How to check your business counterparty – verifying the credibility of a business counterparty

Why it is worth checking your business counterparty

Have you received an interesting offer, but know nothing about your potential business counterparty? Before you start working together, check as much information as possible about them. This will help you avoid transactions with dishonest business counterparties and reduce the risk of losing money or goods.

Also, you will be protected against tax liability for obligations of any fraudsters and it will be easier for you to demonstrate to the tax authorities you have acted with due diligence in a commercial transaction.

You will find a great deal of information, on both domestic and foreign companies, in free public registers available online. In such registers you can check, for instance, whether a given entity has registered its business activity and whether it is a VAT payer. In order to verify this, you must enter the basic data of your business counterparty.

You can also use paid services, for example those offered by credit information bureaux or business intelligence agencies, particularly if you are looking for information on the financial status of a company.

Read below and learn what information you can obtain from the various registers.

Central Register and Information on Business Activity – CEIDG

If your business counterparty has a one-person business or is a partner in a civil law partnership, you can check their details in the Polish Central Register and Information on Business Activity (CEIDG).

You don’t need to know all the data – just enter their name and surname, NIP (Taxpayer’s Identification Number) or REGON (National Official Business Register Number) into the search engine. Once you find the data in CEIDG, it is worth noting how long the company has been operating, whether its activity is stable or seasonal, and whether there is any information on bankruptcy or reorganisation proceedings.

In the CEIDG register you will find information on:

• basic details: name and surname, company name, NIP, REGON
• start date of business activity, or the date when business activity was suspended or resumed
• status (active or suspended business operator)
• address
• types of pursued business activity
• contact details (phone number and e-mail), if disclosed
• details of the company’s representatives
• information on bankruptcy, reorganisation or restructuring proceedings.

Please note! If you are looking for the details of a civil law partnership, you can find the partners in the partnership by filling in the field: “Civil partnership’s NIP” in the CEIDG search engine. The search will produce results if the partners have up-to-date entries that include the partnership. If the search does not yield results, it means that the partners’ entries lack information on this partnership. In this situation, information on this company can be found in the REGON register.

National Court Register (KRS)

If your business counterparty is a commercial law company (i.e. a general partnership, professional partnership, limited partnership, partnership limited by shares, limited liability company, joint-stock company), you will find information on it in the search engine of the National Court Register (PL).

There, you can search entities by their NIP, REGON, KRS number, name, town/city. Remember to check the “Business Operators” box before entering the data.

In the KRS search engine, you will find basic information on the company you are interested in: its address, form of activity, identification numbers, and the date it was entered in or removed from the register. You will also find the entry history, showing the most important changes to the company.

If you will be verifying your business counterparty on the basis of the KRS entry, pay attention to:

• the method of representation, both in terms of the proxy and their powers and the powers granted to partners in partnerships/board members in companies – to find out who can sign a contract in a binding manner
• in the case of companies – the amount of share capital so that you know the limit of liability for obligations
• information on the opened liquidation proceedings, which indicates that an application has been filed for the entity’s liquidation and, consequently, its removal from the National Court Register (KRS) and the end to its business activity
• information on the filing dates of financial statements (as a rule, all companies are required to file financial statements once in a calendar year) – a failure to meet this obligation may indicate the company’s dishonest intentions – it may be a false entity or a “missing trader”.

From the point of view of business counterparty verification, it is particularly important to read section 4 and subsequent sections. They contain information on the possible appointment of a court-appointed administrator for the company, liquidation proceedings, transformations, division, merger, as well as on any bankruptcy, arrangement, restructuring or reorganisation proceedings.

You can check the financial statements of a company free of charge in the Financial Documents Viewer (PL) by entering the company’s KRS number.

National Official Business Register – REGON

Information on business operators can also be found in the search engine of the National Official Business Register (REGON), run by the Statistics Poland (Główny Urząd Statystyczny, GUS). You can find the entity you are interested in by entering its NIP, REGON and KRS numbers, as well as its address.

