PAIiIZ

(last update: 22.03.2006)

Investment incentives scheme in Poland
Poland welcomes foreign investors with various investment incentives tailored to their needs.

Investment incentives available to investors (as described below) have to be granted in accordance with the regulations on state aid for entrepreneurs. It is possible to combine various forms of state aid however the total amount of tax exemptions or financial grants provided to an investor cannot exceed the admissible amount of regional aid. Admissible intensity of regional aid is expressed as a percentage of qualifying costs, which include: investment outlays (aid for initial investment) or value of two-year labor costs of newly employed workers (aid for job creation). The regional aid for initial investment may be granted along with the aid for job creation, provided that the overall amount of aid does not exceed the maximum admissible amount of aid. Admissible amount of state aid is defined as the product of the maximum intensity of aid and the higher of the following two amounts: the value of investment outlays or the two-year labor costs of newly hired employees.

Maximum admissible intensity of regional aid in Poland:

Warsaw, Poznañ 30%

Gdañsk-Sopot-Gdynia, Wroc³aw, Kraków 40%

Other regions of Poland
50%

For small and medium-sized enterprises (SMEs) the maximum aid intensity is increased by additional 15 percentage points.

For large investment projects the aid level is reduced. The admissible amount of aid for a large investment project (qualifying expenditures exceeding EUR 50 million) will be calculated according to the formula:

Maximum amount of aid = R × (50 + 0,50B + 0,34C)
Where:
R is the maximum aid intensity allocated to the given area;
B is the qualifying expenditure between EUR 50 million and EUR 100 million;
C is the qualifying expenditure above EUR 100 million.

The maximum intensity of aid in the automotive sector granted to projects that involve an amount of aid exceeding EUR 5 million, is reduced to 30% of the corresponding regional aid intensity.

Investments may benefit form regional aid on the following conditions:
business activity related to the particular investment should be conducted for a period of at least 5 years since date of the completion of the investment project,

in case of aid for job creation newly created jobs should be maintained for at least 5 years.

Every case of regional investment aid must be notified to the European Commission if the aid proposed for the project exceeds the maximum admissible aid that an investment of EUR 100 million may obtain under the rules described above (for Poland the figure generally stands at EUR 37.5 million). Proposed aid scheme cannot be put into effect before the Commission takes a decision authorizing such aid.

Individually notified projects will not be eligible to investment aid in either of the following two situations:

a) the aid accounts for more than 25% of the sales of the product concerned before the investment or will, after the investment, account for more than 25%; or
b) the capacity created by the project is more than 5% of the size of the market measured using apparent consumption data of the product concerned, unless the average annual growth rate of its apparent consumption over the last five years is above the average annual growth rate of the European Economic Area's GDP.

The European Commission should be also notified of any aid that is not granted on the basis of an aid scheme previously approved by the EC.
Notification is made through the President of the Competition and Consumer Protection Office (UOKIK).

With regard to labor market instruments, some of them constitute state aid (horizontal aid), some do not (details below).

Regional Aid

Type of instrument Eligibility criteria Maximum amount of support Competent authority (institution) Procedure

1
Exemption from income tax (CIT) on income generated from business activity conducted in the special economic zones

Possibility of including the land chosen by an investor into the boundaries of the SEZ

Investment of at least
EUR 100,000.

Investment exceeding EUR 40 mln or creating at least 500 new jobs.

Regional aid intensity ceilings are applied:
- 50% of investment outlays, or
- 50% of two-year labor costs of newly employed workers
(exception: Kraków Technology Park SEZ, where the threshold is set at 40%)
In case of SMEs, the maximum levels of support are increased by additional 15 percentage points.

Management board of the special economic zone

Minister of Economy

Permits for conducting business activity in the SEZ are issued by way of a tender or negotiations following a public invitation.

Changes to the boundaries of the SEZ are introduced in the form of an amendment to the relevant Ordinance of Council of Ministers. Draft amendment is submitted by the Minister of Economy.

2
Exemption from real estate tax:
- possibility of decreasing the tax rate or full exemption for a specified period of time

Defined in resolutions of commune councils introducing exemptions.

Defined in resolutions of commune councils introducing exemptions.

Commune Council (Rada Gminy)

Exemptions are available only in certain communes, which adopted resolutions on exemptions. If all requirements set out in the resolution are fulfilled, the exemption is granted, but it is still necessary to submit an application to the local authority.

Labour market instruments

    Type of instrument Characteristic Maximum amount of support Direct recipient Employer's obligations State aid

1. Reimbursement of costs of equipment or additional workplace equipment
- Reimbursement of costs incurred by employer.

- Contract between the starost and the employer.
Amount specified in the contract,
not exceeding PLN 12,643.10
-500% of an average remuneration in the national economy.
Employer Full-time employment contracts for at least 3 years Yes

2. Subsidized works
- Applicable only for the unemployed persons in special situation on the labour market*.
- Reimbursement of a part of costs of remuneration, bonuses and social insurance contributions.
- Contract between the starost and the employer.
- Maximum subsidizing period:
6 months (reimbursement for every month) or 12 months (reimbursement for every second month). Exceptions for certain categories of unemployed - 12 or 18 months.

- Bonus for continuation of     employment.

Monthly amount specified in the contract, not exceeding:
-   ca.** PLN 615.84 per one full-time employee (amount of unemployment benefit + social insurance contributions on reimbursed remuneration),
-   ca. PLN 530.47 per one employee - in case of part-time (at least half-time) employment, (amount of 50% of minimum remuneration + social insurance contributions on reimbursed remuneration)
-   ca. PLN 1,060.94 per one full-time employee (amount of minimum remuneration + social insurance contributions on reimbursed remuneration) - in case
of reimbursement for every second month (full-time employment).
+ extra lump-sum reimbursement of remuneration in the previously agreed amount, however not exceeding PLN 3,792.93
– 150% of an average remuneration in the national economy - in case of continuation of employment.
Employer
Full-time or part-time employment of the unemployed person in special situation on the labour market, delegated by the labor office.

+At least 6 month employment of a person directly after completion of the subsidised contract lasting at least 6 months, and after this period continuation of full-time employment.
Yes

3. Apprenticeship
- Acquisition of practical skills by an unemployed person to perform work by exercising specific tasks in the workplace without signing an employment contract with the employer

- Applicable only for the unemployed under the age of 25 (in some cases under 27).

- Maximum 12 months.
The unemployed person receives a scholarship amounting PLN 521.90
- (amount of the unemployment benefit), paid by the starost.

The unemployed.

Employer does not incur any costs of the apprenticeship or vocational training
Appointment of a tutor of the unemployed, realization of an apprenticeship or vocational training program specified in the contract, issuing an opinion containing information on performed tasks, obtained qualifications and vocational skills by the unemployed person. No
4. Vocational training at the workplace
Acquiring new qualifications or vocational skills by practical performance of work in a given post.
- Applicable only for the unemployed persons in special situation on the labour market.
- Maximum 6 months.

5. Reimbursement of the costs of social insurance contributions
- Single reimbursement
- Contract between the starost and the employer
The amount specified in the contract, not exceeding PLN 2,697.30 PLN
– 300% of a minimum remuneration for work
Employer. Full-time employment of the unemployed person delegated by the labor office for at least 12 months. Continuation of employment after that period. Yes

6. Training of the unemployed in accordance with employer's needs - Organizing and financing trainings for the unemployed by the starost. Partial or full financing of training cost Training institution.
Employer does not incur any costs of training.
No

7. Reimbursement of the commuting costs
- Reimbursement of the costs for the person delegated by labor office.

- Maximum 12 months.

- The person receives remuneration not exceeding PLN 1,798.20 (200% of the minimum remuneration for work).

- Applied in case of employment, vocational training at the workplace or apprenticeship
     Employee, the unemployed serving his/her apprenticeship or vocational training at the workplace. Employment of the unemployed delegated by labor office or taking on for apprenticeship or vocational training. No

8. Reimbursement of accommodation costs
- Reimbursement of the costs for the person delegated by labor office.

- Maximum 12 months.

- The person receives remuneration not exceeding PLN 1,798.20 (200% of the minimum remuneration for work).

- The time of journey to the workplace and the time of return to the place of permanent residence – total time exceeding 3 hours daily.

- Applied in case of employment, vocational training at the workplace or apprenticeship

9. Recruitment services Free advice and assistance in recruitment. Employer
Unemployed No

* Persons in special situation on the labour market (vulnerable persons): unemployed persons under the age of 25, long-term unemployed, unemployed above the age of 50, unemployed without vocational qualifications, unemployed single persons who bring up children under the age of 7, disabled unemployed persons.
** Exact amount of reimbursement depends on the amount of contribution to the accident insurance, depending on the level of occupational hazard in a given trade.