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Guide on hiring Ukrainian developers in the European Union

Challenges

In broad terms, Ukrainian developers face three types of challenges when moving and working abroad:

  • Legalization of stay
  • Taxation problems
  • Currency exchange issues

Ukrainian developers intending to work or live abroad might encounter different and unfamiliar conditions than what they're used to at home. From different currencies to a new legal framework, issues might arise in the most unexpected ways.

AllSTARSIT is well aware of this unfamiliar environment that some developers might face, and has developed a set of solutions to address these issues.

This article first lays out the main challenges that Ukrainian developers might encounter while working abroad, and then provides the solutions.

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Legalization of stay

Moving and working abroad, particularly when one intends to do it on a permanent basis, incurs a series of administrative issues. The issue of legalizing the stay should be high on the priority list, particularly considering that someone's stay must be legalized before they're allowed to engage in work.

The outbreak of war in Ukraine displaced millions of people. Many became refugees and were evacuated to nations around the world. A number of software developers moved abroad to start a new life elsewhere. These developers might face different challenges, as every country's rules might differ. Often, these rules are based upon when the developer entered the country.

Legal department

If a person entered the country after the outbreak of war in Ukraine (February 24, 2022)

Conditions in Poland

  • Poland allows developers to enter the country legally, work, and register as private entrepreneurs, with the following caveats:
  • People can stay legally until August 24, 2023. The Polish Government will allow this cohort to apply for residence permit from November 22, 2022.
  • In Poland, the taxes for self-employed workers are up to 19%.

Conditions in Germany

The conditions in Germany are different:

  • People can legally stay in the country for a period of 24 months.
  • If a person receives approval to become resident, they can also work legally or register as a private entrepreneur.
  • In Germany, the taxes for a self-employed individual are up to 45%.

If a person entered the country before the outbreak of war in Ukraine (prior to February 24, 2022)

For those developers who moved abroad before the start of the war in Ukraine, the conditions explained above do not apply.

In this situation, the best course of action for Ukrainian developers who might have moved abroad is to become directly employed by a local company. In many cases, this circumstance enables the developers to apply for permanent residence through their employer.

Guide on hiring Ukrainian developers in the European Union

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Guide on hiring Ukrainian developers in the European Union

Ukrainian developers intending to work or live abroad might encounter different and unfamiliar conditions than what they're used to at home. From different currencies to a new legal framework, issues might arise in the most unexpected ways.

AllSTARSIT is well aware of this unfamiliar environment that some developers might face, and has developed a set of solutions to address these issues.

This article first lays out the main challenges that Ukrainian developers might encounter while working abroad, and then provides the solutions.

Challenges

In broad terms, Ukrainian developers face three types of challenges when moving and working abroad:

  • Legalization of stay
  • Taxation problems
  • Currency exchange issues

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Legalization of stay

Moving and working abroad, particularly when one intends to do it on a permanent basis, incurs a series of administrative issues. The issue of legalizing the stay should be high on the priority list, particularly considering that someone's stay must be legalized before they're allowed to engage in work.

The outbreak of war in Ukraine displaced millions of people. Many became refugees and were evacuated to nations around the world. A number of software developers moved abroad to start a new life elsewhere. These developers might face different challenges, as every country's rules might differ. Often, these rules are based upon when the developer entered the country.

Legal department

If a person entered the country after the outbreak of war in Ukraine (February 24, 2022)

Conditions in Poland

  • Poland allows developers to enter the country legally, work, and register as private entrepreneurs, with the following caveats:
  • People can stay legally until August 24, 2023. The Polish Government will allow this cohort to apply for residence permit from November 22, 2022.
  • In Poland, the taxes for self-employed workers are up to 19%.

Conditions in Germany

The conditions in Germany are different:

  • People can legally stay in the country for a period of 24 months.
  • If a person receives approval to become resident, they can also work legally or register as a private entrepreneur.
  • In Germany, the taxes for a self-employed individual are up to 45%.

