From 1 July 2018, Poland became one special economic zone
(SEZ) with extensive tax exemptions available. Since the early
90s, taxpayers have been able to benefit from public aid in the
form of the income tax exemption that applies to profits earned
in SEZs. Most of the exemptions resulted from qualifying
expenses relating to new investments and increases in
employment, but only within very specified locations.
Nowadays, taxpayers do not have to start or move their
businesses to dedicated areas (SEZs) or ask to extend that area
for the purpose of a given investment.
Under the new law, a taxpayer can apply for a decision
granting tax exemption on profit derived from new investments.
The decision remains valid for 10 years and cannot be extended
beyond 15 years. The period depends on the region in which the
new investment is to be made.
The decision will specify the period for which it is valid,
as well as the scope of business within which the taxpayer may
operate, and the conditions the taxpayer will have to meet in
order to be entitled to the tax exemption. These include:
- Number of employees and minimum employment
- A minimum value of qualifying expenses and
at the same time the maximum amount that will be taken into
consideration when setting a limit for public aid;
- The area in which the new investment is to
be made; and
- The deadline for fulfilling the new
investment, after which the expenses will no longer qualify
for public aid.
If the requirements mentioned in the decision ultimately are
not met, the permit will be cancelled and the tax exemption
abolished. The latter will have retroactive effect and the
taxpayer will have to return all the public aid (the amount of
the tax exemption) received under the decision.
Investors wishing to begin new business interests in Poland
are strongly advised to take the new law into account, as the
tax exemption available may substantially increase the rate of
return of the investment.
In terms of the numbers involved: assuming that a large
entrepreneur taxpayer makes an investment in a region where the
public aid intensity is 35%, the limit for qualifying expenses
is €40 million ($45.7 million). Thirty-five percent of
that €40 million is public aid in the form of income tax
exemption, which means, that taxable profit of up to around
€74 million will be corporate income tax-exempt. Note that
very large investments (more than €50 million) will be
Bartosz Głowacki (firstname.lastname@example.org)
Tel: +48 (22) 322 68 88