Solicitor (England & Wales), Warsaw

First published in European Newsletter, combining Eastern European Newsletter, Issue 20, November 2004, Sweet & Maxwell, UK.

Law on Freedom of Conducting Commercial Activity

On July 2, 2004 the Sejm, Poland’s lower house of parliament, passed the Law on Freedom of Conducting Commercial Activity (Official Journal of 2004, No.173, item 1807, as amended) which replaced the 1999 Law on Economic Activity. The new law aims to reduce the amount of red tape accompanying the business activity of entrepreneurs from its start-up, through business activity, to its closing down. Such terms as ‘‘business activity’’ and ‘‘entrepreneur’’ are defined for application within the entire business law framework.

Simplifying formalities

All formalities must henceforth be finalised at once and at the same place under the ‘‘single window’’ principle, where previously the registration process took place in several institutions before it was completed. Also, there has been a reduction in the number of activities requiring licences and permits, for activities such as detective services or organisation of tourist events, which now only require registration under the Register for Regulated Activity. An important change has been introduced for the legal, auditing and medical professions, with each of these now treated as business entities which require registration under the Self-Employed Register.

Commercial Register and Self-Employed Register

Business entities may apply for a REGON statistical number and for a tax identification number (NIP) in cases of application for entry into the Commercial Register or the Self-Employed Register. As of January 1, 2007, all business entities will have to provide their NIP number on all documents relating to their business activity. Also, on that date, a Central Self-Employed Persons Database will come into operation which will pool all the self-employed registers that are kept at the district level.

Tax certainty

In the area of taxation, the number of visits by tax authorities to a particular business have been limited to one at a time by the relevant tax authority and in small companies they may not last for more than four weeks in total during the year and eight weeks in the case of larger companies. Exceptions to this are clearly defined, for example in cases of criminal investigation. As of January 1, 2005, where a public administrative authority has given an interpretation of a tax provision, and the taxpayer has complied with it, then no further actions to the detriment of the taxpayer in that matter can be taken by any tax authority. Where there is no ruling within three months of receiving an inquiry from the taxpayer, then the relevant authority will be bound by the taxpayer’s position contained in his letter of inquiry.

Law on Public Procurement

The value of the Polish public procurement market is estimated to have been at least €10 billion in terms of all tenders exceeding €30,000 in 2003 (the Office for Public Procurement in its statistics takes into account only orders exceeding this amount), which is about 5 per cent of Poland’s GDP. The Law on Public Procurement came into force on March 2, 2004 following its passage by the Sejm on January 29, 2004 (Official Journal of 2004, No.19, item 177, as amended), replacing the frequently amended 1994 Law on Public Procurement. Work on the new law was swift (almost two months) and was seen as one of the most important of this parliamentary term. The legislation put an end to domestic preference in Polish public procurement and opened up this market to EU players in accordance with EU requirements.

Harmonisation with EU requirements

Although structural funding was to become available only as of the accession date on May 1, these could be contracted for the start of the year on the condition that domestic legislation on public procurements was harmonised with that of the EU and thus it was crucial to have the harmonised legislation in place as soon as possible. For example, the enacted law provides a new definition of public contracts that conforms with EU requirements and defines them as contracts for pecuniary interest that are concluded between an awarding entity and a contractor, having as their object services, supplies, or works. The legislation sets out the principles and procedures for granting public tenders where the choice of procedure is dependent on the tender’s value. At the same time, formal requirements in the case of tenders of a lesser value are simplified and stricter requirements are introduced in the case of more expensive tenders.


As under the previous law, only tenders exceeding the value of €6,000 are subject to control and require that the tender be advertised publicly. The threshold for the simplified procedure has been raised from €30,000 under the old law to €60,000. However, arbitration proceedings have also been added to these tenders where there is an appeal from an awarding party’s decision.

The most expensive orders are subject to additional control, namely from an independent observer, and the advertisement of an open tender exceeding €60,000 must be submitted to the President of the Office of Public Procurement. Where a construction works tender exceeds €5 million (excess of €130,000 in case of supplies and services), the open tender advertisement must be placed at the awarding entity’s seat, submitted to the President of the Office for Public Procurement and also submitted to the Office for Official Publications of the European Communities for publication in the Official Journal of European Communities (OJEC).

If the order is under this €60,000 threshold it is sufficient to advertise an open tender at the awarding entity’s own seat or on its own website. Construction works in excess of €10 million (excess of €5 million in case of supplies and services) also require the appointment of, and monitoring by, an independent observer.


Open tender bids for orders not exceeding €60,000 can be received 15 days from the date of advertisement, while in cases of those exceeding this amount bidding starts 52 or more days from the date of submission for publication. There are shorter time-limits in cases of selective tenders. Under the old law, the time-limits were counted from the date of publication; now under the new law, and in line with EU requirements, they are calculated from the date of submission for publication.

Tender committee

There is a mandatory requirement for the appointment of a tender committee for the conduct of an award procedure where the contract value exceeds €60,000. Where the contract value does not exceed this amount, the head of the awarding entity may appoint a tender committee and consequently the provisions relating to such a tender committee apply accordingly. Such a tender committee may be of a permanent character or it may be appointed for a particular procedure.