In REGON you can find, for instance, details of civil law partnerships which you will not find in CEIDG (CEIDG contains only data on partners).

Search for an entity in REGON (PL).

List of VAT payers – White List

An important tool for verifying the tax status of a business counterparty is the list of VAT payers (PL), the so-called White List.

With this tool, you can find the following details on your business counterparty:

• name and surname or company name
• whether they are currently an active VAT payer
• whether they were an active VAT payer in the period you are interested in (you indicate the date)
• date of their registration as a VAT payer
• date and reason for their removal from the register or on the refusal to register – if they are not an active VAT payer
• bank account number registered and confirmed by the Head of the National Revenue Administration (Krajowa Administracja Skarbowa, KAS), to which you can safely pay any amounts you are due

You need to enter one of three details into the search engine: account number, NIP or REGON number.

Please note! Check whether the accounts of your business counterparty are on the List. Paying more than PLN 15,000 to an account outside the White List exposes you to the risk of being jointly and severally liable with your business counterparty for their tax arrears arising from the transaction. In the event of a dispute, it is crucial to demonstrate you have acted with due diligence in verifying the business counterparty. For example, you can print out the White List details as at the date of payment and keep it on file.

Search for a company in the List of VAT Payers (PL).

EU VAT payers list

If your business counterparty is based in another EU Member State, check their details in VIES (VAT Information Exchange System), a search engine run by the European Commission. There you can verify whether the entity in question is registered as carrying out intra-Community transactions. This is necessary in order to apply the 0% VAT rate to these transactions.

In the search engine, enter the EU Member State from which the business operator originates and their EU VAT number (NIP equivalent).

If the customer claims to have registered for VAT but this is not confirmed by online verification through VIES, you can request verification at the tax office of their country.

Check the VIES register.

Information on a business counterparty from the tax office

You can check whether your business counterparty has correctly settled their taxes, by directly contacting a relevant tax office. This will reduce the risk of joint and several liability for their tax obligations.

At your request, the office will issue a certificate stating whether your business counterparty:

• has submitted tax returns or other documents which he was required to submit
• has included in the submitted tax returns or documents all the activities he was required to declare
• is in arrears with the payment of taxes resulting from the tax returns or other documents.

Any business counterparty of the taxpayer may apply to the tax office to obtain such information. However, please note: you must be a party to the transaction. You may not request access to information about a future or potential business counterparty.

Read how to apply for a certificate confirming the status of a VAT payer

Where to check if a business counterparty has debts

Register of Insolvent Debtors (RDN)

It is a state institution run by the National Court Register (KRS). Debtors are entered ex officio, based on a court ruling.

To find a company in the Register of Insolvent Debtors, you must know its RDN number, i.e. the number under which the debtor has been entered in the register. If you do not know it, you must file an application to the KRS Central Information Office. The Central Information Office issues a certificate stating whether an entity is in the RDN register and the number or numbers under which it is registered. The certificate will state all the RDN numbers of the debtor. An application for such certificate costs PLN 15.

Search for a debtor in the Register of Insolvent Debtors.

Business Information Offices (BIG)

You can also obtain data on your business counterparty’s financial standing from Business Information Offices (Biuro Informacji Gospodarczej, BIG). There are several such offices in Poland, run by private entities. They charge fees for their services, depending on their scope.

• InfoMonitor Business Information Bureau (BIG InfoMonitor) operates the BIG Register of Debtors. It provides access to the databases of the Credit Information Bureau and the Polish Bank Association (ZBP). It supports debt collection processes, confirms the financial credibility of customers and business counterparties and helps in verification of the payment status of companies. You will pay PLN 29 net for checking your business counterparty (that is, for a report on a business operator from the BIG register). If you want to check a larger number of debtors, you can order a subscription.

Go to BIG InfoMonitor portal (PL).

• Krajowy Rejestr Długów Biuro Informacji Gospodarczej SA provides services to all economic entities – from one-person businesses, through small and medium-sized enterprises to large corporations. KRD BIG SA has created a system for the exchange of business information linking all branches of the economy. Its services can also be used by individuals, municipalities (gminas) and factors. The monthly package costs from PLN 160 to 990.

