The decision regarding support, issued at the entrepreneur's request, determines the period of its validity, the subject of economic activity, as well as the conditions that the entrepreneur has to meet. It is almost 20 years since the establishment of the Special Economic Zones, the Act of the 10th May 2018[1] amended the instruments of income tax exemption (CIT or PIT)in order to It will be again supported by domestic demand, especially household consumption (59% of GDP), which remains the main growth driver. Poland occupies a pivotal geographic position in central northern Europe and is seen as a stepping stone between the east and the west which gives it many commercial strengths. 107 and Art. The country switches to the most predictable, uniform and appropriate interpretation of the tax law. Domestic provisions: General rules. Therefore, if the entrepreneur simultaneously conducts activities which are not covered, the supported activities have to be organizationally separated and the level of exemption shall be determined on the basis of data (revenues and costs) of the separated activity. The major difference introduced is that the tax exemption is now available across the entire territory of Poland, for companies carrying out new investments, on publicly as well as privately owned land [2]. Use of this site constitutes agreement to the record or use. Average temperatures are between -5 and 0°C in January to 17-20°C in July, with minimum and maximum temperatures ranging from -20 to 35°C. This period is the same for all companies, regardless of the type of economic activity conducted and the size of the company. Nevertheless, the growth pace is likely to remain at solid levels. The investment dynamics will suffer as well, but its impact on GDP will be offset by new spending pledges. And with the minimum eligible business investment being as little as EUR 100,000, polish residency is within reach of more South African families and entrepreneurs than the Golden Visa Programs of Spain, Malta and Portugal. Moreover, donations made within aTCG are no longer tax-deductible. The exemption shall only be applicable to income generated from business activities carried out as part of an investment, covered by the decision on the support. The decision on support is issued for the implementation of a new investment, which meets certain quantitative and qualitative criteria. Minimum Wages in Poland averaged 317.77 EUR/Month from 1999 until 2020, reaching an all time high of 610.79 EUR/Month in the second quarter of 2020 and a record low of 158.94 EUR/Month in the second quarter of 1999. • In Brownfield investments, adjust your transaction approach to the envisaged acquisition structure. allowed support for investments in areas with undeveloped mineral The entrepreneur implementing a new investment in a given sector shall be considered to have met the qualitative criteria once he obtains a certain number of points (depending on location - as indicated in the table below) no less than one point for each criterion: In case of any questions about the Polish Investment Zone or other investment incentives, please do not hesitate to contact our team via the contact form. entrepreneurs can be granted tax exemption. The country borders Russia, Lithuania, Belarus and Ukraine in the north and Poland has become Europe’s biggest economic success story since it transformed into a market economy in the early 1990s. land acquisition cost, cost related to its purchase, the development or modernization of fixed assets (e.g. 25% becomes 35% or 45% respectively). The quantitative criteria (minimum amount of eligible costs) depends on the unemployment rate in the district (poviat) in which the investment is to be implemented (the higher the unemployment rate, the lower the required costs) and the size of the enterprise. Poland is in the Central European time zone and is thus one hour ahead of standard GMT. The total stocks of investments in the country stood at USD 236,5 billion in 2019, an increase of 26% when compared to 2010 level. hygiene products, medicines, and medical products. In the long-term, the Poland Foreign Direct Investment is projected to trend around 196900.00 EUR Million in 2021 and 201500.00 EUR Million in 2022, according to our econometric models. The decision on the support has to specify the completion date of the new investment, after which the costs of the new investment incurred by the entrepreneur cannot be considered as eligible costs, apart from the two-year labour costs, costs related to renting or leasing of land, buildings, structures and financial leasing, which may be considered as eligible even after the investment completion date. selected enterprises from the business services sector (BSS) providing: IT services, research and development in the areas of natural and technical sciences, auditing and book keeping services, accounting (excluding tax declarations), technical research and analysis services, call