attorney Igor Bąkowski
Bakowski Law Firm, Warsaw, Poland
There are several tax incentive instruments in Poland for investors. Below we present some of the most important. There are numerous other instruments and solutions which may be taken into account in particular cases.
Tax holidays (tax exemption) for new investments
Tax holidays for new investments were previously obtainable only in the locally defined Special Economic Zones.
Tax holidays are currently a measure provided within the support for new investment pursuant to the Act of 10 May 2018 on support for new investments on the whole Polish territory complemented by the Regulation of 28 August 2018 on public aid to be granted to certain enterprises for new investments – this is sometimes referred to as the Polish Investment Zone (PIZ), parallel to the existing 14 Polish Special Economic Zones (SEZ).
Following the adoption of these new regulations in 2018, the area offering tax incentives for new investment (SNI) including a tax exemption expanded up to almost 100% of Poland’s territory.
Taxpayers subject to CIT may benefit from the tax exemption, in case of making a new investment.
The new investment can be undertaken anywhere in Poland and the exemption is applicable to income generated from business activities carried out as part of an investment covered by the support decision.
If the entrepreneur simultaneously conducts activities which are not covered, then the supported activities must be organizationally separated, and the level of exemption will be determined on the basis of data (revenues and costs) of the separated activity.
The tax exemption can be obtained in a form of tax holiday for a period of 10, 12 or 15 years, depending on the investment’s location.
The duration of the tax holiday depends on the intensity of the State aid in the relevant region, i.e. the higher the allowed State aid in a given region is the longer the duration of the tax exemption.
If the investment is to be located in one of the existing 14 Polish Special Economic Zones (SEZ), the tax exemption is granted for 15 years.
The Polish territory is split in special zones and regions according to the intensity of the State Aid in each region.
The tax exemption cannot exceed a maximum amount which depends mainly on two factors:
- location of the investment, and
- the size of the company.
The amount of the incentive (the tax exemption) depends on the:
- value of incurred eligible costs of the investment (investment capital expenditures or two-year labor costs of the new employees)
- state aid intensity in a selected region, and
- size of the enterprise.
Applying for the income tax exemption within the Polish Investment Zone regime requires submitting a declaration to meet several quality criteria. Some of them remain common for all types of investment projects. The minimum number of required quality points vary from 4 to 6 points out of 13 possible and depends on the investment location.
The key obligations to qualify for the CIT tax exemption within the Polish Investment Zone regime are:
- maintaining at least 5-years investment activity after completing the project;
- maintaining ownership of acquired fixed assets for five years from the day of registering them;
- maintaining the workplaces created for the project purpose for up to five years;
- incurring declared value of CAPEX.
The implementation of the project may begin no sooner than the day after the date of submission of complete documentation to the authorities relevant for the Polish Investment Zone regime.
Large investor agreement (special tax track option)
The Polish government introduced a possibility to use a special service track for large entrepreneurs planning to place capital in Poland at the level of at least PLN 100 million, and from 2025 – at the level of PLN 50 million.
The investor using that path will be able to immediately receive an opinion on all tax consequences of investing in Poland in one place.
The investment is deemed to mean the following:
- investment in fixed assets or intangible assets relating to the establishment of a new plant, expansion of the production capacity of an existing plant, diversification of the plant’s production by introducing products not previously produced at the plant, or fundamental changes concerning the production process of an existing plant; or
- acquisition of assets belonging to an establishment that has been closed or would have been closed if the purchase had not taken place, whereby the assets are acquired by an entrepreneur unrelated to the seller, and the acquisition of shares of the enterprise itself is excluded.
This solution is meant to provide the investor with a certainty of its tax situation as the tax interpretation for the investor is issued directly by the Minister of Finance and remains binding at all times on the investor, the Minister of Finance and the tax authorities for the tax periods covered by the agreement.
All taxes are included simultaneously in the procedure, where normally such procedures are performed through several different National Tax Administration bodies.
The investor agreement may include:
- prior price agreement,
- hedging opinion,
- binding excise information (BEI),
- binding rate information (BRI), and
- individual interpretation.
The scope of the agreement may vary depending on the planned investment and the needs of the investor.
Such agreement is valid for five years from its issuance, with the possibility of change.
An investor with whom an investment agreement is made has an additional month to adapt to potential future changes in legislation that could result in changes to the content of the agreement.
The investor may terminate the investment agreement at any time.
The Minister of Finance may terminate the agreement in cases that are strictly defined by law.
For more information please contact
attorney Igor Bąkowski
tel. +48 22 633 67 66
or other lawyers from Bakowski Law Firm
bakowski.net.pl