The 7 biggest legal risks for German companies in Poland – how to avoid costly mistakes
The legal risks faced by German companies in Poland may relate to contracts, employment, taxation, investment and the sale of products.
For German companies, Poland has long been more than just an attractive location for manufacturing. An increasing number of firms are using the Polish market to expand their supply chains, set up subsidiaries or tap into new markets. However, entrepreneurs operating in Poland should not assume that the legal framework here is the same as in Germany. In particular, differences in contract law, company law, employment law and tax law can lead to significant financial burdens. This becomes particularly problematic when legal issues are only examined once a business partner fails to pay, an employee makes a claim, or a regulatory body announces an inspection.
We outline seven common legal risks that German companies should be aware of when operating in Poland, and explain what to look out for when mitigating them.
1. Legal risks faced by German companies in relation to contracts
A German businessman enters into a supply contract with a Polish business partner. The negotiations go well and the collaboration begins. However, the first serious complaint leads to a dispute.
- Which law applies?
- Which court has jurisdiction?
- Who is liable for the damage caused?
Such questions often only arise once a dispute has already arisen. It is particularly important to distinguish between the choice of the law applicable to the contract and the agreement on the competent court. Furthermore, the Vienna Convention (CISG) may apply to international contracts for the sale of goods, even where the parties have chosen German law and the application of the CISG has not been effectively excluded.
Our recommendation: German companies should review contracts with Polish counterparties before signing them, particularly with regard to the choice of law, jurisdiction, liability, contractual penalties, warranties and payment guarantees. Carefully drafted contractual provisions can go a long way towards helping to avoid disputes later on.
2. Inadequate vetting of Polish business partners and the risk of non-payment
A new Polish supplier is offering attractive terms. The initial discussions are proceeding professionally. The German client makes a substantial advance payment, but later there are delays in delivery or the agreed service is not provided at all. Such situations demonstrate how important it is to carry out a legal and economic analysis of the counterparty.
Before entering into a contract, it is particularly important to check whether the company is properly registered, who is authorised to represent it effectively, and whether there are any signs of financial difficulties. An important source of information is the Polish National Court Register (KRS). Appropriate payment safeguards may also be useful. If a debt has already arisen, the question arises as to the most effective way of recovering it, whether through out-of-court or court proceedings. Depending on the case, the European order for payment procedure may also be considered.
Related article: The European Enforcement Order (EEO) – effective debt recovery within the EU without unnecessary red tape.
Our recommendation: Vet new business partners before fulfilling larger orders and safeguard significant claims for payment with appropriate contractual provisions.
3. Risks associated with setting up and running a Polish subsidiary
For many German companies, setting up a Polish limited liability company (sp. z o.o.) is a key step in entering the market. However, the real risks arise not only when the company is being set up, but also during its day-to-day operations.
- Who is authorised to sign contracts?
- Which decisions require a resolution by the shareholders?
- What are the responsibilities of the board of directors?
- How should the legal relationship between the German parent company and the Polish subsidiary be regulated?
It is particularly important to distinguish between a company’s limited liability and the potential personal liability of its directors. Polish company law requirements must also be taken into account when entering into intra-group agreements or delegating decision-making powers.
Our recommendation: Even before setting up a company, it is worth analysing its structure, rules of representation and legal relationships within the group of companies.
More on this topic: Articles of Association for a limited liability company – why is it worth entrusting their preparation to a specialist?.
4. Errors in employment law relating to the recruitment and secondment of staff
German companies that employ staff in Poland or temporarily post them here must take into account various labour and social security regulations. The conclusion of a German employment contract does not automatically mean that only German labour law will apply. Depending on the specific employment situation, mandatory Polish provisions protecting employees may apply. In the case of posting, particular attention should be paid to verifying the required notifications, the terms and conditions of employment in the host country, and the relevant social security legislation. Errors may result in the obligation to make additional payments, action by the authorities, and additional personnel costs.
Our recommendation: Before implementing a specific model of cooperation, it is worth carrying out a legal analysis of the rules governing employment, secondment and the cross-border provision of labour.
You may also be interested in: Employee Capital Plans – information for employers.
5. Tax risks: VAT, tax registration and KSeF
Not every German business needs its own company to operate in Poland. However, this does not mean that no tax obligations will arise. The very nature of the business activity, the use of local resources or specific distribution models may have tax implications. One of the key issues is determining whether a permanent establishment arises in Poland or whether there is an obligation to register for VAT. The criteria set out in the relevant tax provisions must be assessed separately.
Added to this is the Polish National e-Invoice System (KSeF), the mandatory implementation of which began in phases in 2026. With regard to foreign companies, the regulations provide for significant exceptions, depending in particular on the nature of the company’s presence in Poland and the structure of its establishments and branches.
Our recommendation: When planning cross-border business models, it is advisable to analyse their tax implications as early as possible and agree on the relevant contractual provisions with a tax adviser.
6. Underestimated risks associated with property and investments
A German company is planning to purchase a production hall in Poland, lease a logistics centre or set up a new plant. Initially, attention is usually focused on the location, rent and investment costs. However, a lack of the necessary legal and regulatory foundations under building law, inadequate contractual provisions, encumbrances on the property or ambiguities regarding its permitted use can have serious economic consequences. Long-term commercial property leases should also be analysed carefully, particularly with regard to maintenance and repair obligations, changes to the rent, the tenant’s capital expenditure and the possibility of terminating the lease.
Our recommendation: Before purchasing or entering into a long-term lease for commercial property, carry out legal due diligence tailored to the specific investment project.
7. Compliance risks when selling products in Poland
A business owner who successfully places products on the market in Germany cannot automatically assume that they meet all the legal requirements applicable on the Polish market. In addition to EU regulations on products, national regulations may also be relevant, including those relating to labelling, instructions for use, and obligations concerning packaging and waste management.
It is particularly important to identify any obligations under the Polish BDO system relating to products, packaging and waste.
See also: Cross-border shipments of waste within the EU.
The scope of responsibilities depends, amongst other things, on the product category, the distribution model and the role of the business in question.
Our recommendation: Before you start selling, check which product and environmental obligations actually apply to your business on the Polish market.
Summary
The legal risks faced by German companies in Poland can be mitigated through early analysis of contracts, business partners, and employment and tax obligations. Legal certainty is a key element of an effective business strategy in Poland. The Polish market offers German companies numerous opportunities. However, it is crucial to take legal risks into account before any damage occurs. Particularly in cross-border business relationships, a timely legal analysis can help to avoid unnecessary costs, disputes and delays.
Are you already running a business in Poland, or are you planning to enter the Polish market?
The International Law Practice supports German-speaking companies in legal matters relating to doing business in Poland. Our services include, in particular, the drafting and analysis of international contracts, advice on company law and cross-border employment relations, legal due diligence on business partners and investments, and debt recovery.
Find out what legal risks apply to your business model. Book a consultation.
Legal status: October 2026. This article is for general information purposes only and does not constitute individual legal or tax advice or an opinion. The information provided relates to general legal issues and does not take into account the circumstances of any specific case. Before making any decisions based on this information, you should verify the current legal situation and analyse your individual circumstances, seeking professional legal advice where necessary. Although every effort has been made to ensure the accuracy of this publication, changes in legislation, case law or practice may affect the validity of the information provided.