Go to the KRD (PL)

• Rejestr Dłużników ERIF Biuro Informacji Gospodarczej S.A. supports businesses in prevention and managing receivables. A report on a selected entity costs PLN 49.99.

Go to ERIF (PL)

• KBIG – Krajowe Biuro Informacji Gospodarczej is part of an international group – Deltavista. It cooperates with offices from Western Europe. Information on unreliable payers disclosed in KBIG is also made available on foreign markets. The monthly subscription costs from PLN 290 to 590.

Go to KBIG (PL)

• Krajowa Informacja Długów Telekomunikacyjnych S.A. was established to support the telecommunications market and the security of financial transactions.

Go to KIDT (PL).

Business intelligence agencies

Also, you can use the services of business intelligence agencies, i.e. private entities that verify the financial credibility of Polish and foreign entities on request. Business intelligence agencies report information from registers, data on the financial situation of an entity, including its possible debts. The service is chargeable and the price depends on the scope of the data provided. Use the online search engine to find a business intelligence agency that meets your needs.

How to verify a foreign business counterparty

When operating in foreign markets, you may come across an untrustworthy company that attempts to take advantage of a geographical, language or legal barrier to – for example – avoid paying for a delivery. There are also scams that impersonate actual entities, or the company you plan to do business with may be in poor financial condition.

Therefore, before you decide to transact with a foreign company that you do not know, especially if its offer seems particularly attractive, it is worth verifying it. Here are some ways in which you can verify such business:

• Check information on a business counterparty online: its registered office, website, social media sites and discussion forums. Check whether the company operates under domains of exotic countries. You can also view its registered office on Google Street View.
• Ask for references or a list of clients that the company works with, and verify this by contacting these clients.
• Determine whether the entity is listed in the business register in its country. You will find a database of European companies on the European e-Justice portal, managed by the European Commission. The portal contains basic information about registers of other countries (the equivalents of Polish CEIDG and KRS), and links to their websites. Access to the information is usually free of charge.
• Go to the Export Promotion Portal for a list of institutions and Polish diplomatic missions that will help you establish contact with foreign companies. There you will also learn more about the rules of doing business in the country in question.
• Some bilateral chambers of commerce offer assistance with business counterparty verification. For example, you can order copies of foreign registers and trade reports from the Polish-German Chamber of Industry and Commerce.
• You can also use the services of an international business intelligence agency – services are chargeable depending on the scope of data you will be requesting.

How to apply due diligence – guidance from the Ministry of Finance

As a rule, in order to apply due diligence, a taxpayer should verify their business counterparty, i.e. the supplier of the goods, and the circumstances of the transaction – see the Methodology of the Ministry of Finance on the assessment of due diligence by purchasers of goods in domestic transactions (PL). If you take the steps set out in the Methodology, the likelihood that you will exercise due diligence increases significantly.

According to the Methodology, it is worthwhile for you to check, among other things:

• the place of business, for example, whether your business counterparty has an office, employees, a landline – to rule out that it is the so-called virtual office, and whether the premises correspond to the type or scale of their business (for example, it offers wholesale fuel supply but has premises in a garage)
• the contract of ownership or lease of the warehouse, the contract of lease of the means of transport and the insurance policy for the transport of goods – if they carry out wholesale trade in goods, they should have access to appropriate warehouses
• the identity of your business counterparty or of the person representing them – be careful when contact is made by e-mail unconnected with the company or by instant messaging (personal contact is recommended)
• licenses and permits, if required, for example a wholesale alcohol licence or a fuel trading licence
• after the purchase, the conformity of the goods with the specifications that the seller attaches to the invoice – you can take photos of the purchased goods

Beware when a business counterparty, without any economic justification:

• offers goods at a price far from the market price
• demands payment within a shorter period than the standard payment period
• offers goods from a sector other than the one in which they operate

Remember: It is a good idea to ask your new business counterparty for references.