Basic concepts of the legislation to support new investment projects

27 March 2018

When you can get tax relief

Enterprises will be entitled to tax relief on new investment projects. New investment means investment in tangible or intangible assets to establish a new plant, increase the production capacity of an existing plant, diversify the output of a plant by introducing products not previously manufactured in the plant, or make a fundamental change in the manufacturing process of an existing plant.

Tax relief will be granted by virtue of a decision on granting state aid issued by the minister competent for the economy at the request of the applying enterprise. The decision on granting state aid will be issued for a definite period ranging from 10 to 15 years.

Who can receive state aid

State aid can be granted to every enterprise in the meaning of Article 4 of the Freedom of Economic Activity Act of 2 July 2004. The term enterprise also covers the business activity of partners in a civil-law partnership, regardless of the size of the partnership.

The planned scope and amount of state aid

Scope of aid

The act provides for exemption from income tax according to the rules specified in corporate and personal income tax laws. The exemption will apply to:

the costs of the new investment project – the amount is calculated as the product of the maximum state aid intensity specified for the area and the incurred costs of investment projects eligible for the aid, not higher than the eligible costs specified in the state aid decision,
the costs of creating new jobs – calculated as the product of the maximum state aid intensity specified for the area and two-year costs of labour of the new employees, which include the costs of gross wages of the employees, plus obligatory contributions incurred by the enterprise since the day of hiring the employees.

Aid amount

Tax relief will be classified as regional investment aid. The maximum regional investment aid intensity will be:

between 45% and 50% in the provinces: Lubelskie, Podkarpackie, Warmińsko-mazurskie and Podlaskie,
between 20% and 35% in the provinces: Kujawsko-Pomorskie, Lubuskie, Łódzkie, Małopolskie, Opolskie, Pomorskie, Świętokrzyskie, Zachodniopomorskie and in the sub-regions: Ciechanowsko-Płocki, Ostrołęcko-Siedlecki, Radomski, Warszawski-Wschodni,
between 20% and 25% in the provinces: Dolnośląskie, Wielkopolskie and Śląskie,
20% in the Warszawski-Zachodni sub-region,
10% in the capital city of Warsaw,
the maximum aid (earmarked for a given region) will be available to investment projects carried out in districts in which the following 122 mid-sized cities that are losing their social and economic significance are located: Prudnik, Hajnówka, Bartoszyce, Kętrzyn, Przemyśl, Sanok, Grudziądz, Ostrowiec Świętokrzyski, Jasło, Kraśnik, Jarosław, Chełm, Nysa, Zamość, Zambrów, Starachowice, Staszów, Jędrzejów, Braniewo, Hrubieszów, Kamienna Góra, Ząbkowice Śląskie, Tomaszów Lubelski, Nowy Targ, Konin, Zakopane, Kędzierzyn-Koźle, Rydułtowy, Mielec, Brzeg, Szczytno, Koło, Augustów, Ostrołęka, Żagań, Radom, Ostrów Mazowiecki, Tomaszów Mazowiecki, Ciechanów, Malbork, Jelenia Góra, Sieradz, Zabrze, Łomża, Krosno, Tarnów, Kluczbork, Jastrzębie-Zdrój, Chrzanów, Sosnowiec, Dębica, Gostynin, Nisko, Międzyrzecz, Krapkowice, Pułtusk, Nowa Ruda, Grajewo, Kłodzko, Giżycko, Bielawa, Gorlice, Włocławek, Nowa Sól, Krasnystaw, Kozienice, Olecko, Pisz, Białogard, Chełmno, Wałbrzych, Ełk, Lubań, Wałcz, Świdwin, Choszczno, Gryfice, Sokółka, Nakło nad Notecią, Bytów, Lidzbark Warmiński, Szczecinek, Rypin, Złotów, Bytom, Zgorzelec, Mrągowo, Końskie, Dzierżonów, Słupsk, Stalowa Wola, Skarżysko-Kamienna, Jawor, Sandomierz, Wieluń, Biłgoraj, Bielsk Podlaski, Świętochłowice, Tarnobrzeg, Elbląg, Biała Podlaska, Radomsko, Turek, Bolesławiec, Żary, Nowy Sącz, Piła, Gniezno, Zduńska Wola, Inowrocław, Działdowo, Ozorków, Kutno, Świebodzice, Przeworsk, Sierpc, Busko-Zdrój, Złotoryja, Strzelce Opolskie, Radzyń Podlaski, Pleszew, Namysłów.

The maximum aid that can be granted to small enterprises will be additionally increased by 20 pp and that available to mid-sized enterprises by 10 pp in relation to the above-mentioned maximum aid intensity for a given region.

Tax relief will be determined based on the expenses eligible for new investment aid, i.e. investment costs incurred during the decision's validity period less VAT and excise duty. The expenses eligible for tax relief will include:

• the purchase price of land or the perpetual usufruct right to land,
• the purchase price or internal production cost of the taxpayer's tangible assets,
• the costs of development or modernisation of the existing tangible assets,
• the purchase price of the taxpayer's intangible assets,
• the costs of lease or rental of land, buildings and structures for a minimum period of 5 years in the case of large enterprises and for a minimum period of 3 years in the case of SMEs, starting from the planned date of investment completion,
• the purchase price of assets other than the leased or rented land, buildings and structures, if such assets are used under a finance lease agreement.

Terms and conditions of aid

A decision on granting state aid may be issued for investments that meet the following criteria:

quantitative criteria (minimum cost limits dependent on the unemployment in the area where the investment project is to be carried out),
qualitative criteria.

Quantitative criteria - minimum eligible expenses are as follows:

PLN 10 million (for districts with an unemployment rate above 250% of the average national unemployment rate),
PLN 15 million (for districts with an unemployment rate between 200% and 250 of the average national unemployment rate),
PLN 20 million (for districts with an unemployment rate between 160% and 200% of the average national unemployment rate),
PLN 40 million (for districts with an unemployment rate between 130% and 160% of the average national unemployment rate),
PLN 60 million (for districts with an unemployment rate between 100% and 130% of the average national unemployment rate),
PLN 80 million (for districts with an unemployment rate between 60% and 100% of the average national unemployment rate),
PLN 100 million (for districts with an unemployment rate lower than 60% of the average national unemployment rate).

The minimum eligible expense criteria will be lowered by:

80% in the case of investment projects in modern business services and R&D activities,
98% in the case of micro enterprises,
95% in the case of small enterprises,
80% in the case of mid-sized enterprises.

Qualitative criteria - will be used to determine the compliance of the investment project with the mid-term national development strategy based on the so-called investment project assessment criteria:

The following criteria have been set for the modern business services sector:

1. Structural development:

creating high-paying jobs and offering steady employment
investing in service projects in industries which fit the current national development policy
specific export levels

2. Scientific development:

co-operating with a research and development unit or a scientific centre
creating a modern business service centre operating also outside Poland

3. Sustainable development:

investing in high-unemployment areas
supporting micro, small and medium-sized enterprises
investment project location

4. HR development:

supporting employees in education and professional development
taking care of employees

The following criteria have been set for industrial investment projects:

1. Structural development:

creating specialised jobs and offering steady employment
investing in service projects in industries which fit the current national development policy
specific export levels

2. Scientific development: