Polish Investment Zone

When expanding or launching a business in Poland, it's worth considering a range of solutions designed to foster its growth. One such solution is the Polish Investment Zone, an instrument available across the entire country aimed at businesses planning to expand their operations through the implementation of a new investment project. However, investor support in this case does not take the form of a cash grant but rather an exemption from income tax (CIT  or PIT) or from real estate tax. How much support can business owners expect, and how should they plan their investment to maximise potential benefits?

Support for new investments through tax exemptions

To receive support under the Polish Investment Zone, a business owner implementing a new investment must obtain a decision on support, issued on the basis of an application containing an investment implementation plan.

The decision to grant support is issued by the minister responsible for economic affairs, acting through the locally competent Special Economic Zone (SEZ). Before the decision is issued, the SEZ conducts proceedings to review the documentation related to the planned investment.

A new investment may include expenditures on tangible fixed assets or intangible assets related to:

• establishing a new production plant,
• increasing the production capacity of the existing plant,
• diversifying production,
• fundamentally changing the production process.

Therefore, a new investment may involve the launch of an entirely new venture or the development of an existing investment.

Support provided through the Polish Investment Zone constitutes regional aid, and the decision is issued for a fixed period of 10 to 15 years. Tax advisory experts at RSM Poland emphasise that a properly planned investment can ultimately translate into tangible, long-term tax benefits for the business.

What determines the level of support under the Polish Investment Zone?

The amount of tax relief available for new investment development is influenced by several key factors, related both to the investment itself and the business's situation. The relevant minister, acting through the SEZ, takes into account:

• eligible costs (quantitative criterion),
• investment location,
• company size,
• investment purpose (qualitative criterion).

Eligible costs (quantitative criterion)

The eligible costs of a new investment are the primary element assessed when determining whether support under the Polish Investment Zone can be granted. These include capital expenditures and, in certain cases, the labour costs of newly hired employees.

A business owner applying for support commits to making a specified investment and implementing the project in accordance with the submitted plan. To obtain support, the project must reach the required level of expenditures (the so-called quantitative criterion), which simply means that a minimum investment value is established and must be met in order to benefit from the incentives offered under the Polish Investment Zone.

Investment location

The location of the investment – due to the regional nature of the exemption – also significantly impacts the level of support. Different regions of Poland apply different maximum levels of state aid. In practice, this means that an identical investment may receive varying levels of support depending on its location, i.e., the county (Polish: powiat) in which it is located.

Depending on the selected county, the investor may recover from 15% to 50% of the eligible expenditures.

Company size

Another important criterion is the size of the business. Small and medium-sized enterprises (SMEs) may benefit from higher levels of aid than larger entities.

In order to determine the size category of a given entity, the guidelines set out in EU Commission Regulation No. 651/2014 are applied.

Investment objective – qualitative criterion

The final important element taken into account by the authorities determining the level of support granted under the Polish Investment Zone is the set of qualitative criteria which assess the value a given investment brings to the economy.

In practice, this means that the investment must contribute to the real development of the company, for example through:

• development in areas of strategic importance to the economy,
• creating new jobs for highly qualified employees,
• cooperation with technology clusters,
• providing social welfare support for employees.

The level of investment expenditures is not the only factor that matters – its purpose and the manner in which funds are spent are equally important. A defined scoring system is used to evaluate how well the investor meets the qualitative criteria.

Detailed guidelines regarding qualitative criteria are set out in the Regulation of the Council of Ministers of 27 December 2022 on state aid granted to certain businesses for the implementation of new investments.

Tax relief for new investments is worth pursuing

As demonstrated, the level of support available under the Polish Investment Zone depends not only on the scale of the investment but also on its quality and its impact on the development of the voivodeship in which it is located. Therefore, each investment should be analysed individually to accurately determine the level of tax exemption that can be utilised.

If you are planning to expand your business, our tax advisory team will be happy to help you analyse your planned investment to maximise your chances for claiming the support and tax exemptions. We invite you to get in touch!