Original Article by: Panasiuk & Partners
The American Silicon Valley is the center of the high-tech sector and is the seat of many multinationals such as Facebook and Google. The region is characterized by its proximity to universities and government research centers, a large number of educated employees and access to venture capital. Of course, these features are not unique to the Silicon Valley, which is why many countries would like to repeat the success of the Silicon Valley. One of these countries is Poland.
One of the largest American venture capitalists, Tim Draper, says now is the perfect time to invest in Poland. Tim Draper became interested in Poland after he heard about the Polish satellite technology ICEYE. ICEYE is a world leader in microsatellites and already works with many global companies and governments from around the world. According to Tim Draper, now is the perfect time to look at investments in Poland, which is one generation ahead of other CEE countries in terms of the market system.
Over the past few years, Poland has started to be perceived as a country with extraordinary investment potential. This is evidenced by the growing number of foreign direct investments, despite the fact that in the world this trend is definitely the opposite. It is worth mentioning the amount of capital invested, for example, by American companies in Poland, USD 62.7 billion – in new technologies (from cloud solutions, systems including CRM supporting e-commerce, online entertainment products, cybersecutira, AI, IoT and blockchain, by nanotechnologies, bioTech, bioMed, to process automation solutions).
Therefore, it can be safely said that Poland has a very good chance of becoming a European Silicon Valley for foreign investors who focus on its convenient central location in Europe, a large domestic market with domestic demand, a competitive workforce and qualified management.
However, that’s not all. Let’s take a look at 10 reasons why it is worth investing in Poland.
1. Income tax exemption from 15% -50% on income from business activity in Special Economic Zones (SEZ) There are fourteen special economic zones (SEZ) in convenient locations throughout Poland. The minimum value of an investment in SEZ is PLN 100,000. EUR, and the share of the entrepreneur’s own funds should constitute at least 25% of the total eligible investment costs.
The advantages of running a business in an SEZ include:
- exemption from income tax (CIT or PIT, depending on the form of conducting business by the investor) on income from activities conducted in the SEZ and specified in the permit up to the amount of 15 to 50%;
- availability of attractive land with all necessary infrastructure;
- the possibility of purchasing or renting real estates in the SEZ;
- the possibility of using also other investment incentives offered in the SEZ, including in particular real estate tax exemption (often offered to new investors by municipalities), investment grants from the government, subsidies of poviat labor offices and support from EU funds (public aid sums up i.e. the total level of support for the company from all sources cannot exceed the above-mentioned 30-70% of the capital expenditure);
- administrative support from companies managing SEZ in legal and organizational issues related to the implementation of investments (media suppliers, local authorities, etc.) and the so-called post-investment care.
A characteristic feature of SEZs is their territoriality, i.e. limited availability of incentives only to certain areas of Poland. However, foreign and Polish investors can apply for the so-called “Extension of SEZ” eg in the area of an already operating enterprise.
2. Income tax exemption for the implementation of a new investment in the Polish Investment Zone
Pursuant to the provisions of the Act on supporting new investments, the Polish Investment Zone was created, under which, after meeting certain criteria, it is possible to obtain CIT or PIT exemptions in almost the entire country, and not only in the SEZ. Support in the form of income tax exemption is granted by way of a decision on support issued for the benefit of an entrepreneur implementing a new investment. The decision to support the investment with the tax exemption will be issued for a period of 10 to 15 years, depending on the intensity of public aid in a given area. In the case of investments located in the existing SEZ, the period of using the exemption will be 15 years.
3. A subsidy for the development of the automotive, electronic, aviation, biotechnology, modern services and research and development sectors
The subsidy for the development of the automotive, electronic, aviation, biotechnology, modern services and research and development sectors is granted on the basis of an agreement concluded between the minister competent for economy and a Polish or foreign investor. The agreement specifies the conditions for the payment of the subsidy, which is paid in proportion to the degree of fulfillment of the investor’s obligations. The amount of the subsidy may be increased if employees are offered training programs.
4. Up to EUR 10 million non-returnable investment subsidy for the implementation of innovative investments and more
Foreign companies that recognize Poland as an interesting place for investment may benefit, among others from structural funds and national programs offering in Poland non-returnable subsidies for research and development (R&D), implementation of innovative investments, digitization of business entities, environmental protection, logistics and renewable energy sources. The grant is non-returnable and gives the possibility of partial financing of up to 70% of eligible costs and may amount to up to EUR 10 million.
Considering that we have September 2020, this is the last call to be able to get funding under the current conditions. Details of the competitions that can be entered by the end of the year can be found on the website of the European Funds Portal.
5. Property tax exemption at local level
One of the basic investment incentives available to companies at the local level is the exemption from local taxes and fees. Pursuant to the Act of January 12, 1991 on Local Taxes and Fees, municipalities have the right to set tax rates and to establish tax reliefs. Here, of key importance for companies is the exemption from real estate tax, which is granted on the basis of resolutions of the commune council and constitutes the so-called “automatic assistance”. This means that the entrepreneur is automatically entitled to an exemption after meeting the conditions specified in the resolution of the commune council.
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