How to Open a Branch Office in India from Poland
A Branch Office (BO) is a suitable entity structure for Polish companies that want to establish a presence in India without creating a separate legal entity. Unlike a Private Limited Company or a Wholly Owned Subsidiary, a Branch Office is an extension of the Polish parent company in India. It does not have a separate legal identity, which means the Polish parent is fully liable for all obligations of the Indian branch.
Poland and India elevated their bilateral relationship to a Strategic Partnership in 2024, with trade reaching USD 5.72 billion in 2023. For Polish companies looking to test the Indian market, provide professional or IT services, conduct research, or manage export/import operations, a Branch Office offers a simpler entry point with lower initial setup requirements compared to full incorporation.
However, it is important to understand that a Branch Office has significant activity restrictions. It cannot engage in manufacturing, retail trading, or any commercial activity beyond its permitted scope. Polish companies planning to manufacture in India or conduct full-scale commercial operations should consider a Private Limited Company or Wholly Owned Subsidiary instead.
FDI Route and Regulatory Requirements
Unlike a Pvt Ltd or WOS that can be set up under the automatic route, establishing a Branch Office in India requires prior approval from the Reserve Bank of India (RBI). The application is submitted through an Authorized Dealer (AD) bank in India using Form FNC.
Under the RBI's 2025 draft guidelines, the framework for Branch Offices has been updated. The earlier minimum net worth requirements (USD 100,000 for branch offices) have been removed, opening the door to a wider range of Polish investors. However, the principle-based approach now requires the Branch Office to align its activities with sectoral regulations and India's FDI policy.
Permitted activities for a Branch Office in India include:
- Export and import of goods
- Providing professional or consultancy services
- Carrying out research work related to the parent company's business
- Promoting technical or financial collaborations between Indian companies and the Polish parent
- Representing the parent company in India and acting as buying/selling agent
- Providing IT services and software development
- Providing technical support for products supplied by the parent company
The Branch Office is prohibited from engaging in retail trading, manufacturing, or processing activities in India, unless located in a Special Economic Zone (SEZ). Since Poland is an EU member state and not subject to Press Note 3 (2020), the RBI application process follows the standard route without additional security clearance requirements that apply to land-border countries.
DTAA Benefits for Polish Companies
The India-Poland DTAA, signed in 1989 and amended by a protocol effective from June 2014, has specific implications for Branch Offices. A Branch Office typically constitutes a Permanent Establishment (PE) in India under the treaty, which means:
- Business profits: Profits attributable to the Indian Branch Office are taxable in India. The branch is taxed at the corporate tax rate of 35% for foreign companies (plus applicable surcharge and cess), which is higher than the rate for Indian companies
- Interest on branch funds: 15% under the DTAA
- Royalties: 22.5% under the DTAA
- Fees for Technical Services: 22.5% under the DTAA
An important tax consideration for Branch Offices is the Branch Profit Tax. When profits are remitted from the Indian branch to the Polish parent, a branch profit repatriation tax may apply. The DTAA's dividend article may provide relief depending on the characterization of the remittance. Polish companies should obtain professional tax advice to optimize the structure and ensure compliance with both the Indian Income Tax Act and the DTAA.
To claim treaty benefits, the Polish company must provide a valid Tax Residency Certificate (TRC) and Form 10F.
Document Requirements and Authentication
Both Poland and India are members of the Hague Apostille Convention. Documents from Poland are authenticated through the apostille process by the Polish Ministry of Foreign Affairs in Warsaw.
The Polish parent must prepare and apostille the following:
- Certificate of incorporation or KRS extract of the Polish parent company (certified and apostilled)
- Memorandum and Articles of Association or equivalent constitutional documents of the Polish parent (apostilled)
- Board resolution authorizing the establishment of a Branch Office in India, specifying the scope of activities and the authorized representative
- Audited financial statements of the Polish parent for the latest two financial years (translated into English if originally in Polish, and apostilled)
- Power of Attorney in favour of an Indian representative to handle the RBI application and subsequent filings
- Passport copies and address proof of the authorized representative and key personnel
- Details of the parent company's business activities and a business plan for the Indian Branch Office
The apostille fee is PLN 60 per document, with processing taking 3-14 working days through the Ministry of Foreign Affairs in Warsaw.
Step-by-Step Registration Process
The Branch Office registration process involves both RBI approval and subsequent registration with the Registrar of Companies (ROC):
- Appoint an Authorized Dealer (AD) bank: Select an Indian bank that will serve as the AD bank for submitting the RBI application and handling all future foreign exchange transactions. Timeline: 1-2 weeks.
- Prepare and submit Form FNC: The AD bank submits Form FNC to the RBI on behalf of the Polish company. The application includes details of the parent company, proposed activities, financial statements, and the business plan. Timeline: 1-2 days for preparation.
- RBI review and approval: The RBI reviews the application, may seek additional information, and issues approval. Under the 2025 guidelines, the processing has been streamlined. Timeline: 2-4 weeks.
- Register with ROC: After receiving RBI approval, the Branch Office must register with the Registrar of Companies by filing Form FC-1 under the Companies Act 2013 within 30 days. Timeline: 5-7 business days.
- Obtain PAN and TAN: Apply for a Permanent Account Number and Tax Deduction Account Number for the Branch Office. Timeline: 1-2 weeks.
