Michał SZCZECH | Tax Supervisor

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Michał Szczech RSM Poland

Your organisation is planning a sizeable investment – of more than PLN 50 million – in Poland, but you are worried about changing interpretations and potential tax disputes concerning CIT, VAT, or transfer pricing? Before making the final decision to proceed, you can minimise the risk by concluding an investment agreement with the Polish Ministry of Finance with the support of our tax advisors.

What is an investment agreement?

An investment agreement is an instrument to support large projects (of at least PLN 50 million) in Poland. Entrepreneurs who enter into an investment agreement with the Polish Ministry of Finance will be able to fully understand the tax implications of their planned activities and receive protection (for a maximum period of five tax years) from conflicting interpretations by obtaining binding VAT rate information, protective opinions (which secure against tax avoidance or evasion allegations), and individual tax rulings (covering real estate tax).

Applying for an investment agreement by a consortium, company, or branch or representative office of a foreign entity may be beneficial in particular if:

  • The investment requires a financial security (banks or shareholders expect a guarantee that the investment is predictable in terms of taxes).
  • The investor is not certain if the operations will require registration for VAT purposes in Poland.
  • The board expects reduction of tax risks (and wishes to avoid tax audits and disputes with tax authorities).
  • The entity intends to increase the prestige of the enterprise and show its business partners that its operations are reliable by securing an agreement directly with the Polish Minister of Finance and Economy.

What kind of projects can be covered by an investment agreement?

An investment agreement can apply to projects which are at the planning stage or already in progress. It can cover such operations as:

Including construction of shop floors together with necessary infrastructure, construction of warehouse facilities, or establishment of shared service centres.

For example, by increasing the production capacity, implementing a major change in the production process, or rolling out a new (not manufactured previously) product (by purchasing specialised manufacturing machinery and facilities).

Applies to plants which have been closed (or would have been closed if the purchase had not taken place) on condition that the assets are acquired by an investor not related to the seller.

What can be covered by an application for an investment agreement, and what are its tax implications?

An investment agreement can apply to a broad scope of issues and may be adjusted to the investor's needs. Therefore, before applying, it is worth contacting a tax advisor who will identify the areas which are particularly relevant to a specific operation, including: 

  • Individual tax rulings – it is worth noting that within the scope of investment agreements, tax rulings can also apply to local tax issues (such as real estate tax; an investment agreement can be especially helpful for entrepreneurs investing in different municipalities, as they often are faced with a situation where tax authorities of different municipalities have a different approach to the classification of buildings and structures for the purposes of this tax).
  • Binding VAT rate information – on the basis of which investors will know better how to apply tax law and determine the appropriate VAT rate with respect to specific goods or services.
  • Binding excise information – particularly important in determining the tax treatment of goods liable to excise duty or cars.
  • Transfer pricing – the agreement with the Ministry of Finance will clearly state the method of verification of transfer prices set by the investor in transactions with related entities.
  • Protective opinions – which will secure the taxpayer against disputes with tax authorities and tax evasion allegations.
  • Top-up tax – important for investment plans of constituent entities of multinational and domestic groups which are subject to Pillar 2 EU regulations.

 

Why choose RSM Poland for support in applying for an investment agreement?

RSM Poland's tax advisors have extensive experience in facilitating communication between entrepreneurs and officials and can explain complex technical topics in a comprehensible manner using Polish, English, or German.

We will support you at every stage of the process. Before applying, we carry out risk assessment and indicate issues which may have a significant impact on the planned or ongoing investment. Then, we will help you to gather documents, and we will take steps to ensure effective communication with the ministry and smooth running of the entire procedure. We also remain at your disposal after the investment agreement is concluded, taking advantage of our experience in implementing the solutions agreed-upon with the authorities.

Support in concluding an investment agreement step by step

At the beginning – before applying – we check if the investment can be actually secured by an agreement concluded with the Polish Ministry of Finance and identify tax risks and issues which should be included in the content of the document.

Due to the fact that the application for an investment agreement has no formal model or template, our advisors take advantage of their experience and knowledge of how officials operate in order to create – in cooperation with the client and the authorities – a list of necessary documents, prepare a complete description of tax issues, and choose the optimal form of presenting the investment and its value.

The final stage of the procedure is coordinating the actions of the ministry and the investor and, if necessary, preparing explanations or additional documents required for the conclusion of the agreement. To ensure the efficient running of the process, we are ready to participate in all meetings with the officials, and we remain at your disposal for comprehensive assistance in the implementation of the agreed-upon tax solutions.

Before making new investments in Poland, it is worth consulting tax advisors

An investment agreement, providing protection from ambiguity in interpretations and potential disputes with tax authorities (and greater transparency of the process for investors and funding parties alike), is a genuinely attractive solution for many domestic and international companies and groups. If you decide to take advantage of this instrument, the best thing to do before contacting the Ministry of Finance is to try to reach a stronger bargaining position and use the support of experts who deal with tax authorities on a daily basis.

To secure the most favourable conditions for your investment, we strongly recommend using the services of our tax advisors, who will make sure that your organisation benefits from the most optimal and effective solutions in a given situation. Feel free to contact us!

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