When is a subsidiary a right choice?

Firms choose to set up a subsidiary in Poland instead of using typical outsourcing services if they plan to generate a long-term advantage for the company through the offshore team.

If you need a generic, temporary team, there is probably no reason to set up a subsidiary to offshore. Your needs can be satisfied with an outsourced team.

If you would like to scale up your engineering team and this is a part of a long-term strategy, then setting up a subsidiary and hiring your own employees may be a better choice. The cost of using your own employees vs. using outsourced employees will be lower, but this is not the main reason why you should take this avenue.

Firstly, if you are going to train the team on your product or services, this is an investment that you want to be able to leverage, therefore it makes sense to keep the team in-house. Also, some of the know-how you transfer is probably a valueable asset that you don't want to share outside your organization. Particularily, if you are services company, the skilled consultants you employ to some extent determine the value of your company.

Having your own team also provides you a better control over how the processes are executed and how the work is done. This is the best way to assure the best quality. Quality, though, is also a result of your company culture and values, which can be only transfered to the team, if the team are you employees.

Setting up operations in Poland

Most of the foreign tech firms that set up their operations in Poland chooses limited liability company as a form of incorporation. This way the entity in Poland is owned entirely by the parent entity. All legal steps to set up an LLC can be completed within 2 weeks.

19% corporate tax in Poland
Most of the subsidiaries established in Poland operate in the cost-center model where the Polish entity issues monthly invoices to the parent entity to cover the cost of operations. In this model, the Polish entity doesn’t yield any profit. The overhead cost of running an LCC in Poland is relatively low comparing the other EU locations.

The following table shows some key 3rd party costs.

Service Cost
Entity setup government fees $3 000
A shared, serviced office space for 5 people $1 000
A-class private office space of 100 m2 (approx. 1100 ft2e) $2 000
Monthly cost of accounting services for a small LLC company $300
Monthly cost of payroll services for up to 10 employees $120
Attorney’s hourly fee $60

Included services

The following services are included in this solution

Optional services

The following services are optional in this solution