Special Economic Zones in Poland

Special Economic Zones in Poland
Jakub Chajdas

Jakub Chajdas

Partner / Attorney-at-law

In the past few years, Poland has become a leader among European countries when it comes to the best destinations for establishing businesses by foreign investors. It results from a long-term policy that aims at encouraging entrepreneurs to invest in Poland. One aspect of its manifestations concerns the issue of Special Economic Zones. What are the Special Economic Zones and what are the benefits connected with conducting business activities within their area?

Special Economic Zones in Poland – what are they?

Special Economic Zones have been operating in Poland since 1994. They constitute separate areas on the territory of the Republic of Poland where entrepreneurs can conduct business under special, more favorable conditions as compared to other parts of the country.

By supporting the development of investments, the Special Economic Zones contribute to the economic growth of a given area. On the other hand, they simultaneously offer a wide range of business conveniences for entrepreneurs, such as tax exemptions and remissions that make locating a business in this area highly profitable for an investor.

The list of Special Economic Zones is available on the official website of the Ministry of Economic Development and Technology.

What are the benefits of Special Economic Zones for the investors?

The primary advantage stemming from investing in Special Economic Zone is the possibility to use income tax exemptions (CIT or PIT, depending on the type of the conducted business activity). The limit of the exemption is calculated as the percentage of the incurred investment expenditure or, alternatively, based on the two years’ labor costs of new employees. The total value of the income tax exemption is also dependent on the investment location, the size of the enterprise, and the amount of investment expenditure. It is worth mentioning that in some regions of Poland one can retrieve up to 70% of the incurred costs.

Some of the Special Economic Zones also offer the possibility to obtain a real estate tax exemption. This kind of exemption is usually granted to new investors and it covers a period of time that is defined in advance.

The other benefits of investing in Special Economic Zones include funds and grants for:

– investments,

– creating new jobs,

– research and development activities (R&D),

– activities related to environmental protection, training, logistics, or renewable energy sources.

Investing within Special Economic Zones facilitates obtaining financial aid from District Labor Offices or from European Union funds.

Other advantages of investing within Polish Special Economic Zones

Apart from the obvious profits connected with tax exemptions or simplified procedures for obtaining grants and investment funds, the Special Economic Zones also provide other significant benefits – especially for foreign investors.

It is worth mentioning that the Zones are created on territories that are highly industrialized and attractive in terms of investments and business activities. Frequently, they use an infrastructure remaining after those branches of industry that are no longer developing. As a result, it is possible to rent or even buy properties that are already located in Special Economic Zone. The Zones offer not only warehouses and production facilities but also office buildings e.g. dedicated for shared services centers or call centers.

The location of Special Economic Zones also takes into account the high availability of qualified employees. The vicinity of academic centers that ensure a steady inflow of well-educated employees is frequently taken into consideration in the process of establishing the Zones. Many of them remain in constant cooperation with higher education institutions in order to take advantage of the educational and intellectual potential of the region.

The support offered by companies managing the Special Economic Zones should be also mentioned. They provide legal and organizational assistance in the process of communication with the local authorities or while negotiating with utility providers. The aforementioned solution constitutes a significant convenience, especially for foreign investors, who are not yet familiar with certain aspects of running a business in Poland.

The rules of conducting business activities within a Special Economic Zone in Poland

Until now, the entrepreneurs wishing to benefit from the advantages offered by Special Economic Zone had to first obtain special permission to conduct a business activity within its territory. Currently, the permits have been replaced by support decisions that are issued on the basis of the Act on Support for New Investments. The support decision is an administrative decision that enables entrepreneurs to obtain CIT or PIT income tax exemption, limited to a maximum value specified in that decision.

The support decision is issued at the request of the entrepreneur, by the management of Special Economic Zones on behalf of the minister in charge of economy. It is issued for a specified period of 10, 12, or 15 years.

What is Polish Investment Zone and will it replace Special Economic Zones in Poland?

In 2018, after 24 years of operating, it has been decided that the Special Economic Zones program should be updated and broadened. A new support instrument for entrepreneurs has been established under the name of the Polish Investment Zone. It constitutes an expansion and development of the existing Special Economic Zones and is intended to replace them eventually. Under current legislation, Special Economic Zones will be operating until the 31st of December 2026.

The aims of the Polish Investment Zone and Special Economic Zones are fairly similar. The main difference concerns the possibility to benefit from exemptions in a situation when business activities are also conducted outside the specified area of the Zone. The idea of the Polish Investment Zone is best described in words: “The entire Poland becoming a Special Economic Zone”. The slogan was used to promote the establishment of the Polish Investment Zone.

According to the data published on the official Government website, there were 1 521 support decisions issued within the scope of the Polish Investment Zone (from September 2018 till the end of 2021), of the total declared value worth 73,4 billion PLN and with a declaration to create 31 569 new job positions.

Assistance in starting activity within Special Economic Zones in Poland

There is no doubt that conducting business activities and investing within Special Economic Zones in Poland has many advantages. However, in order to fully and properly use their potential, some requirements have to be fulfilled. The first one is to submit an application for issuing the support decision. Our law firm has many years of experience in assisting and advising entrepreneurs on starting businesses within the territory of Special Economic Zones. In the first place, we analyze the subject of the enterprise activities, as well as its business records, in terms of meeting the necessary requirements for obtaining a positive decision. Secondly, depending on the findings of the conducted analysis, we offer assistance in the preparation of the request as well as support during the whole process of obtaining the decision and its implementation.

For more detailed information, we recommend contacting our specialists.

Featured expert

Jakub Chajdas

Partner / Attorney-at-law