- Open bank account: Open an Indian bank account in the name of the Branch Office. The AD bank can also serve as the operational bank. Timeline: 1-2 weeks.
- GST registration: If the Branch Office's activities attract GST, register on the GST portal. Timeline: 3-5 business days.
Timeline and Costs
The typical timeline for establishing a Branch Office in India from Poland is 6-10 weeks, longer than a Pvt Ltd due to the RBI approval requirement:
| Step | Timeline |
|---|---|
| Document preparation and apostille | 3-14 days |
| AD bank selection and engagement | 1-2 weeks |
| Form FNC submission and RBI approval | 2-4 weeks |
| ROC registration (Form FC-1) | 5-7 days |
| PAN/TAN and bank account | 1-2 weeks |
Estimated costs:
- RBI application: No government fee for Form FNC, but the AD bank may charge a processing fee
- ROC fees: INR 5,000-10,000 for Form FC-1 filing
- Professional fees: INR 30,000-75,000 for a CA/CS firm handling the end-to-end process
- Apostille fees in Poland: PLN 60 per document
- AD bank charges: Varies by bank (typically INR 10,000-25,000 for processing)
Post-Registration Compliance
Branch Offices have specific compliance requirements that differ from Indian companies:
- Annual Activity Certificate (AAC): An annual certificate from the Branch Office's auditor certifying that its activities are within the RBI-permitted scope. Filed with the AD bank by September 30.
- Annual accounts: Must be filed with the ROC within 60 days of the close of the financial year of the parent company
- Income tax return: Filed on behalf of the foreign company by July 31 or as applicable
- Tax rate: Foreign companies are taxed at 35% (plus surcharge and cess) on income attributable to the Indian Branch Office
- GST returns: Monthly or quarterly if GST-registered
- FLA return: Annual Foreign Liabilities and Assets return to RBI by July 15
- Profit remittance: Profits can be remitted to the Polish parent through the AD bank after payment of applicable taxes
For comprehensive compliance guidance, refer to our Compliance Calendar and Annual Compliance guide.
Common Challenges for Polish Companies
Polish companies setting up a Branch Office in India should be aware of these challenges:
- RBI approval timeline: Unlike the automatic route for Pvt Ltd companies, Branch Offices require RBI permission, which adds 2-4 weeks to the setup timeline. The 2025 guidelines have streamlined the process but approval is not guaranteed.
- Activity restrictions: The Branch Office is strictly limited to its permitted activities. Any deviation can result in RBI penalties and potential closure orders. Polish companies with evolving business needs may find this restrictive.
- Higher tax rate: Foreign companies operating through a Branch Office pay 35% corporate tax (plus surcharge and cess), significantly higher than the 22-25% effective rate available to Indian Pvt Ltd companies under the concessional regime.
- No separate legal entity: The Polish parent is fully liable for all obligations of the Branch Office. Any legal disputes, debts, or regulatory penalties incurred by the branch extend to the parent company.
- Financial statement translation: The RBI and ROC may require audited financial statements of the Polish parent to be translated into English by a certified translator, adding time and cost to the application process.
Frequently Asked Questions
Does a Polish company need RBI approval to open a Branch Office in India?
Yes. Unlike a Private Limited Company that can be set up under the automatic route, a Branch Office requires prior approval from the Reserve Bank of India. The application is submitted through an Authorized Dealer bank using Form FNC. The RBI reviews the parent company's credentials, financial standing, and proposed activities before granting permission.
Can a Branch Office engage in manufacturing activities in India?
No. A Branch Office is prohibited from manufacturing or processing activities in India, unless it is located in a Special Economic Zone (SEZ). For manufacturing operations, Polish companies should consider incorporating a Private Limited Company or Wholly Owned Subsidiary instead.
What is the tax rate for a Branch Office of a Polish company in India?
A Branch Office of a foreign company is taxed at 35% on its net income attributable to Indian operations, plus applicable surcharge (2% if income exceeds INR 1 crore, 5% if income exceeds INR 10 crore) and 4% Health and Education Cess. This is higher than the concessional rates available to Indian companies.
Can a Branch Office be converted to a Private Limited Company?
There is no direct conversion mechanism. However, the Polish parent can simultaneously incorporate a Private Limited Company, transfer the Branch Office's business and assets to the new entity, and then close the Branch Office with RBI approval. This process requires careful tax and regulatory planning.
How can a Branch Office remit profits to Poland?
Profits earned by the Branch Office can be remitted to the Polish parent company through the Authorized Dealer bank after payment of all applicable Indian taxes. The AD bank verifies tax compliance and processes the remittance in accordance with FEMA regulations. There is no separate withholding tax on profit remittance by a Branch Office.
Is there a minimum net worth requirement for the Polish parent company?
Under the RBI's 2025 draft guidelines, the earlier minimum net worth requirement of USD 100,000 for Branch Offices has been removed. However, the RBI still evaluates the financial standing of the parent company as part of its approval process, and a financially sound parent company is more likely to receive swift approval.
Can a Branch Office hold property in India?
A Branch Office can lease commercial property for its operations but generally cannot purchase immovable property in India under FEMA regulations. The lease agreement for the registered office must be in the name of the Branch Office and submitted as part of the ROC registration.