Over the past couple of years, Poland has become a leading player in the European IT market. According to Eurostat, there are approximately 554,000 IT specialists living in Poland. Although this is less than 5% of the total IT workforce in the EU, the number is constantly growing. It is also widely recognized that Polish IT specialists are well trained. If you also consider the convenient geographical location between West and East and the stable economic situation, it is no surprise that many foreign companies have found Poland to be a promising place to develop software and carry out related research and development activities.
As new software houses enter the market, tech start-ups emerge, game development studios deploy, and SSCs expand (e.g. in Krakow), the demand for IT specialists is extremely high. To address the specific needs of the Polish IT market, but also to spur innovation, Poland has passed tax reliefs dedicated to business entities engaged in producing software and R&D activity (the so-called IP Box and R&D tax relief). Moreover, in response to the unstable political situation in Belarus, at the end of 2020, Poland launched the Poland Business Harbor program aimed at helping Belarusian IT specialists to relocate to Poland. In July 2021, the program was extended to, inter alia, Russia, Ukraine, and Georgia to welcome even more IT professionals.
Cloud Regulations
The potential of the Polish IT market has been recently recognized by Google. In April 2021, the Polish Google Cloud Region in Warsaw was launched. It is the first Google Cloud Region in CEE and the seventh in Europe. The Google Cloud location is a cloud data processing center whose infrastructure is located in Poland, thus making Poland a regional leader in digital transformation.
Cloud solutions are becoming more and more popular in Poland. Scalability and cost-efficiencies resulting from moving to the cloud have been spotted by many businesses, as well as public administration. Cloud-based financial and banking activities are of particular interest to the FinTech industry. In regard to the FinTech market, in March 2020, the Polish Financial Supervisory Authority (PFSA) published its communication on information processing by supervised entities using public or hybrid cloud computing services. In December 2020, the PFSA provided additional guidance, in an attempt to reduce the legal uncertainly arising from the use of the cloud by financial institutions.
Blockchain, AI, and Other Issues
There are many software houses in Poland successful in developing blockchain-based solutions, virtual and augmented reality applications, software solutions for the gambling market, and software engines powered by artificial intelligence algorithms. Poland is also a leading market player in the field of video games. The sharing economy is also on the rise, particularly with respect to scooters and cars.
Apart from regulating the status and use of electric scooters in public spaces (new provisions entered into force in May 2021), there are no specific provisions concerning such issues as blockchain, Big Data, or AI.
Legal Trends and Perspectives
The Polish legal framework in the field of new technologies is strongly affected by EU legislation. Currently, IT market stakeholders are closely monitoring the proposed e-Privacy Regulation (Regulation on Privacy and Electronic Communications or the EPR). The EPR, sometimes also referred to as GDPR II, is expected to change the playing rules for sales and marketing activities. The proposed regulation might also have a significant impact on the collection of metadata invaluable for the development of the Internet of Things (information on geographical localization of the user, user’s hardware, operating system, date and length of connections, etc.).
Furthermore, the draft of the EU Artificial Intelligence Act (AIA) has drawn the attention of various business industries. The proposed regulation is a pioneering legal act, whose business magnitude may be similar to that of the GDPR. At the same time, the AIA raises concerns around maintaining the competitiveness of EU businesses engaged in manufacturing and offering AI-based products and services. The legal burdens to be set by the AIA may generate additional operational costs, e.g. for the FinTech and LendTech markets that are lively inter alia in Poland.
By Michal Konieczny, Managing Partner, and Lukasz Wieczorek, Partner, Konieczny Wierzbicki
This Article was originally published in Issue 8.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.