Michał Gosek

Tax adviser (Poland)
Associate Partner
Phone: +48 61 624 49 39

What is a grant?

A grant  is a non-repayable financial aid which can be obtained in the form of reimbursement of expenses (incurred by a beneficiary e.g. an enterprise) or an advance payment. In the case of projects awarded with an advance grant the enterprise receives the funds before it incurs expenses. It is also possible to combine the two funding methods, that is, to have a part of the funds transferred as an advance payment in one or more instalments, and the remaining part in the form of reimbursement of expenses.

Rules for grant / state aid application procedure in Poland

To be able to apply for EU funding in Poland, the applicant must meet a few basic criteria. First of all, the applicant should carry on a business activity and be established, or in case of a natural person, reside, in Poland. The applicant must not be disqualified from applying for funding, which means that it must not be e.g. in arrears with payment of public dues, in a difficult financial situation, in liquidation, subject to insolvency or rehabilitation proceedings, and must not be under the obligation to repay any state aid (grants) previously obtained.

Further key principles to qualify for state aid relate to the project implementation itself. The fundamental principle is that the project must be implemented in Poland. Any work planned under the project must be launched after applying for a grant, and it should be kept in mind that any legal obligations entered into with sub-suppliers of goods and services are as well considered a project launch. 

It is also important to remember about the obligation to ensure the so-called project sustainability after it has been implemented (this is a period in which you must not, as a matter of principle, e.g. sell tangible assets purchased under the project). In the case of large enterprises this period is 5 years and in the case of micro, small and medium-sized enterprises 3 years. The period runs from the date of receiving the last payment under the project.

Project life cycle

Each application for a grant is subject to the grant application procedure which should result in obtaining the grant for a given project. The individual stages of this procedure are as follows:

  1. To obtain a grant the applicant should file an application for grant along with necessary appendices e.g. a business plan or a project feasibility study. The application needs to be filed in due course in response to a call for proposals announced by a relevant institution. 
  2. In principle, the project assessment is carried out in two stages:
    • formal assessment which involves checking the filed application against the formal criteria specified for a given contest and call for proposals. After being formally approved, the application is forwarded to the next stage:
    • substantive assessment based most often on two types of criteria – the so-called access criteria and score criteria. The score criteria determine how many points an application will score and how it will be ranked. 
  3. After the substantive assessment, ranking lists are compiled which are then announced by the institution which calls for proposals. As a matter of principle, applications which earn the the highest score will receive the grant. 
  4. The institution which has called for proposals concludes a grant agreement with the beneficiary whose application is recommended for funding. In such a document the following is listed in detail: conditions for granting funding, including rights and obligations of the beneficiary, project settlement details, budget, time schedule for the performance of specific tasks etc. 
  5. The last stage is the timely performance of the tasks set forth in the application, achievement of the assumed ratios and fund spending/cost payment according to the budget. The performance of individual tasks is described in detail in the report on project implementation filed with the institution which announces and calls for proposals. The reporting allows verification whether the assumptions made in the application and the grant agreement comply with the actual status of project implementation. 

The scheme below shows the most important stages of the project life cycle.

Who is eligible for grants in Poland?

As a general rule, all entities conducting a business activity and established in Poland may benefit from the funding. State aid may be granted to, among others, enterprises, entities working on innovations, and entities working for economic development. Financial support intended for enterprises is assigned depending on the enterprise size, that is according to breakdown into the so-called micro, small, medium-sized and large enterprises.

In accordance with Appendix no. I to the Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation) the category of micro, small and medium-sized enterprises (SMEs)is made up of enterprises which employ fewer than 250 persons and whose annual turnover does not exceed EUR 50 million, and/or whose annual balance sheet total does not exceed EUR 43 million.

The above table shows that the category of micro enterprises includes enterprises which employ fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

A small enterprise is defined as an enterprise which employs from 10 to 49 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

A medium-sized enterprise is defined as an enterprise which employs from 50 to 249 persons and whose annual turnover exceeds EUR 50 million and/or annual balance sheet total does not exceed EUR 43 million.

Enterprises which exceed the presented limits, i.e. those which employ more than 250 persons and which have an annual turnover exceeding EUR 50 million, and/or an annual balance sheet total exceeding EUR 43 million are referred to as large enterprises. 

When determining the enterprise status, it is necessary to take account of its equity and personal links with other enterprises (e.g. through a partner or a foreign parent company). In terms of the links, enterprises are classified as either autonomous, or partner or linked enterprises.

1. An autonomous/independent enterprise 

An "autonomous enterprise" is any enterprise:

  • which does not hold 25% or more of the capital or voting rights in another enterprise, or
  • in which another enterprise does not hold 25% or more of the capital or voting rights.

2. Partner enterprises

"Partner enterprises" are all enterprises:

  • which hold 25% or more of the capital or voting rights in another enterprise, or
  • in which other enterprises hold 25% or more of the capital or voting rights, and
  • which are not linked with other enterprises.

Where the percentage value of the capital and that of the voting rights are different, the greater value should be taken into account. Therefore, partner enterprises are all enterprises which are not classified as linked enterprises and between which there is the following relationship: an enterprise (upstream enterprise) holds, either solely or jointly with one or more linked enterprises, 25 % or more of the capital or voting rights in another enterprise (downstream enterprise).  

