Poland offers several investment incentives for new investments into the country. Under a new law on “Polish Investment Zone” that entered into force on 5 September 2018, companies can now apply for a corporate income tax (CIT) exemption for a new investment to be placed at any location in Poland. On 5 September, the executive regulations (by-laws) which provide for detailed, but important mechanics related to obtaining such an incentive became a binding law.
In short, the investment incentive provides investors with a CIT exemption that is calculated based on the size of their investment (value) multiplied by the percentage of the public aid amount allocated for a given region (set percentage). Up to this amount, investors do not have to pay CIT.
The CIT exemption obtained under the new investment incentive can be utilized for a period of 10-15 years, depending on the location of the investment.
An investment (capital expenditure or two-year employment costs of new employees) of PLN10m (approx. US$3m) is the threshold for qualification for large operations. For small and medium enterprises, a reduced threshold may apply.
Special treatment is available for investment in new business services and research and development as the above investment threshold is lowered to PLN500k (approx. US$135k), irrespective of the size of the enterprise.
Obtaining the investment incentive is subject to meeting a number of conditions and fulfilling the formal requirements. Certain businesses are excluded including financial services and maintenance of machinery, among others.
Investors should consider the potential benefits of the CIT exemption in assessing new investments or expansion of existing investments in Poland.