It is widely understood that a branch is an entity in the host country whose identity is not separate from its company being merely an arm or an extension of the company completely owned and controlled by its parent company. The branch may perform the same services and manufacture the same products as the company in the home country. If a branch enters into a contract, the contract is deemed to be with the company. The branch can thus be seen as the presence of the company in the foreign country.
The European Union issued the Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State (“EU- Directive”). The EU – Directive applies in particular to branches opened in a Member State by limited liability companies ( e.g. private companies or (public) joint stock companies) governed by the law of another Member State.
Companies from other Member States should disclose the following mandatory information when setting up their branches in other Member States within appropriate registers :
- address and activity;
- company’s place of registration and registration number;
- name and legal form of the company, and name of the branch (if different from company);
- appointment, termination of office and particulars of the company representatives;
- winding-up of the company, appointment and particulars of liquidators;
- accounting documents;
- closing of the branch.
In addition, branches must have a unique identifier to allow identification of at least:
- Member State of the register;
- domestic register of origin;
- branch number.
It should also contain, where appropriate, features to avoid identification errors and additional disclosure of the company representatives or instruments of constitution.
The question arises whether the EU – company going to establish its branch in Poland must additionally obtain a Polish Tax Identification Number (NIP) for its branch. Apparently the National Court Register (KRS) in Poland assigns only a KRS number (unique identifier of entities) and so – called REGON number (statistical number) to the branch leaving the issue about the NIP open. A NIP is needed to identify taxpayers but the EU- company seeking to open its branch has already its domestic tax identification number and this would mean the EU company would have a double tax number as its branch is not a separate entity at all.
It is recognized that the branch of the EU – company does not possess the status of a VAT tax payer and this status is tied only to the EU – company itself which, when issuing VAT invoices, should identify itself through its domestic tax number. Why would we need then a NIP for the branch of an EU – company in Poland? It is still a common view in Poland that a branch of a foreign (EU) company registered within KRS should have a NIP if it has the status of an entrepreneur under Polish labor law and pays social contributions (ZUS). To support this view a reference is made to Article 2 of the Act on Rules of Identification and Registration of Taxpayers (law journal 2017. 869f from 28.04.2017) stating that individuals, companies and organizational unites without a legal capacity should obtain NIP numbers if they pay taxes in Poland. This view is not correct as it is trying to treat the branch of an EU- company as a quasi – separate entity . A branch of a foreign company in Poland is neither a company nor an organization unit without legal capacity in the meaning of this provision. This provision clearly refers to paying taxes and not paying social contributions. Last but not least a foreign/EU- company aalready has its (domestic) tax identification number that may and should be used to pay any taxes and social contributions in Poland as well and to be involved in trade here. The imposing of the requirement on the branch of an EU- company regarding the obtaining of a Polish NIP goes beyond the scope and terms of the EU – Directive that states clearly that a unique identifier of the branch (Polish equivalent of a KRS number) is sufficient to identify the EU- company in the host country. In order to make this situation less confusing for EU – companies, the Polish legislator should introduce de lege ferenda, a provision stating that a NIP is not required for the branch of an EU- company in Poland unless the EU- company does not have a tax identification number.