centres, architectural and engineering services. At the same time, the currently binding Special Economic Zone (SEZ) 4 | Investment in Poland Chapter 1 Poland – a Brief Survey 1.1 Geography and Climate Poland is situated in the heart of Central Europe and is the ninth-largest country on the continent, with an area of 312,679 square kilometres and a population of 38.5 million. Investments in projects from the following sectors: Achieving an appropriate volume of sales outside of the territory of the Republic of Poland, Pursuing research and development activity, Possessing the status of a micro, small or medium-sized enterprise, National Key Cluster / Business Services Sector, Establishing a business services centre providing services outside of the territory of the Republic of Poland, SUSTAINABLE SOCIAL DEVELOPMENT - max. The minimum wage in Polish is the lowest monthly or hourly remuneration that employers are legally allowed to pay their workers in Poland.The sum is decided by the Polish government.In 2019, Polish government announced a sharp rise in minimum wage from 2019's 2,250 zloty to 2,600 zloty in 2020 and 3,000 zloty in 2021 and subsequent 10% increase per annum until 2024. minimum of PLN 5,000). Turnover and balance sheet total are alternative criteria. The exemption period shall be counted from the date of receipt of the decision on support and shall stand at: If, on the day the decision on support is issued, at least 51% of the area of land on which the new investment is to be located is situated within the boundaries of a special economic zone (as defined in Article 2 of the Act of 20 October 1994 on special economic zones), the decision on support for a new investment is issued for a period of 15 years. According to UNCTAD's 2020 World Investment Report, FDI inflows to Poland remain stable in 2019, reaching USD 13,2 billion, slightly up from USD 13,9 billion. 108 of the Treaty, the following evaluation criteria were adopted for the purposes of defining the size of enterprises: number of employees, turnover, balance sheet total, and independence. Contact us for details Michal Gawlak - Partner / Attorney, Jakub Chajdas - Partner / Attorney Piotr Owczarek - Partner / Attorney, When doing business in Poland, foreign investors are treated according to the Economic Freedom Act. According to this document, the, Foreign individuals are either natural persons residing abroad, without Polish citizenship or legal persons with a registered office outside of Poland, having legal capacity. The EU´s 6th largest market by population, Poland has enjoyed 26 years of unbroken growth – driven by strong domestic demand, dynamic exports, improved productivity, foreign investment, a stable banking system, and a significant inflow of EU cohesion funds. – Minimum holding requirement: 75 percent; – Minimum holding period: 2 years. Doing business in Poland 65 V. Investing, manufacturing, providing services 83 VI. The general domestic WHT rate for dividends is 19%. As a result, we expect CPI to reach 3.2-3.5% YoY in 2020. The explanatory notes help to establish the best practice of applying the above-mentioned provisions, i.e. in medium-sized cities losing their socio-economic functions, and in municipalities bordering these cities, in poviats or cities, with poviat status where the unemployment rate stands at least 160% of the national average unemployment rate (excluding those cities where the Voivode or the Parliament of the Voivodeship are seated), We are a member of the Polish Development Fund Group. out new investments, on publicly as well as privately owned land[2]. What is more, PAIH operates a Generator of Investment Offers, in which you can check the conditions for obtaining tax exemption for a specific piece of real estate. Polish and European Union (EU)/European Economic Area (EEA) based investment funds are also exempted on the grounds of such provision. The rules and regulations applicable to Polish citizens also apply to investors from other countries, like: There are several forms of businesses in Poland, and each type of legal entity offers various advantages for entrepreneurs. We can help foreign businessmen open any type of company in Poland. needs. The decision is issued on behalf of the Minister responsible for the economy (currently Minister of Economic Development), by the management of Special Economic Zones in the areas indicated in the ordinance to the Act. 5 points, Pursuing an economic activity with low negative environmental impact, Supporting the acquisition of knowledge and vocational qualifications and cooperating with vocational schools, Creating specialized jobs in order to pursue an economic activity covered by the new investment and offering secure employment, Creating well-paid jobs and offering secure employment. How long is the tax exemption granted for? As in the case of SEZ, investments carried out within certain sectors of economic activity shall not be covered by the support system. Open