Planning a change of residence? Or are you moving the company out of Poland? See how others have done it – a summary of experiences and change trends in 2020.
The geopolitical unrest (particularly the situation in Poland) that has accompanied our lives in recent years has only strengthened during the Covid pandemic. The sluggishness and ineffectiveness of the courts, the inevitable and unchanging fiscal policies are the most common arguments for change of residence given by our clients. Today, entrepreneurs are looking for alternative solutions and inevitably reorganise their assets and companies with a view to rationalise costs and safeguard their business from geopolitical upheaval.
The choice of where to take up residence depends on a number of factors. Those are:
- Cultural identity – one of the most important ones. It is unusual for an investor to move east to Asia, unless they are from a younger and more open-minded generation. In 2020, the obvious choice in 95% of the cases was Europe or North America.
- Climate – mild and warm is better. Our clients often highlight this feature. When families choose a destination, they typically point towards Mediterranean countries. The case for those locations is further strengthened by the low level of Covid prevalence. Sometimes decisions are made to go to more exotic destinations.
- Language. This one rarely matters. Those open to relocating from Poland speak English at the very least, but do not shy away from Spanish or French-speaking destinations. If however language matters, English is widely spoken across the world and there is a multitude of choices.
- Friendly legal and tax systems. The choices here are many. Listed in alphabetical order: Cyprus, Italy, Liechtenstein, Luxembourg, Malta, Monaco, Portugal, Switzerland, UK etc.
The above group does not include the United States, which is an often-chosen destination but not because of a friendly tax system. It is rather decided on for its economic potential. In the Covid era, there has been a change in perceptions and Southern European countries are now also considered as viable alternatives.
- Costs. Those should not be underestimated. When making those significant life or business changes, it is important to speak to an experienced specialist who can outline the costs of such an undertaking. Please note, whilst it is important to know the costs of the first stage of reorganisation, it is essential to also be aware of the annual cost of maintaining such a project/alternative residence.
A few words on methodology when choosing a new destination
The economic environment, the fiscal policy, the administrative machine’s optimal approach, the type of jurisdiction, all have to be looked at and examined when choosing a destination for oneself and for one’s business.
Due to Brexit, choosing the UK no longer comes automatically. But until recently it was an excellent foothold for companies wanting to win customers in the UK or in the US. Both investors and clients in both markets by default have greater confidence in those who are present (if only formally) in these markets.
A company domiciled in Switzerland has a similar dimension. On top of being a prestigious destination, Switzerland also provides a very favourable tax environment (12% versus 19% in Poland or Great Britain). However, it is worth bearing in mind that the costs of running a company in this country are much higher. When undertaking a staff heavy business it may not be cost-effective due to the prohibitively high costs of labour.
Southern Europe is most often a matter of personal taste. Those destinations are chosen most often for their climate and very favourable tax and legal systems. Indeed, Southern European countries specialise in offers to HNWI. That said not everyone wishes to be ‘stuck’ on an island. In the age of Covid and the resulting limitations imposed on flights, this can make a big difference.
So how to choose? – Prudently and not hastily
It is possible to apply and change objective criteria when setting up a new business location. But when the plan is to build a new plant, then it is necessary to carry out a thorough tax and legal analysis, above all however it is paramount to perform an in-depth investigation of the market, labour costs, local policies and regulations.
When choosing a destination for personal reasons, then the choice is purely individual. Sometimes it is not enough to discuss things with colleagues. It is worth travelling to the places that are being considered and then adjust accordingly depending on the formalities.