3. Linked enterprises (see also the article: Related parties? What parties?).

"Linked enterprises" are enterprises which have any of the following relationships with each other:

  • an enterprise has a majority of the shareholders’ or members’ voting rights 
  • in another enterprise;
  • an enterprise has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another enterprise;
  • an enterprise has the right to exercise a dominant influence over another enterprise pursuant to 
  • a contract entered into with that enterprise or to a provision in its memorandum or articles of association;
  • an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement with other shareholders in or members of that enterprise, a majority of shareholders’ or members’ voting rights in that enterprise.

In addition, "enterprises linked by natural persons" are enterprises which have the above relationships with other enterprises through a natural person or a group of natural persons if they conduct their activity or a part of their activity in the corresponding or adjacent markets.

An "adjacent market" is considered to be the market for a product or service situated directly upstream or downstream of the relevant market.

The enterprise size is generally calculated in the following way: 

  1. In the case of an autonomous enterprise, the data, including the headcount and turnover and balance sheet figures, are determined exclusively on the basis of the accounts of that enterprise.
  2. In the case of partner enterprises, to the applicant's data on the headcount and turnover and balance sheet figures are added the corresponding data presented by any other partner enterprise of the enterprise in question in proportion to the percentage interest in the capital or the voting rights (whichever is greater). In the case of enterprises holding shares/voting rights in one another (cross-holdings), the greater percentage applies.
  3. In the case of linked enterprises, all the corresponding data presented by the linked enterprise are added to the applicant's data on the headcount and turnover and balance sheet figures.

Eligible costs in EU funds granted in Poland

It needs to be noted that EU funding in Poland is available exclusively for those expenses that are considered eligible. Eligible costs are listed in the Community regulations and the provisions specified by the Managing Authority. Furthermore, to qualify an expense as an eligible cost, it must not only be listed in the regulations, but must also be actually incurred and properly documented, directly related to the project and indispensable for its implementation, and also must be reduced by the input VAT, except where the VAT is not refundable under domestic VAT regulations. The time when the expenditure is incurred also matters – to qualify an expense as an eligible cost, it must be incurred during the so-called period of eligibility set in the project's objective and financial schedule included in the application for grant. Other costs that do not meet the above requirements are considered non-eligible costs. That is why almost every project will include both eligible and non-eligible costs.

Types of projects eligible for co-financing in Poland by means of grants in the 2014-202 financial framework

1. Investments in new machinery in Poland:

  • assisting in the implementation of R&D outputs in Poland;
  • creating infrastructural conditions for conducting business activity in the R&D area by enterprises in Poland;
  • crediting technological innovations in Poland;
  • supporting the development of open innovations – creating partnerships between large enterprises and small and medium sized enterprises;
  • stimulating the collaboration between research and business – vouchers for innovations in Poland.

2. Grants in the area of energy efficiency in Poland:

  • modernising and extending production lines in Poland to improve their energy efficiency;
  • modernising buildings held by enterprises in Poland to improve their energy efficiency;
  • applying energy efficient technologies in enterprises in Poland;
  • constructing, extending and modernising renewable energy installations in Poland;
  • performing on-site energy (industrial) audits in Poland;
  • investing aimed at high-efficiency combined heat and power generation (high-efficiency cogeneration).

3. Grants for renewable energy sources in Poland:

  • development and extension of infrastructure in Poland used for the production and distribution of energy from renewable sources: wind farms, biomass installations, biogas installations, power generating units using water and sun, and heat with simultaneous involvement of geothermal energy.

4. Grants for the implementation of computer systems:

  • implementing solutions supporting Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Supply Chain Management (SCM);
  • implementing advanced ICT solutions using mobile systems and cloud computing model;
  • developing products and services based on e-commerce;
  • creating and implementing new e-services.

5. Grants for R&D in Poland and for collaboration with research organisations and units:

  • supporting R&D projects and implementing research results;
  • R&D projects conducted by scientific and industrial consortia;
  • developing technologies which have not yet been commercialised and used in business practice;
  • creating and/or extending R&D resources used for supporting innovation activity of enterprises.

6. Grants for training purposes.

Framework for European funds-oriented activities

On 23 May 2014, the European Commission approved the Partnership Agreement laying down the investment plan for EU funds, which is the master document governing the relations between Poland and the European Commission in this regard. Poland has, therefore, become one of the first EU states which successfully completed the negotiation of the Partnership Agreement.

The draft national and regional operational programmes are currently being negotiated with the European Commission. The aforementioned documents are expected to be approved in the third quarter of 2014. 

Therefore, the first calls for proposals under the new framework are planned to take place in the fourth quarter 2014 or the first quarter 2015. 

You can learn more about the new financial framework in the EU Funds in Poland 2014–2020

It is worth knowing that the new structure and management system of the EU funds is an issue which undoubtedly should draw interest of all enterprises and organisations that wish to enjoy EU funding in the future. To successfully apply for EU funding, it is worth examining the entity's development needs and planning how to finance them. Therefore, we would like to invite you to use our consultancy services in the area of EU funding, state aid and investments. For this purpose, please contact our offices in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw.