Monika Spotowska

Tax adviser (Poland)
Senior Associate
Phone: +48 22 244 00 56

The tax authorities often claim that enterprises which conduct their business within the SEZs cannot enjoy the income tax exemption in so far as the manufacturing process requires some degree of involvement of third parties (see, for instance, the advance tax ruling of the Director of Tax Chamber in Bydgoszcz of 06/05/2014, file no. ITPB1/415-150c/14/WM or the advance tax ruling of the Director of Tax Chamber in Poznan of 02/09/2013, file no. ILPB3/423-268/13-2/AO).

At the end of 2014, the Supreme Administrative Court delivered its judgements (dated 19/11/2014: file no. II FSK 2750/12, II FSK 2826/12, II FSK 2887/12) concerning the eligibility for income tax exemption for a business activity conducted in the special economic zones with third parties involved in the manufacturing of products eligible for zone exemption.

As appears from the recent case law of administrative courts, not only revenues and costs of earning them, resulting directly from the operations within the special economic zones in Poland, qualify as tax-exempt and tax-deductible accordingly, but the same applies as well to the revenues and costs of the revenue auxiliary to the core (tax-exempt) business activity. In the contemporary world the technological requirements often force companies to use, to some extent, ancillary services of third parties. 

Circumstances must be assessed on a case-by-case basis. There are same 'limits' as regards the outsourcing of ancillary services in the manufacturing of zone products which should not be transgressed. First of all, you need to examine whether the services outsourced (irrespective if in or outside the SEZs) are ancillary (auxiliary) and indispensable to the production process.

In the above-mentioned judgments the SAC, having analysed the literature on the subject, the practices of interpreting authorities and the judgements of administrative courts, pointed out that the criteria for exemption from income tax on revenues earned from any in-zone manufacturing involving services outsourced to entities outside the zone could be the following:

  1. there is added value to the goods manufactured by an in-zone enterprise; 
  2. the services provided by third parties make up one of the production stages of the goods manufactured and sold by an in-zone enterprise, and the production and sale of the goods falls within the scope of PKWiU (the Polish Classification of Goods and Services) specified in the permit for a business activity within the special economic zone; 
  3. (there is a strict, functional and inseparable connection between the core business activities within the zone and the activities conducted outside the zone, the latter being ancillary (auxiliary) to the activities carried out within the zone (here with reference made to the SAC's judgment of 15/12/2011, file no. II FSK 1139/10); 
  4. the key decisions for a particular business are made within the geographical area of special economic zones.

The judgments cited above confirm that it is possible to use services of business partners located within the same special economic zone, as well as outside that zone, as long as the manufacturing of the finished goods requires ancillary services. However, if you use such services, you are still better off applying for an advance tax ruling to avoid disputes with the tax authorities. 

In case of further questions, please do not hesitate to contact us. Our tax advisers in Rödl & Partner offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw will gladly review your documentation related to your investment in the Special Economic Zone in Poland and propose a solution to minimise your tax risks. We are also on hand to answer any other tax-related questions you may have. Our offices offer legal advice in Poland with conducting business within a SEZ and with any other aspects of your operations. We take this opportunity to encourage you to contact us.