If a person entered the country before the outbreak of war in Ukraine (prior to February 24, 2022)

For those developers who moved abroad before the start of the war in Ukraine, the conditions explained above do not apply.

In this situation, the best course of action for Ukrainian developers who might have moved abroad is to become directly employed by a local company. In many cases, this circumstance enables the developers to apply for permanent residence through their employer.

Taxation issues 

There currently exist many agreements between countries to prevent double taxation (that is, prevent the worker from paying taxes in their home country and the country where they're working/living. These agreements stipulate the manner in which Ukrainian citizens should pay taxes. 

Taxation issues 

Taxation regulation can be divided into two categories:

  • Directly employed
  • Sole trader/private entrepreneur

Directly employed

If the person is working under an employment contract, this person should:

  • Pay social contributions (payments for medical/social security, pension, etc.)
  • Pay income tax in the country where they are currently working
  • Issue a yearly declaration of their income in Ukraine
  • Obtain evidence of tax payment from the local tax authority and present it to a Ukrainian tax agency
  • Pay the difference in tax ranges, if any
  • Pay military tax in the amount of 1,5 % of income

Sole trader/private entrepreneur

If a Ukrainian citizen decides to register as a sole trader in any other country than Ukraine, this person should:

  • Pay local taxes and social contributions
  • Declare their income in Ukraine yearly, and pay the difference in taxes and military tax

It is worth noting that most European countries do not collect income tax on foreign income if the person is not considered a tax resident of this country. 

The aforementioned agreements define the regulations around tax residency. For instance, in many European countries, you are not classified as tax resident if you reside in the country less than 183 days per year.

Solutions

AllSTARSIT proposes two sets of solutions to address all these issues: short term, and long term.

Short term solution

Ukrainians can stay in the country with temporary protection and have a business-to-business (B2B) contract in the chosen country.

Long term solution

Upon termination of the residence under temporary protection, direct employment is the best possible solution.

Hiring Ukrainian staff in Ukraine is still possible. Despite the ongoing armed conflict, Ukraine remains open for business, offering a rather vast and competitive talent pool. AllSTARSIT remains operational in Ukraine, and can still hire staff as needed.

Best European country to choose for hiring your team

Considering all the circumstances and caveats explained above, the logical question is, which European country suits best to hire a team of developers in, if you already have a team in Ukraine? That decision should be based on taxation & potential pool of software developers to further grow your team.

Top Personal income tax rates in Europe

From this graph, we can clearly see that Central Europe countries have better tax rates then Western and Eastern Europe. But the question remains, how big is the potential talent pool of these countries?

Developer population of Central & Eastern Europe

Why Poland looks like the best offshore destination in the CEE Region now 

Poland offers some compelling reasons to hire developers in. From its strategic location as a gateway to the west and the east, to the high number of well-trained professionals, Poland offers a range of very attractive arguments for outsourcing, including:

  • 25% of offshore programmer talent in Eastern and Central Europe is located in Poland
  • The Polish IT market is growing at a stable rate of 5-10% a year
  • Cultural traits are similar to Ukraine

It's worth noting that, while Poland's taxation system is not the most cost-effective in Europe, Poland offsets this by offering the largest number of developers.

Conclusion

Ukrainian developers remain in great demand, for a variety of reasons: excellent and eclectic programming skills, outstanding professional attitude, and commitment to the role, among others.

AllSTARSIT can help you hire qualified developers in any offshore locations where we have a presence, including Ukraine, Poland, Israel, Colombia, and many others.

Our local staff on these countries has experience and expertise in legal and operational challenges that may arise, and can assist you in setting up your own R&D center or tech support site fast and effectively. 

Guide on hiring Ukrainian developers in the European Union

Ukrainian developers intending to work or live abroad might encounter different and unfamiliar conditions than what they're used to at home. From different currencies to a new legal framework, issues might arise in the most unexpected ways.

AllSTARSIT is well aware of this unfamiliar environment that some developers might face, and has developed a set of solutions to address these issues.

This article first lays out the main challenges that Ukrainian developers might encounter while working abroad, and then provides the solutions.