polish entrepreneurs, too. Poland is a great place to run your business – and for many reasons. I hope potential administrative difficulties won’t discourage you from growing your company here.
Don’t hesitate to contact me if you have any questions about setting up your company in Poland. We can also discuss any problems with document translation or other issues relating to your business.