Karolina Sieraczek

Attorney at law (Poland)
Senior Associate
Phone: +48 71 60 60 415

As the Ministry of Development has proclaimed, new legislation was planned to enter into force on for 1 January 2018. It was supposed to modify the criteria for granting tax exemptions to enterprises and let them obtain state aid anywhere in the country, not only within Special Economic Zones in Poland (SEZs). However, the act on supporting new investments is still not ready, although it was supposed to come into force over a month ago. At the moment the Legal Committee is working on the draft resolution and it should be forwarded to the Sejm soon. The new provisions are expected to enter into force any day now. They are supposed to be an alternative for SEZs.

What about tax exemptions in SEZs?

To begin with, it is worth emphasising that the old terms of tax exemptions granted under permits for business in SEZ remain unchanged. Once the new legislation enters into force, investors will not be able to obtain new tax exemptions on the old terms, and new investors will have to follow the new rules. The current SEZ Act will be applicable until the end of 2026 only with respect to decisions and permits already granted (as regards changes, withdrawal, cancellation or extinguishment). The old rules will also apply to procedures which are pending as of the date when the new regulations become effective.

New criteria and changes related to the area eligible for the aid

So far, the area eligible for the state aid covered 25 thousand hectares, i.e. 0.08% of the country. Access to other investment areas was possible only after a long-lasting procedure of SEZ border change. Pursuant to the new assumptions, there will be no more territorial restrictions except for a decision on the area's intended use granted to obtain a tax exemption. This is supposed to boost the number of investment projects, especially the large ones. 

The criteria that need to be met to obtain a tax exemption will also change significantly. Currently, it is still possible to pursue a business activity after fulfilling only the quantity criteria. The new act will introduce quality criteria which will have to account for the regional development guidelines. 

Unlike now, with the minimum expenditure amount of EUR 100,000, pursuant to the new assumptions the amount of capital expenditures will depend on the unemployment rate in a given municipality and on the enterprise size. Large enterprises will have to spend more to obtain state aid. 

The quality criteria will be adjusted to a specific location and according to the available information, they will be as follows: 

  • Structural development – measured on the basis of: employment of specialists or the number of high-paying jobs; compliance of the investment project with the current national development policy, as well as exporting goods or services;
  • Scientific development – measured in consideration of the collaboration with science centres, academic centres and R&D projects; 
  • Sustainable development – measured on the basis of the investment project location (e.g. in areas with high unemployment rate); additional points for supporting micro, small and medium-sized enterprises and for supporting medium-sized and small towns and villages;
  • Human resources development – measured by additional benefits offered to employees, e.g. health care services provided to employees or supporting them in education and skill development.

An investment project can score a maximum of 10 points. The quality criteria are deemed met after scoring 60% of all the points (or 50% or 40%, depending on the investment project location). 

What will determine whether an investment project in the SEZ gets the aid or not?

The decision on the state aid for an investment project will be issued for a definite period ranging from 10 to 15 years. The exemption period will depend on the investment location – the higher the EU-allowed state aid intensity in the province, the longer the exemption period. Investment projects implemented in the current SEZs will have priority. 

The draft act includes also less favourable provisions that allow halting the decisions granting the aid in a budget year, which means no aid for new investment projects in some years.

Anti-tax avoidance clause

The new act is supposed to include an anti-tax avoidance clause to eliminate situations where the main or one of the main purposes of obtaining the decision was to become exempt from income tax or when the activities related to the investment project were not real. This regulation needs to be reformulated because the application for a decision on the state aid is, in principle, aimed at becoming exempt from tax. 

As proclaimed, the new rules for obtaining tax exemptions are supposed to overhaul the current functioning of SEZs. The draft act may still be amended after public consultations. 

Only after the new laws are put into practice will it be possible to assess whether and to what extent they are more favourable to investors. As mentioned at the beginning, the Legal Committee is currently working on the wording of the individual provisions. So now is the last chance to initiate the procedure for obtaining a permit for business in SEZs on the current terms. 

In case of further questions, please do not hesitate to contact us. Our tax advisers in Rödl & Partner offices in Cracow, Gdansk, Gliwice, 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 support in conducting business within a SEZ and in any other aspects of your operations.