On March 10, 2018, the Act on supporting new investments was adopted, which introduced changes the exemption of income tax - PIT or CIT, to adapt the legal provisions to the needs of entrepreneurs. Thanks to this, entrepreneurs who implement new investments can take advantage of tax exemptions throughout the country, in public or private areas. Existing permits for doing business in Special Economic Zones (SSEs) remain in effect until the end of 2026. The amendment of 31 July 2019 also provided the possibility to support investments in areas with undeveloped mineral deposits. As a result, the scope of areas where businesses can obtain tax exemptions has been expanded.
According to the new rules, state aid in the form of a tax exemption can be counted on:
- all enterprises of the traditional industrial sector, except that produce: explosives, alcohol, tobacco products, steel, as well as companies that operate in the field of energy generation and distribution; wholesale and retail trade, construction works, accommodation services (hotel activities), and catering, as well as to the running of games centres. Companies from the metallurgical, coal and transport sectors are also excluded under EU legislation.
- Selected enterprises from the modern services sector providing IT, research and development services in the field of natural and technical sciences, accounting and auditing, except for tax returns, technical research and analysis, call centers, architectural and engineering projects.
Also, these companies must make investment expenses that are qualified by law. Acceptable costs for new investments in accordance with the state aid rules are:
- the cost of purchasing land, the cost of acquiring, expanding or upgrading fixed assets (for example: machinery, production lines), the cost of purchasing intangible assets (computer programs, licenses, certificates, etc)
- 2-year costs of newly employed workers.
Who makes the decisions about providing support?
The decision on support determines the period of its validity, the subject of entrepreneurial activity, as well as the conditions that the entrepreneur must fulfill. The decision is made by the Minister of Economy (now the Minister of Development), who manages the special economic zones by area.
What are the criteria for receiving government assistance?
The decision on support is made by implementing new investments that meet quantitative and qualitative criteria. Quantitative criteria depend on the unemployment rate in the investment district (the higher the unemployment rate, the lower the ceiling on the required expenditure) and the size of the enterprise. The preferences were given to entrepreneurs engaged in research and development, and in the sector of modern business services..
Investment location: Podkarpackie Voivodeship (region with one of the highest unemployment rates in Poland)
Cost of new investments: 500 000 PLN
State aid intensity: 60%
Enterprise size: medium
State aid (tax credit) = 500 000 PLN x 60% = 300 thousand PLN
300,000 PLN is a CIT or PIT income tax quota that can be ignored
The rate of income tax CIT: 19%
Amount of tax-exempt income: 600 thousand / 19% = 1 578 947,37 PLN
The mid-sized entrepreneur invested 500 000 PLN in the Podkarpackie Voivodeship and thanks to the Polish Economic Investment Zone will be able to benefit from a tax exemption of 300,000 PLN. This means, in subsequent years (maximum 15 years), will not pay income tax in the amount of 1.578 million PLN. After exceeding this income limit, the entrepreneur will pay tax in the standard amount, even if 15 years have not passed.
Using the link below, you can check for the entry threshold for investments in a county, what is the intensity of public aid in a region, and how many years you can benefit from the tax exemption: https://www.biznes.gov.pl/pl/inwestycje/mapa-polskiej-strefy-inwestycji