pension funds can invest at most 40% in equities from the regulated stock exchange market; 10% in equities in the regulated non-exchange market; 40% each in mortgage bonds, municipal bonds, corporate bonds; 10% in certificates of close-end investment funds; 15% in units of open-ended investment funds; 20% in bank deposits and bank securities. Capital requirements state that banks must maintain a certain minimum ratio between their capital (of different quality) and risk-weighted assets. In accordance with the regulations on state aid, the eligible costs of the new investment are: In accordance with the Commission’s Regulation (EU) No 651/2014 of 17 June 2014 declaring certain types of aid compatible with the internal market pursuant to Art. adjust the provisions to the current market situation and entrepreneur’s According to this document, the investment legislation in Poland does not discriminate against foreign investors: they are entitled to the same rights and obligations as Polish entrepreneurs, if they are EU or EEA residents. Polish Investment Zone Act on support for new investments, Programme for supporting investments of major importance to the Polish economy for 2011-2030, increase of production capacity of an existing enterprise, diversification of production through the introduction of products which previously were not manufactured by the enterprise, fundamental changes to the production process of an existing enterprise, acquisition of assets of an enterprise which has closed or would have closed had it not been purchased, provided that the assets are acquired by an entrepreneur not linked to the seller; the mere acquisition of shares in the enterprise is excluded. Its GDP per capi… So imagine that the bank wants to sell a corporate investment loan (70% risk-weight) of PLN100mn. The easiest way to invest in Poland is by using exchange-traded funds (ETFs), which offer instant diversification in a single U.S. traded security. The. In Poland, permission for temporary residence is granted for maximum of 3 years and it can be renewed.In order to obtain a residence permit, you must submit an application to the appropriate consulate of Poland, usually found in your country of residence.In case you have already been staying in Poland, you can apply directly to the appropriate regional office of a provincial governor. The minimum wage in Poland, at 2,000 PLN/month (465 Euros) is three times lower than in the UK. Rafal Benecki. In the light of the provisions on regional state aid[3], the definition of a new investment reads as follows: If the investment is located in the Mazowieckie voivodeship, only an investment in favour of a new economic activity shall be considered a new investment[5]. Poland Property Investment For Sale "A robust economy - the only European country to weather the global financial crisis." However, since Poland's accession to the European Union, foreigners from the European Economic Area have not been required to obtain such a permission, except in relation to the purchase of agricultural or forest land, where a permission was required until 1 … The decision on support shall be issued for a definite period, not shorter than 10 years and not longer than 15 years. According to the new regulations, the following enterprises are eligible for public aid in the form of tax exemptions: The maximum amount of state aid in the form of CIT or PIT tax exemption is determined on the basis of the regional aid map for 2014-2020 (representing the percentage of costs eligible for regional aid): Detailed criteria which need to be met in a given location to obtain a decision on support can be found here. Investing in Poland should be analyzed through the success stories of thousands of companies that have made new investments in the last 27 years – a new era after the fall of communism. material recycling of raw materials and modern plastics. Disputes and liability within the corporation. Tax capital group rules: As of 1 January 2018, the minimum average share capital of entities required to form a tax capital group was reduced to PLN 500,000 (from PLN1 million), direct stake threshold was reduced from 95 percent to 75 percent and the minimum profitability ratio was reduced to 2 percent (from 3 percent). Participation exemption for dividends from Polish subsidiaries and subsidiaries located in EU Member States, EEA states and in Switzerland, provided that: – Minimum holding requirement: 10 percent (25 percent for Switzerland); – Minimum holding period: 2 years. Support for medium and small/ micro enterprises is increased by 10 and 20 percentage points respectively (i.e. Minimum wages in Poland were 610.79 EUR/Month in the first half of 2020. As a member of the EU, it offers entrepreneurs the opportunity of an easy access to the worlds’ biggest free market area. In 2020, Poland is expected to experience a further deceleration of growth, after a slowdown perceived in 2019. Preference is also granted to