Spotlight on Poland

Geography

Poland, or the Republic of Poland as it is officially known, is located in Central Europe. The country stands as the European Union’s fifth most-populous member with a teeming population of over 38 million people. Its capital city is Warsaw and its citizens are referred to as Polish. The same designation also applies to its official language. Though a member of the EU, Poland still maintains its currency, the Polish złoty, as its legal tender as it does not belong to the EU’s Monetary Union yet. 

Economy

The economy of Poland is mixed, relying largely on its services sector, while industry and agriculture make up the remainder. Poland has been classified as a high-income economy by the World Bank with its nominal GDP reaching $716 billion in 2022. According to the European Union, this is currently the sixth-largest economy in Europe. Its well-diversified economy has also been classified as one of the fastest-growing within the EU. Exportation of not only goods, but services as well, plays a large role in Poland’s economic growth as it ranks 20th largest exporter in the world. Vehicles, furniture, plastics and electronic equipment account for most of its top export goods. 

Ease of Doing Business

With its fast-growing economy, statistics have shown Poland to be an accessible and relatively easy location to do business in Europe. According to 2020 Doing Business Report, the country ranked 40th most easy country to do business. This can be accrued to its solid and highly developed road transport system, as well as its well-educated citizenry. This abundance in human capital accounts for one of the best-educated populace in Europe.

Poland’s relatively stable political climate is also a contributory factor as it ranks 25th in the 2022 Global Peace Index. Its well-developed financial system is also worthy of note. For Many foreign investors, the Limited Liability Company (LLC) is the most commonly adopted as readymade LLCs are available for off-the-shelf purchase and could be ready for use within a few days.

Terms of Employment

`Like any other country with its peculiar labour laws, the Polish Labor Law caters for different types of agreements between employer and employee. This law originates from the provision of its 1997 constitution. The different types of employment contracts are solely based on the term of duration of work and according to the Labor Law, these are just four. Thus, an employee can be hired for an indefinite term, a fixed term, on a contractual basis for a short period of time in which a job gets done and as a replacement for another employee whose absence from work is undeniably justified.

Regardless of the terms of work, the general standard for work hours is an 8-hour day in a 5-day working week. Within this timeframe, employees are entitled to 15 minutes to 1-hour break. The number of hours per week is capped at 40 and employees are entitled to a minimum salary per month. This minimum wage is put at $677. Poland has 13 public holidays and works on these holidays is not permitted with the exception of essential service providers. 

As for overtime hours, employee overtime should not be more than 150 hours in a year. 100% of the salary is remunerated for night work, bank holidays and Sundays. In the event that overtime occurs on any day apart from these three, 50% of the salary is remunerated. Like other EU countries, employees are entitled to paid holiday leave, sick leave as well as maternity/paternity leave. It is important to note that employees are protected against unfair termination by the Polish Labor Law and it also maintains rigid procedures for termination of employment. 

Tax Obligations

• Poland’s residents are obligated to pay tax on income generated worldwide, while non-residents are to pay tax on income generated within the country only. To be considered for residency, more than 183 days in a year must have been spent in the country. 
• There are no specific payroll taxes.
• Taxes are filed on the 30th of April. 
• Individuals under the age of 26 who are gainfully employed are exempt from tax once their income is up to 85,528zł in a calendar year.
• Both employer and employee are obligated to make contributions to the employee’s Social Security. This amounts to about 35% of the employee’s salary, though the employer’s contribution is between 19% – 22% of the gross pay, while employees pay 14% of their gross salary. 
• See the table below for more information:

Tax	Payer	Rate
Accident Insurance	Employers	1.67% of the total salary for employers with up to 9 employees.0.67% to 3.33% for employers with more than 9 employees.A flat rate of 1.67% applies to foreign employers.
Labor Fund	Employer	2.45% of the gross salary
Employee Guaranteed Benefits Fund	Employer	0.1% of the gross salary
Pensions and Disability Insurance	EmployerEmployee	16.26%  of the gross salary2.45% of gross salary
Employee Capital Plans(PPK)	Employer EmployeeGovernment	1.5% of the gross salary (with no cap)2% of gross salary (with no cap)
Health Insurance	Employee	9.76% of gross salary to be deducted by employer

Why Choose Poland As Your Next Point of Expansion? 

Poland’s strategic location in the heart of Europe makes it a prime spot for business expansion, especially for companies who have business dealings with the Eastern and Western parts of Europe, as it has unlimited access to other member states of the EU. It has also been rated as one of the fastest-growing countries in the world, especially with its stable economy.

Tax exemptions apply to all parts of the country, wherever companies choose to do business. Taxes are also waived for companies with employment expenses, especially those related to research and development. The Polish government’s subsidy program also grants up to 20% of the costs for eligible projects. Its stable political climate and flourishing economy will provide a thriving ground for your business.

Take Expansion Steps with WeHireGlobally

If you are not sure how to begin your expansion journey, you can start now with WeHireGlobally. Our Global Employer of Record solution is designated to deliver efficient solutions to companies and business owners seeking to take their business to other shores. With WeHireGlobally services, you can be sure to build your talented team of individuals and disburse all necessary payments, including taxes, at the appropriate time. Our international payroll service is designed to do this in compliance with labour laws to help mitigate risks associated with tax payments.