Types of tender procedures

The primary procedures for awarding contracts are open tenders and selective tenders. Selective tenders no longer have a specified threshold limit as was the case under the previous legislation where only orders that were less than €30,000 were considered, thus their position vis-à-vis open tenders is levelled. Selective tenders are subject to a two-stage procedure where the second stage produces a selection of 5 to 20 tendering parties. This is particularly useful for reducing the amount of documentation submitted for big orders, such as in construction. In addition, the awarding entities may award contracts by advertised negotiation, non-advertised negotiation, price inquiry, free-hand order and by electronic auction procedure where the maximum order value allowed is €60,000 and the e-auction is only in respect of goods. The authorities have high hopes for this e-auction procurement procedure.

Principles of tender procedures

Awarding entities must prepare and conduct contract award procedures in a manner ensuring fair competition and equal treatment of contractors. Actions connected with the preparation and conduct of contract award procedures are to be performed by persons ensuring impartiality and objectivity, and contracts can be awarded only to contractors chosen in accordance with the provisions of this legislation. Contract award procedures are made public and the awarding entity may limit the access to information connected with the award procedure only under specified circumstances. The contract award procedures are conducted in writing, subject to specified exceptions, and the procedures must be conducted in Polish. However, in particularly justified cases, the awarding entity may agree also to the submission of a request to participate in contract award procedures, statements, tenders and other documents in a language commonly used in international trade or in a language of the country in which the contract is to be awarded.


The legislation defines ‘‘supplies’’ as the acquiring of things, rights and other possessions, in particular on the basis of contracts for purchase, supply, rental or lease. The definition of ‘‘works’’ is the execution or the design and execution of works within the meaning of the 1994 Construction Law, as well as the execution of works within the meaning of that law, by a third party, in accordance with the requirements specified by the awarding entity. While ‘‘works concessions’’ are defined as those works contracts where the consideration for their execution consists either in the right to exploit the work or in this right together with payment. The definition of ‘‘services’’ is any services not having as their object works or supplies.

‘‘Contractors’’ are defined as natural persons, legal persons or organisational units not having legal personality, who compete for the award of a contract, have submitted their tenders or concluded a public procurement contract. ‘‘Awarding entities’’ are natural persons, legal persons or organisational units not having legal personality, who are required to apply the Law on Public Procurement.

Applicability to public contracts and sectoral Contracts

The Law on Public Procurement legislation applies to public contracts (‘‘contracts’’) awarded by:

(1) the public finance sector units within the meaning of provisions on public finances;

(2) state organisational units not having legal personality, other than those specified in item 1;

(3) legal persons, other than those specified in item 1, established for the specific purpose of meeting needs in the general interest, not having industrial or commercial character, if the entities referred to in these provisions and in items 1 and 2, separately or jointly, directly or indirectly through another entity:

  1. finance them in more than 50 per cent;
  2. have more than half of the shares or stocks;
  3. supervise their management board; or
  4. have the right to appoint more than half of the members of their supervisory or management board;

(4) entities, other than those specified in items 1–3, exercising one of the following types of activities where the contract (within the so-called sensitive sectors such as energy, public services, transport, telecommunications and referred to as ‘‘sectoral contract’’), is awarded for the purposes of performing one of the following types of activities:

  1. exploring, prospecting for or extracting gas, oil and its natural derivatives, coal and other solid fuels;
  2. the management of airports, maritime or inland ports and their provision to air, sea and inland carriers;
  3. the creation of fixed networks intended to provide public services connected with the production, transport or distribution of electricity, gas or heat, or supply of electricity, gas or heat to such networks or management of such networks;
  4. the creation of fixed networks intended to provide public services connected with the production or distribution of drinking water or supply of drinking water to such networks or management of such networks;
  5. the operation of networks providing public services in the field of transport by railway, tramway, trolley bus, cable or automatic systems;
  6. the operation of networks providing public services in the field of transport by bus;
  7. the provision or operation of public telecommunications networks or provision of one or more telecommunications services by means of such a network.

If such an activity is exercised on the basis of special or exclusive rights, or if the entities referred to in items 1–3, separately or jointly, directly or indirectly through another entity, have a dominant influence over them, in particular:

  1. finance them in more than 50 per cent;
  2. have more than half of the shares or stocks;
  3. supervise their management board; or
  4. have the right to appoint more than half of the members of their supervisory or management board;

(5) entities, other than those specified in items 1 and 2, if more than 50 per cent of the value of the contract awarded by them is financed out of public funds or by the entities referred to in items 1–3;

(6) entities, other than those specified in items 1 and 2, if the contract awarded by them is financed with the participation of funds, the allocation of which is dependent on the use of the contract award procedure provided for in this Act;

(7) entities, who have been granted the works concession, hereinafter referred to as ‘‘concession’’, by the entities referred to in items 1–3, in so far as they award contracts for the purpose of the execution of that concession.