entrepreneurs, conducting research and development activities and those in the business services sector. Poland is one of the most dynamic and fast-growing markets in Europe due to the increasing number of new investment projects. permits, already granted to investors within the old SEZs shall remain available across the entire territory of Poland, for companies carrying professional telecommunication and information services. There is a ‘minimum income tax level’ for taxpayers holding substantial real estate, which has initial value over PLN 10 million. Poland’s climate is prone to abrupt changes both during the seasons and from year to year. FDI in Figures Poland figures among the most attractive countries in Europe in terms of FDI. Foreign Direct Investment in Poland is expected to reach 195100.00 EUR Million by the end of 2020, according to Trading Economics global macro models and analysts expectations. When doing business in Poland, foreign investors are treated according to the Economic Freedom Act. A detailed catalogue of exemptions is defined in the regulation on state aid granted to certain entrepreneurs for the implementation of new investments[6]. What are the criteria for receiving public aid? deposits, thus significantly expanding the offer of locations, in which Its large and attractive internal market – with more than 16 cities with over 200,000 inhabitants from which investors can source people for their operations – has become th… We are a team of lawyers specialized in corporate and tax law. On this basis, the following classes of enterprises have been established: Companies that do not qualify as micro, small or medium enterprise are classified as large companies. Other, Opening a Branch vs. a Subsidiary in Poland, Opening a Textile Manufacturing in Poland, Convert a Sole Proprietorship into an LLC in Poland, How to Start a Franchise Business in Poland, Open a Rental and Leasing Company in Poland, Set up a Business for Sale of Motor Vehicles in Poland, Legal Requirements for a Residence Permit in Poland, Legal Requirements for Obtaining a Work Permit in Poland, Obtain Information about Polish Companies, Restructuring and Insolvency Attorneys in Poland, Purchasing an Agricultural Land in Poland, Shareholders of a Limited Liability Company in Poland, Directors of a Limited Liability Company in Poland, Company Administration in Case of Insolvency. ), 2-year labour costs of newly hired employees. The major difference introduced is that the tax exemption is now This website uses cookies. Note the legal peculiarities that will apply to each of the structures, and specifically: • Make sure the due diligence covers sensitive areas relevant to … Real estate investment by foreigners. Since 1989, Poland has become a central point of interest to investors, not only for Central and Eastern Europe, but also for the whole of Europe and the world. 5 points, Compliance with the current national development policy, where Poland may gain a competitive advantage. The ruling PiS decided to raise the minimum wage by ~15% in 2020 and 2021, followed by 10% rises per annum until 2024. in force until 2026. all enterprises in the sector of traditional industries. Investing in Poland with ETFs . machines), cost related to the acquisition of intangible assets (computer programs, licenses, certificates, etc. Unemploy­ment rate in the district/ average unemploy­ment in Poland[11], * and in 122 medium-sized cities losing socio-economic functions and in municipalities bordering these cities, SUSTAINABLE ECONOMIC DEVELOPMENT - max. At the same time, the currently binding Special Economic Zone (SEZ) permits, already granted to investors within the old SEZs shall remain in force until 2026. This is reflected in the cost of living, significantly lower than in the UK. The period for which the decision on support is issued shall depend on public aid intensity in a given area. inclusive smart specializations of the voivodeship the investment is planned in. Karol Pogorzelski. What is more, the Ministry of Finance has published explanatory notes on the method of determining tax-exempt income achieved from economic activity, as defined in the decision on support (referred to in the Act of 10 May 2018 on support for new investments[8]), which clarified, inter alia, how to interpret situations when, because of the way in which a new and existing investment (located on the same site) are integrated, it is impossible to determine the income (revenue) exclusively from the new investment, without taking into account the integrated part of the existing investment (close links). What is more, the amendment of 31 July 2019 also professional electrical and electronic equipment. Politically stable, and member of the European Union and NATO, Poland is quickly catching up with the West. The, Real estate purchase is possible for foreigners in Poland if they have a special permit for acquiring ownership. 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