These IT freelancers are living the remote-working dream. New rules could change that
Lured by higher wages and the country's lenient approach to freelancing contracts, Poland's IT pros did remote working before it was cool. But proposed changes to the country's tax laws could make things more difficult.
For a couple of years, 37-year-old IT security analyst Aleksander Dros did what most Polish IT workers did when they got a job offer abroad: he packed his bags, accepted that he would see his family at most every other weekend, and moved to Brussels to work as a penetration tester. But after half a year, he wanted to go back to Poland due to the birth of his child.
"I managed to negotiate a new deal, where I would work two weeks per month in Brussels, and two weeks from Poland," the ethical hacker says. "And after a year, we re-negotiated it to one week in Brussels and three remotely, renting a co-working space. And when COVID-19 came, I started to work fully from home."
The way Dros works is through what in Poland has become known as the Business-to-Business (B2B) contract, which has become steadily more popular over the past few years in the country. Such contracts are, as the name suggests, between two businesses – but in practice, between a business and a self-employed individual – and are much less rigid than standard labour contracts. They are meant for freelancers, but usually have a broader scope than features a standard freelance arrangement might include, such as fixed duration or exclusivity.
According to research by NoFluffJobs, a Polish platform for IT freelancers, nearly a third of IT specialists in the country work using a B2B contract. While it's still less prevalent than the typical employment contract, it is much more popular among experienced workers. When it comes to countries, Great Britain, Scandinavia and Germany are the most popular 'digital' destinations. "In these times of digital transformation, we see even more barriers disappear, and there is nothing that would stop people working remotely for countries in Asia or Australia," NoFluffJobs CEO Tomasz Bujok tells ZDNet.
The wages remain the main perk of this working arrangement. The cost of living in Poland is low compared to other European countries, and freelancers working through B2B contracts are often able to make two to three times the money they would otherwise, even if wages in the country are climbing rapidly. As such, it affords most the opportunity to live a fairly comfortable middle-class lifestyle in Warsaw.
The B2B contract is also the only viable arrangement available to Polish IT workers who want to work for organizations in another country without moving abroad. But even if they had a choice, the arrangement would still remain very popular among the specialists, largely thanks to other benefits it offers that are designed to stimulate educated professionals to move more freely through the economy.
"Taxes are lower," says Krzysztof Lis, who works as a standardization specialist for digital telecommunication. "If I had to work as a freelancer from, say, the United Kingdom or Germany, I would probably have to pay much more."
Tax breaks and cushy perks
Besides tax breaks, IT workers can also take advantage of incentives like the IP Box incentive, which offers an additional tax break for any work classed as research and development. Such perks and lenient freelancing rules in Poland allow IT workers to compete in the Western European and American job markets, to the benefit of companies there.
"The lack of IT professionals is far more serious in Scandinavia than it is here," says Szymon Bialy, a programmer and IT architect working mainly on a project basis for a Danish company. According to the bank Pekao, Poland has a deficit of around 50,000 IT specialists on the job market. But a country like Sweden, which has less than one-third of Poland's population, is expected to have a shortage of 70,000 by 2022.
Rules for B2B contracts in Poland do not require freelancers to have a minimum number of customers either, as is the case in many other countries, allowing for exclusivity deals. In return, many people who are working exclusively for organizations abroad get some kind of compensation for missing out on benefits that labour contracts bring.
"I think the only perk I do not get that those working at the American offices do is employer health insurance, something that is universal in Poland anyway," says Artur Piszek, an engineer who works exclusively for US-based Automattic.
"Right now, I am on parental leave, and I get a stipend to use for renting co-working spaces. I don't need to track hours or anything, and work-related trips are fully paid for."
When it comes to job certainty, which for those on a B2B contract is basically non-existent, Piszek shrugs: "American companies can fire their people easily anyway, so my situation isn't any different."
The pandemic has put remote working in the spotlight all over the world. But over the years, it has become second nature. Dros used to work in a co-working space using an extra allowance until the pandemic hit. Now, he simply works from a home office.
Lis has been working from home since he became self employed four years ago. "The loneliness is a big drawback," he admits. "But I've got good neighbors." For both of them, COVID-19 has proven to be an equalizer of a sort, where remote working has become more of a norm rather than a drawback.
Another downside is the lack of networking opportunities, especially for those preferring a more traditional freelance life with multiple clients and projects.
Building such a network on your own is tough, and almost a no-go when you look across borders, says Bialy, who works through a Poland-based agency that offers nearshoring services. Bialy says that agencies like the one he works with take around 25% of the total fee, but it's a cost he is willing to carry.
"Another pro is that there is also a better balance between the client and the worker. The relationship between two organizations is much more business-like."
Such flexibility benefits the economy in general, and justifies the tax breaks this group is getting, says Przemyslaw Pruszynski, secretary of the Tax Council of Lewiatan, Poland's largest business association.
Pruszynski tells ZDNet: "On top of [paying income tax] they need to pay their healthcare insurance and pensions themselves. They also take more of a risk, and it's generally harder to attain your income this way."
An end to the dream?
But as is happening in other European countries, debate rages in Poland about the benefits the self-employed enjoy. A new tax package proposed by the conservative government – marketed as The Polish Deal – seeks to even out the differences with conventional employees.
The biggest proposed change is to abolish the flat fee for state health insurance and the state pension for the self-employed, which would drastically hike up their health payments. Despite a proposed compensation in the form of a higher tax-free allowance, it will almost certainly make IT workers pay more.
For some, this can be reason enough to move to a different country, says Pruszynski, who warns that the proposal could also have a cooling effect on Poland's IT specialist market.
B2B workers themselves are, unsurprisingly, universally negative towards the proposals. While one of the stated goals of hiking taxes is to improve the country's lagging healthcare facilities, those interviewed by ZDNet are not confident this is where the money will go. "I would need to pay more into the state pension system, while I would still get the same low pension payment in return," Lis said. Dros and Piszek hate the idea as well, though acknowledge that taxes would be lower than in the west.
Bialy, meanwhile, is already drawing up a plan B. "I am already looking into possible emigration to the Czech Republic if the plans go through, but that's truly a last resort," he says.