POLAND HAS THE LARGEST POPULATION AND the biggest economy among the eight former communist countries that joined the European Union on 1st May 2004, along with Malta and Cyprus. The Polish economy turned the corner in 2003, growing by 3.7 per cent compared to 1.4 per cent in 2002, but it still faces a mammoth challenge in reducing its public deficit and high rate of unemployment.
While most people were guaranteed a job in communist-era Poland, the jobless rate rose sharply in the mid-1990s. In preparation for joining the EU and amid a deep restructuring of its economy, Poland had to shed thousands of jobs in the mining, steel and shipbuilding industries. The high unemployment rate (the expanding EU's highest) eased slightly in March 2004 when it fell to 20.5 per cent.
In the second quarter of 2004, the Polish economy grew by 6.1 per cent year-on-year, a slight slowdown from the first quarter when the economy grew by 6.9 per cent. Although the second quarter growth rate was slower than in the first quarter, the Polish economy remains one of the most dynamic in the European Union. The central bank has raised interest rates in recent months amid fears that high economic growth is translating into increased inflationary pressures.
In another sign that Poland is emerging from the economic woods, analysts have said that Poland's current account "was practically balanced" in the first quarter, thanks to a boom in exports to the European Union. Inflation has risen since Poland joined the EU in May 2004.
Politics
Poland's political environment has remained fractious and uncertain since the demise of communism. A succession of minority governments has been in power, and corruption scandals regularly rock government circles. Prime Minister Leszek Miller resigned on 2nd May 2004. His popularity had plummeted to 10 per cent because of the country's continued economic troubles and a number of corruption scandals. He was replaced by Marek Belka, the personal choice of PolishPresident, Aleksander Kwasniewski.The coalition formed in October 2001 between the Democratic Left Alliance (SLD), its Union of Labour (UP) partner and the Polish Peasants' Party (PSL) was dissolved on 1st March 2003. Since then, the SLD and the UP have formed a minority government.
The next parliamentary election is due in September 2005, and the current government is trailing the main conservative opposition party Civic Platform. A populist anti-European peasants' party called Samoobrona (meaning Self Defence), led by Andrzej Lepper, a pig-farmer, has also polled fairly well in recent times.
Crime
While Poland generally has a low rate of violent crime, the incidence of street crime, which sometimes involves violence, is high. Major cities have higher rates of crime against residents and foreigners than other areas. Organised groups of thieves and pickpockets operate at major tourist destinations, in train stations and on public transport. Car thefts, thefts from cars and carjackings are commonplace. Racially motivated verbal, and occasionally physical harassment of foreigners, particularly those of non-Caucasian ethnicity, is also known to occur.
Religion
The main religion in Poland is Catholicism. Approximately 98 per cent of Poles are practising Catholics. The current pope, John Paul II, was born in Krakow. He is much loved by the majority of the Polish population.
Currency
The Polish currency is the zloty (Zt). 1 Zt is equivalent to 100 groszy. At the current exchange rate, £1 sterling is approximately 6.35Zt, US$1 is 3.5Zt,and €l is 4.2Zt.
Language
Poland is one of the youngest countries in Europe, with 35 per cent of Poles under 25 years of age. This means that about 14 million young and educated people will enter the labour market in the future. English is a very popular language to learn at school and-university, so a very high proportion of young Poles speak English. It's less common for older generations to speak English because they were only able to learn German and Russian at school. English is widely spoken in the tourist centres, such as Krakow, and less so in rural areas.
Food and wine
Poland is not known for its wine production. It is, however, known for its vodka! Poland is arguably the birthplace of vodka, and produces some of the best and most distinctive varieties in the world. Traditional Polish food is not particularly healthy, consisting mainly of the 'meat and potatoes' variety. Polish sausage (kielbasa) is world renowned. Other popular dishes include pierogi (meat or potato dumplings), bigos (stewed cabbage) and oscypek (goat or sheep cheese). Increasingly, international cuisine is available in major cities.
Visas and work permits
The accession of Poland to the European Union on May 1st 2004 has brought a welcome relaxation to visa regulations. Citizens of the EU, Australia, New Zealand, Canada and the USA can now enter Poland for a period of three months without a visa, while British citizens can stay for up to six months. Those wishing to extend their stay can apply for a Karta Pobytu, which is easily obtainable. Citizens of other countries may still need to obtain a visa to gain entry to Poland.
Insurance
Getting personal insurance is easy because there are brokers that are located in and around cities, so it's simply a matter of going in and purchasing insurance. This applies to both property and personal insurance. Typically, as with the UK, if you purchase an apartment, the building's insurance is normally included within the administration costs. You will most likely need a translator for this process though.Healthcare
Adequate medical care is available in Poland, but hospital facilities and nursing support are not comparable to western standards. Physicians are generally well trained but specific emergency services may be lacking in certain regions, especially in rural areas and smaller towns. Younger doctors generally speak English, though nursing staff often don't. Doctors and hospitals often expect immediate cash payment for health services and bribery to get priority treatment is commonplace.
Banks
Most Polish banks are foreign-owned, which means the process of setting up a bank account is normally relatively straightforward.
Utilities
Arranging gas and electricity requires registering at the local gas and electricity offices in order to transfer the bills into your name. Normally the queues are quite long and this can be a very time- consuming process. You're given a series of pay slips, which must be taken to the post office to pay, although a direct debit can be set up.
The same goes for water, but again, it may be included in the administration of a building if you own an apartment.
Education
The state education system is still under-funded, though a large private network of schools exists.Schooling in an English-language environment, targeted at children of expats and wealthy locals, is increasingly available. It's also possible to study university courses in English, and such courses are often available at a cheaper price than they are in other parts of Europe.
Tax
Income tax as an individual
Tax must be paid locally by foreign individuals who gain an income from property in Poland. Rental income, net of allowable costs, is taxable monthly at progressive rates of income tax (currently 19 per cent, 30 per cent and 40 per cent). If an individual disposes of property within five years of purchase, tax at 10 per cent of the net proceeds is payable. Gains arising out of the disposal of property held for more than five years are tax-free.
Income and capital gains will be subject to the double taxation treaty of the particular country and Poland on repatriation of the funds. The double taxation treaty ensures that tax is not paid twice on income received overseas and will take into account any taxes already paid.
Corporation tax
At the beginning of 2004, corporation tax was reduced from 27 per cent to 19 per cent in Poland, partly to help attract foreign investment. For example, the 19 per cent tax rate applies where a limited liability company holds investment property. Deductions can be made on depreciation and interest on loans, such as mortgages. Should a property be sold, the profit on disposal is added to other sources of income and taxed at the general rate of 19 per cent.
Renovating a property
Renovating a property in Poland is relatively inexpensive compared to the UK.The average manual labourer only earns approximately 80 pence per hour, so it can be very cheap to get work done. Tradesmen are a little more expensive and highly skilled. The labourers are hard-working and have a good work ethic, but it's important to manage them well, the difficulty of which can be exacerbated by language barriers. There are companies that will manage renovation projects for you, which is probably the best way for foreign investors to get the work done. They'll quote you for a job and manage the workers themselves.
It's common for foreigners to be charged higher rates than locals. As an estimate, a budget of up to ,£200 per m 2 should be calculated for a complete refurbishment of an apartment, excluding kitchen and bathroom, but including parquet flooring and new installations for gas, electricity and plumbing.