Last year, Lower Silesia was Poland's third most attractive region for foreign students and professionals behind Mazovia and Lesser Poland. Wroclaw is known to attract the largest number of foreign nationals from Ukraine, South Korea, Russia, India and Belarus. In 2015, Wroclaw's District Employment Agency alone received 36 thousand applications from employers (99% of which concerned Ukrainian nationals) who sought to employ foreign professionals using the simplified procedure. Read more: Employment opportunities for foreign nationals in Wroclaw (procedures).
The growing number of Ukrainian residents is reflected in the data provided by the Department of Civic Affairs and Foreign Residents, Provincial Office of Lower Silesia, which issues work permits, permanent residence permits, temporary residence permits and long-term EU residence permits. Admittedly, the Provincial Office does not run any register on the nationality of the foreign residents, but it is nonetheless known which countries they represent. Accordingly, 1414 Ukrainian, 383 South Korean and 175 Chinese nationals obtained temporary residence permits in 2013 alone. In 2015, the data were as follows: 7018 for Ukraine, 350 for South Korea 350, 264 for India and Russia respectively.
"Lower Silesia is conveniently located for Ukrainian nationals who would like to run their business operations in Ukraine and Poland. As a result, Ukrainian entrepreneurs have prompt access to goods and services offered in Western Europe. These products are available in every Polish supermarket. Take Portuguese wine, French cheese, Spanish watermelons or German cleaning products for example, all of them more expensive in Ukraine due to to excise duties and limited access to European markets and foreign currencies," says Aleksandra Kłonowska-Drozd from the Wroclaw Metropolitan Area Development Agency.
Why Ukrainian nationals choose Wroclaw?
Historically, both countries share powerful cultural and linguistic ties. This means that Ukrainian nationals, even if they hardly speak any Polish, can easily communicate with Polish employees and business partners. This is impossible if they run a business in other European countries.
"Economic challenges and socio-political factors that has led to the crisis which Ukraine in now facing had a very negative effect on business operations in the country. A large number of Ukrainian entrepreneurs had to reconsider the viability of running a business in the country due to armed conflict in the East of Ukraine, rapid inflation growth and general economic instability. It is no wonder, then, that Ukrainian nationals seek business development opportunities in EU member countries. One of the countries that are particularly friendly to running a business is Poland,” says Oksana Kartavtseva, a Ukranian national who runs relocateyou.pl, a Wroclaw-based relocation company.
Running a business in Poland in Ukraine: differences
Since Poland is a EU member, businesses registered in Poland can exercise the right to free exchange of goods and servicesm not only nationwide (which gives 38 million potential customers) but in the whole of the EU (over 500 million consumers). Additionally, the EU supports SMEs by providing subsidies to innovative projects or unemployed persons that wish to set up a business, etc. No such opportunities exist in Ukraine.
Aleksey Ivankin, CTO at 908, an IT company that runs operations both in Poland and Ukraine, shares his views on the advantages of doing business in Poland: "In comparison to Ukraine, businesses in Poland can freely run their exports operations; have bank accounts in foreign currencies, e.g. in USD or EUR, which helps to settle the accounts with partners as large as Google or Apple; combine their PayPal account with their business bank account, etc. Instead of focusing on economic challenges, entrepreneurs in Poland can focus more on developing their brands. Additionally, regarding the overheads, it is important that you can obtain an invoice at any shop by simply providing your KRS number. The vendor can easily access all your details in the online registry of companies and issue the invoice accordingly. Freedom of business activity provides opportunities for making your presence felt at various international events. While the organisers just have to check your company's details, all your representatives need to do is produce an ID.”
As he speaks on the pros and cons of running a business in Poland, Yevgeniy Shevchenko, CEO at Gorilla Group Wroclaw (an American company that specialises in designing, creating and implementing e-commerce solutions; some of their Kyiv employees have recently been relocated to Wroclaw), points out: "A good thing is that there are transparent rules for running a business in Poland. You just have to stick to the regulations. You know exactly what you can and cannot do as an entrepreneur. Poland guarantees stable economy, access to EU markets and better access to global markets. It would be nice, however, if certain formalities were simplified because it sometimes takes a lot of time to go through some of the procedures when dealing with local authorities.”
Tax systems in Poland and Ukraine
One of the reasons why Ukrainian entrepreneurs decide to relocate to Wroclaw is that Poland has one of the lowest tax rates throughout Europe. For example, corporate income tax in Poland is only 19%, whereas in Hungary, Estonia and Germany it reaches 20.6%, 21% and 30%, respectively. At the same time, the existing regulations stipulate that some of your company's expenses can be treated as overheads. Particular attention should also be paid to VAT, which is 23% and is usually returned to tax payers within the legal deadline. In Doing Business 2016, the tax system in Poland came 58th (an improvement by 38 places), whereas the tax system in Ukraine was ranked as 107th. (for comparison: Slovakia came 73rd, Hungary 95th and the Czech Republic 122nd).
Some of the differences between running a business in Poland and Ukraine are as follows: "Firstly, Poland has institutions such as the Wroclaw Metropolitan Area Development Agency, which allows you to find out more about the city or the country of your arrival. I wish Ukraine had similar agencies that support foreign investment opportunities. Additionally, legal and tax regulations in Poland are more transparent, which only facilitates running a business," says Yevgeniy Shevchenko.
Economic development: corruption as a challenge
Ukrainian nationals point out that Poland's economy is now one of the most reliable in the whole of the EU. Additionally, Poland also enjoys a leading position in Central and Eastern Europe for bilateral trade volumes and GDP growth. According to latest "Doing Business 2016", whose focus is on business facilitation, Poland came 25th out of 189 different countries, Slovakia being 29th, the Czech Republic 36th, Hungary 42nd and Ukraine 83rd. Poland was the leader in international trade volumes last year.
"One of the reasons for such a great disparity between Poland and Ukraine, which are both neighbouring countries after all, is corruption. In Ukraine, corruption and legal instability are great obstacles to running a business. Admittedly, the situation improved last year, e.g. several supervising bodies were established, including the National Police, National Anti-Corruption Bureau and National Agency for Corruption Prevention. That being said, the citizens still feel the negative impact of the past," adds Oksana Kartavtseva.
Foreign Professionals in Wroclaw [GUIDE]
A growing number of foreign specialists work in Wroclaw. This guide has been developed to suit their needs as well as the needs of their families and employers. The articles that follow will focus on the following topics: an employer's perspective on relocating foreign personnel, relocating foreign personnel's family, initial costs of relocating to Wroclaw, registering a company in Poland by foreign nationals, an expat's mini guide to Wroclaw or how to find your way around the city.
Read more:
Employment for foreign candidates in Wroclaw (procedures).
Foreign residents on rise in Wroclaw
How to relocate foreign employee and their family
How to set up company: guide for foreign residents
Foreigners in Wroclaw: Raghavender Balasubramanian
Beach and surfing: a Costa Rican in Wroclaw
The feature was prepared in collaboration with RelocateYou and the Wroclaw Metropolitan Area Development Agency
Oksana Kartavtseva President of RelocateYou sp. z o.o. www.relocateyou.pl
Aleksandra Kłonowska-Drozd Project Manager www.invest-in-wroclaw.pl