The legislation applies to sectoral contracts, where the contract value exceeds €400,000 for supplies or services, and €5 million for construction works. For sectoral contracts referred to in item 7 (‘‘concession’’) the euro value must exceed €600,000 for supplies and services. Sectoral contracts may be awarded by open tender, selective tender and advertised negotiation.

Prior information notice

The awarding entities are required immediately following the approval or adoption of their financial plan, in the case of awarding entities who do not prepare financial plans once a year, to submit to the Office for Official Publications of the European Communities a prior information notice about procurements envisaged for the next 12 months, the value of which:

  1. for works – exceeding €5 million;
  2. for supplies – calculated for the given group as specified in the Regulation 2195/2002 of the European Parliament and the Council of November 5, 2002 concerning the Common Procurement Vocabulary (OJEC L 340 of December 16, 2002, p.1), exceeding €750,000; and
  3. for services – calculated for the given CPC category as specified in Annex 3 to the Common Procurement Vocabulary, exceeding €750,000.

Construction works tenders

Tenders for construction projects and construction works are no longer made under separate tenders, as such construction projects are now included in construction works and this is in line with EU requirements. A novelty is the introduction of a new type of order, namely a concession for construction works whereby the contracting party undertakes to construct buildings in exchange for the right to their exploitation which can be combined with part-payment. Another important novelty for an awarding entity and contracting party is the possibility of the continuance of a tender even where only one party takes part in the tender, previously a most frequent cause for invalidating tenders. Also, rather than suffer outright tender elimination, there is now the possibility of a contractor making corrections to accounting errors contained in his tender. Polish employees are somewhat protected under the new legislation in that there is a possibility for an awarding entity to take into account the influence on the local labour market where a particular firm is to be granted an order.

Law on Polish Language

The amendments to the Law of October 7, 1999 on Polish Language (Official Journal of 1999, No.90, item 999, as amended) published in the Official Journal of 2004, No.92, item 878 are expected to facilitate commercial contact between Polish and foreign parties in business and consumer transactions, as well as in employment situations. Prior to the amendments coming into force on May 1, 2004, the often controversial legislation required that a contract be concluded in the Polish language if one of the parties was a Polish entity (this applied equally to legal and physical persons) and if the contract performance was to be carried out in Poland.

Previous difficulties of contract enforcement

Prior to the amendments, the enforcement of a contract prepared in another language was made practically impossible before a Polish court as a person trying to enforce its provisions or wishing to show its existence had the onus of proving that it had been breached while the evidence allowed was severely restricted. The requirement for Polish language contracts applied irregardless of whether all the contract negotiations were conducted in a foreign language and those signing the contract had any knowledge of the Polish language. Also, the parties did not have the option of signing a contract that had been translated into Polish.

Present options

With the amendments, there is no longer the requirement to conclude such contracts in Polish. It is, however, mandatory that the contract be in Polish where it involves a consumer or employment law provision, where the consumer or employee has residence in Poland on signing the contract and the contract is to be performed in Poland. However, on motion of a consumer or employee who is a citizen of an EU Member State other than Poland, the contract need not be prepared in Polish if the party has been informed that he has the right to have it prepared in Polish and this is also available where the employer is a citizen of, or has a seat in, an EU Member State.

E-services contracts

For contracts prepared in a foreign language that are subject to the Law on E-Services (see European Newsletter, Issue 4, May 2003) and which were concluded by any party (entrepreneur or consumer) with a party providing e-services who is not a physical person and a Polish resident, or who is a legal person/organisational unit without legal personality conducting business activity in Poland, such contracts may make evidence necessary for the fact of an occurrence of a civil law transaction under the Civil Code.

Mandatory use of Polish language

Certain situations and documents are specifically required to be in the Polish language:

  • proper names of goods and services;
  • offers;
  • terms of guarantees;
  • invoices;
  • bills and receipts;
  • warnings and information for consumers;
  • service instructions; and
  • information on properties of goods and services, including advertisements.

Commonly-known and recognised graphic depictions of warnings, words and signs require no Polish language translation unless they are accompanied by text in a foreign language.

There is no prohibition against the preparation of several language versions which include Polish for the above-listed documents. Where there is no provision as to which language version contains the obligatory meaning, the Polish version is to prevail.

Exceptions to the use of Polish language

The legislation allows exceptions to the use of Polish language in the following cases:

  • proper names;
  • foreign language dailies;
  • foreign language magazines and books;
  • foreign language computer programmes (with the exception of their description and instructions);
  • teaching and research activities of schools and classes with foreign language instruction or that are bilingual, etc.;
  • scientific research and artistic creativity;
  • commonly-used scientific and technical terminology;
  • trade names;
  • commercial names;
  • origin markings for goods and services; and
  • norms introduced in the original language in conformity with standardisation provisions.

Enforcement and transitory provisions

Enforcement of the legislation lies with the Office for Competition and Consumer Protection, Commercial Inspection, district/city consumer ombudsman, as well as the State Employment Inspection with fines levied for its infraction. Matters prepared before May 1, 2004, and in conformity with the previous law, remain valid while matters started and uncompleted before that date are subject to the amended legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.