Hire Employees in Poland Without a Company: ZUS, Payroll and PE Risk

1. Can a foreign company hire employees directly in Poland?

Yes. A foreign company can enter into an employment contract directly with a person who works in Poland. Establishing a Polish subsidiary or branch is not a prerequisite for employment.

This model is commonly used for individual specialists, small teams, sales staff, technicians and employees working remotely from Poland. It can also be used on a long-term basis. There is no general rule requiring a foreign company to incorporate in Poland once it reaches a particular number of employees or a particular period of activity.

The important point is that employment, social security, income tax and permanent establishment rules operate separately. A structure that works for one of these areas does not automatically solve the others.

2. Which social security system applies?

The first question is not whether the employer wants to register with ZUS. The first question is which country’s social security legislation applies to the employee.

Under the general EU coordination rule, a person working in one Member State is subject to the social security legislation of that state. An employee who works permanently in Poland will therefore normally fall within the Polish social security system, subject to the specific exceptions provided by EU coordination rules.

The employer and employee cannot simply choose which social security system they prefer. For employees outside the EU, EEA and Switzerland, the position must be analysed under Polish law and, where applicable, a bilateral social security agreement.

3. What happens when Polish ZUS applies?

If Polish social security legislation applies, a foreign employer is generally required to fulfil the obligations imposed by the Polish system even if it has no Polish subsidiary or branch.

The choice between these administrative models should not be based solely on headcount. The relevant factors are the applicable legislation, the employer’s country of establishment and how the ongoing contribution process can be organised reliably.

4. How are Polish PIT and payroll handled?

Social security and income tax must be analysed separately. Registration of a foreign company with ZUS does not automatically make the company a Polish withholding agent for personal income tax.

Where employment income for work performed in Poland is taxable in Poland under domestic law and the applicable double tax treaty, but the foreign employer has no permanent establishment in Poland, the employer generally does not withhold Polish PIT advances from the salary.

In that situation, the employee may be responsible for calculating and paying Polish income tax advances and generally reports the employment income in a PIT-36 annual return.

If the employer has a Polish permanent establishment, or the factual circumstances otherwise change, the withholding analysis must be revisited. ZUS registration should therefore never be treated as a shortcut for determining the PIT position.

A monthly payroll process is still needed to calculate gross salary, employee and employer contributions, net salary, leave, sickness, benefits and other payroll items. Who technically makes each payment is a separate administrative question.

5. Which employment law applies?

Choosing foreign law in the employment contract does not automatically remove the mandatory employee protections of the country in which the employee habitually works.

Article 8 of the Rome I Regulation provides that a choice of law cannot deprive an employee of the protection of mandatory rules that would otherwise apply. If an employee habitually works in Poland, mandatory Polish employment rules therefore have to be considered.

Depending on the case, these include working time, annual leave, minimum remuneration, sick pay, termination rules, occupational health and safety and employment documentation.

Temporary posting is different. A person who is temporarily sent to Poland may remain subject to other employment law elements and specific posting rules. A permanent Poland-based employee should not be treated as if they were merely on a short-term assignment.

6. When can employees create a permanent establishment in Poland?

Hiring an employee in Poland does not automatically create a permanent establishment. The analysis depends on the relevant double tax treaty and on the actual functions performed in Poland.

Risk can arise in two main ways. First, the foreign company may have a fixed place of business available to it in Poland. Second, an employee may perform functions that create a dependent agent permanent establishment under the relevant treaty.

• an office or other premises in Poland available to the foreign company,
• a home office that, based on the facts, constitutes a place of business of the employer,
• employees who conclude contracts or play a principal role in concluding contracts,
• local management or decision-making functions,
• a stable Polish operational structure that goes beyond activities of a preparatory or auxiliary nature.

The OECD updated its Model Tax Convention Commentary in 2025 to clarify the treatment of cross-border home working. For treaties based on the OECD Model, working from a home in another country for less than 50% of total working time would generally not, by itself, make the home a place of business of the employer.

Where the employee works from that location for 50% or more of their working time, the analysis remains fact-specific. One important factor is whether there is a commercial reason for the business activities to be performed from that country.

7. When is a Polish company the better structure?

A Polish company does not become mandatory merely because the foreign business reaches a particular number of employees. Incorporation becomes more relevant when Poland develops into a separate operational location.

Typical factors include a dedicated office or warehouse, local management, a growing team, local contracting authority, independent customer relationships or a need to separate operational responsibility and liability into a Polish entity.

A Polish subsidiary may make the structure easier to manage, but it does not automatically eliminate all permanent establishment risk for the foreign parent. The actual functions carried out by each company and by individual employees remain decisive.

If a local entity is becoming appropriate, see our Company Formation in Poland service page.

8. Practical steps before the first hire

1. Determine where the employee will actually perform their work and whether the arrangement is permanent or temporary.
2. Establish which country’s social security legislation applies and whether an A1 certificate is relevant.
3. If Polish social security applies, determine whether the employer will register directly with ZUS or whether a lawful Article 21(2) arrangement can be used.
4. Analyse the Polish PIT position separately from social security.
5. Review the employment contract and mandatory employment law requirements.
6. Assess permanent establishment risk before assigning material sales, management or contracting functions to Poland.
7. Only then implement the recurring payroll, reporting and payment process.

FAQ

Summary

Direct employment in Poland without a Polish company is a normal cross-border employment structure. Before the first payroll run, however, four separate areas must be addressed: social security, PIT, employment law and permanent establishment. In particular, the applicable social security system must be distinguished from the question of who technically fulfils the ZUS contribution payer obligations. A Polish company becomes the preferred structure only when the actual scale and functions of the Polish operation justify it.