Investment incentives in Poland (Special Economic Zone)

Special Economic Zone (SEZ) is part of Polish territory which is administered separately, allocated for the running of businesses on preferential terms. The SEZ is a place which is subject to special treatment and tax exemptions where an entrepreneur can establish a business on a specially prepared site and run it without paying income tax.

If a company decides to invest in one of the SEZ’s, the income which it receives from business carried out on its terrain will be exempt from income tax (CIT – from legal persons or PIT – on physical persons, depending on the legal form used to run the business).

In an SEZ the entrepreneur can obtain the following privileges

• tax exemption (CIT or PIT)
• a site fully prepared for development by the investor at a competitive price
• free assistance in dealing with formalities in connection with the investment
• exemption from property tax (on the territory of certain gminas)

Exemption from income tax granted in the SEZ is regarded as publicly funded regional aid, which serves to speed up the development of the most poorly developed EU regions; by supporting new investments and creating new workplaces linked to these new investments.

New investment

Initial investment means:

(a) an investment in tangible and intangible assets related to the setting-up of a new establishment, extension of the capacity of an existing establishment, diversification of the output of an establishment into products not previously produced in the establishment or a fundamental change in the overall production process of an existing establishment; or

(b) an acquisition of assets belonging to an establishment that has closed or would have closed had it not been purchased, and is bought by an investor unrelated to the seller and excludes sole acquisition of the shares of an undertaking;

For investment carried out in Mazowieckie region a different definition of new investment applies:

Initial investment in favour of new economic activity means:

(a) an investment in tangible and intangible assets related to the setting up of a new establishment, or to the diversification of the activity of an establishment, under the condition that the new activity is not the same or a similar activity to the activity previously performed in the establishment;

(b) the acquisition of the assets belonging to an establishment that has closed or would have closed had it not been purchased, and is bought by an investor unrelated to the seller, under the condition that the new activity to be performed using the acquired assets is not the same or a similar activity to the activity performed in the establishment prior to the acquisition.

The creation of new jobs in connection with new investments

The net growth in jobs of a given enterprise in connection with the realisation of a new investment, is in relation to the average employment in the firm, during the 12 months prior to the day that acceptance was granted.

New employees are those employed after the day on which acceptance of the new investment is granted, however, no later than three years from that time. The number of employees are those employed full time, together with those employed part time and also seasonal workers, calculated on a full time basis.

The permission to operate in SEZ:

The administrative-legal basis for being able to receive public assistance in a SEZ, is permission to set up a business in the SEZ, which is granted by the SEZ board.

The permitted level of regional aid available to the entrepreneur is dependant on:

• location of the investment
• level of capital input, or
• costs of employing new workers
• and also, the size of the business seeking tax relief

The right of access to tax exemptions under the terms of a new investment in an SEZ, may be granted to an entrepreneur, on condition that:

1. there can be no transfer of any kind in the ownership of fixed assets, which are connected to investment expenditure – for a period of 5 years from the date of their entry into the inventory of fixed assets and intangible or legal expenses, according to the provisions on income tax, in the case of small and medium sized businesses for a period of  3 years;
2. the business will be conducted for a period of no less than 5 years, whilst in the case of small and medium sized businesses no less than 3 years;
3. new workplaces will be maintained for no less than 5 years, 3 years in the case of small and medium sized businesses.

source https://www.paih.gov.pl/investment_support/investment_incentives_in_SEZ#