A classy clickbait title? Will this list help you make up your mind and decide whether you should start your company in Poland? We say you should just do it and here's our very subjective list of five reasons why. It may work for you, it may work not, it does for most of our clients. In the end it's always down to money, so check out our free Polish company calculator below the article.
1. Low 9% Corporate Income Tax (CIT) for Small Companies
Poland is not necessarily a tax haven, yet it offers quite a few incentives for new companies. With these Poland can easily compete tax-wise with other popular EU countries such as Ireland. You won't benefit much if you're a large international corporation, but being a small and medium-size business in Poland can really pay off.
The general income tax for companies in Poland is at a flat 19% (2021), but if your company's yearly turnover stays below an equivalent of 2 million euros (roughly around 9,1M Polish zloty) you can benefit from a low flat 9% corporate income tax. A great boost for start-ups. Even better for production and outsourcing subsidiaries, the objective of which is to provide products and services within their capital group at a price slightly above the cost.
On top of low tax for small companies, your business can also benefit from special economic zones in Poland which are scattered across the country and business activity in one of them is subject to additional tax exemptions and grants.
2. Well Educated Population
A company in Poland can also benefit from its well-educated workforce. Polish youth made it to the 10th position globally in the most recent PISA assessment (2018) and ranked 10th in mathematics (3rd among European countries following Estonia and the Netherlands), 12th in science (preceded only by Estonia and Finland in Europe) and 10th in reading (after Estonia, Finland & Ireland).
In terms of higher education, Poland is a good place to set up a company. In 2012, a quarter of the Polish population had a university degree (Eurostat 2012). Still, the trend is rising, as in 2019, over 45% of people aged 30-34 years had a higher degree compared to 14.4% back in 2002.
The majority of students in Poland are choosing subjects relevant to the business. Out of 1.23 million students in 2018, 22% studied business, law or administration, 17.2% majored in IT and other technical faculties related to the industry and construction sector. This is highly beneficial to technology companies outsourcing their core business to Poland and goes well with the next 3 reasons to invest in Poland.
3. High Proficiency in English
According to EF English Proficiency Index Poland ranked 16th (14th in Europe) in their Global Ranking of Countries. The country has been classified as "high proficiency". Europe is the world leader in English proficiency (excluding native English speaking countries), so Poland's high ranking comes as no surprise. It's worth underlining, though, that Poland ranked 2nd in Central Europe, right after Hungary, which is a satisfying result as Central and Eastern Europe has generally been lagging behind Western Europe in English proficiency.
English speaking employees are necessary for doing business in Poland, both in services and manufacturing, unless the owners and the management speak Polish themselves. Still, the possibilities for foreign employers are plenty. Although manufacturing companies can do with a couple of team leaders who communicate in English while the rest of the team speaks only Polish, hi-tech companies must hire staff who speak English at a professional level from tip to toe to operate at an international level. Both are quite easy nowadays.
English is Not Enough
- How to Start a Business in Your Local Language
Poland has been investing in higher education for decades. Moreover, considering the fact that elder generations had been isolated from the outside world during the communist time and the only foreign language they learnt used to be Russian, younger generations became thirsty to explore the world and connect with "the West" privately and professionally. This led to a real boom in foreign studies.
Some of the most popular faculties in many Polish universities are language studies, not limited to the most common ones. For example, at the Adam Mickiewicz University in Poznan, students can learn 6 foreign languages, including English, German, French, Russian, Spanish and Italian, regardless of their faculty. Yet, the university itself offers a wide variety of dedicated programs covering literature, history, culture, and language in more than 40 languages, some really rare such as Thai, Vietnamese, Korean, Dutch, Hebrew, Arabic, Hungarian, Danish, Norwegian, Swedish and Finnish - to name a few.
This led to the emerging of a whole new business sector within BPO and SSC (Business Process Outsourcing and Shared Services Centres), where international companies hire highly competent language graduates to take care of their business in other countries. In 2019 the sector employed over 120 thousand people and it is predicted, that it will grow by another 100 thousand in the years to come.
As a result, the more experienced business professionals drip to SME's and can come in handy when it comes to company formation and doing business in Poland. At Hugin Consulting we've been building our niche around broader business expertise combined with servicing our clients not only in English but also in Scandinavian languages and thus creating a synergy between Polish companies entering the Scandinavian markets and Scandinavian companies doing business in Poland. Even though English is the lingua franca of modern times, helping do business internationally, speaking your local language cannot be easier than in Poland.
4. More Affordable Workforce
In order to run a competitive business one must keep their costs low. A truism that's been under heavy criticism in recent years, especially when the cost cuts are found in staff. On the other hand, a well-paid and motivated employee will only benefit the business. As in many aspects of life, one will need to find the right balance and we think that the right balance can be found in Poland. No BS, Poland is still cheap! But not too cheap.
According to Eurostat (2019), average wages in the European Union range from 43.50 EUR in Denmark to 5.40 EUR per hour in Bulgaria. With its around 10 EUR at the time, Poland ranked as the 6th least-expensive country in labour costs in the EU. The minimum hourly pay in Poland in 2021 was around 4.30 EUR. But highly qualified professionals in Poland also get paid above EU average wages.
For example, an unqualified production employee in 2021 costs the Polish employer anything between 750 EUR - 1250 EUR a month full time, yet a skilled software developer can cost between 2.600 EUR - 6.500 EUR a month. That's nearly 9 times more expensive than the minimum wage, though it's still less expensive than a corresponding employee in Germany or Sweden.
On the one hand, it is cost-effective to hire an unqualified labour force, yet it is difficult to find people willing to work for the minimum wage on other hand, especially in larger cities. Although migrant workers from the East have been accepting the least paid jobs, we don't advise hiring on minimum wages in Poland. The savings from an unqualified staff often come with a price of effectiveness. One should always bear in mind that cheap labour does not necessarily turn out cheaper in the long run. Automation and technology can make a difference in production costs, and logistics also play an important role, which became crucial during the Covid-19 pandemic, when many Polish companies gained orders that originally were destined for China.
Understanding the correlation between technology and labour costs is a tip for both investors and companies sourcing from Poland: less complicated products requiring lots of manual labour may turn out more expensive in Poland than the corresponding products machined and produced with automated processes in wealthier countries. However, the tide turns in favour of Poland when a highly skilled and educated workforce becomes involved, as, for instance, engineering outweighs the production costs in many cases. All in all, Poland is a good place for starting a business that balances the need for manual labour, automation and new technologies.
5. Modern Infrastructure
A Digital Wunderkind
Landline phones and backward communications? Not really! Being the late introducer in the case of Poland in the 1990s turned in its favour, as today's Poland offers access to all the modern communications technologies in a fast and reliable manner. Remote work, the Internet of Things, Cloud Services, Big Data & AI are part of everyday business life in Poland today.
Let's compare Poland with the US that back in 2004, had 90% of households actively using landline phones. With the surge of smartphones, one would expect landline phones to die a natural death, yet in 2020 40% of US households were still using a landline phone. On the contrary, in 2019, only 9.3% of Polish households used landline phones.
Mobile technologies were introduced much faster in Poland than in the US (and Western Europe). And it's not only due to the size of the country, but rather its technical backwardness from the communist times, that forced quicker adoption of newer (wireless) technologies. And even though the numbers have been evenly spread in Europe in recent years, there are still areas where Poland takes the lead.
In 2020 over 90% of Polish households had access to a broadband Internet connection, whereas in the US it was approximately 80%. Poland ranks 12th in the EU, and 1st in Eastern Europe in terms of broadband access and the cellular coverage (including mobile internet access) is much better compared to Western Europe.
Working from home during the pandemic was not a problem for Polish companies. And Polish financial institutions (that survived the 2008 banking crisis without a scratch) are one of the fastest in the world to adopt new technologies. Automated grocery stores without any staff are not an unusual sight anymore and contactless payments were introduced much sooner than in other countries. Poland was actually a pioneer in mobile payment apps when Polish financial institutions widely started accepting the BLIK system.
Road network & logistics
The size and location of Poland are some of the countries greatest assets - although it hasn't always been like that in the past. Poland turned from a battleground in the past to a business hub in modern times. A business in Poland can benefit from being located centrally in Europe with wide access to the European transport network and thousands of logistics and freight companies.
In the early 2000s, there was merely 275 km (171 mi) of dual carriageway motorways and expressways in Poland, whereas today in 2021 (June) there is 4 295 km (2 669 mi) of the same type of roads. And that's still only 52% of the entire planned network.
Poland - The Mother of all Freight Companies
Poland has been known for its all-present freight companies. Especially visible in its vicinity. Most of the trucks on European roads are registered in Poland, and this gets confirmation in statistics: Polish trucks registered the highest number of tonne-kilometres in the EU in 2020, in particular, due to high international, cross-trade and cabotage transport. The transport industry in Poland was also among the least affected ones across the whole EU.
Polish freight companies are amongst the most agile and most competitive in Europe. No surprise that richer companies from Scandinavia, such as Freja or NTG, have established their own bases in Poland, where they have a large domestic market and hire drivers from all of Eastern Europe.
Thanks to Poland being the European hub for freight and logistics, the business activity of manufacturers is a lot easier due to fast deliveries of raw materials and parts as well as quick shipment of final products to customers and other facilities.
Hugin Consulting Scandinavian customers experience that it is much easier to dispatch goods directly from Poland to their Western European customers than it would be from their home countries.
Check out the costs of running a company in Poland
If you'd like to see how the standard costs of running a business in Poland compare to your specific type of business, and also calculate your potential profits from starting a business in Poland, you might want to check out our free company calculator here.
A Business in Poland - recap of pros & cons
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