PSI – Practical aspects of accounting for zone relief

The Polish Investment Zone was introduced by the Act of May 10, 2018 on supporting new investments. This solution, unlike special economic zones, makes it possible to obtain state aid throughout the country. The public aid in question relates to exemption from payment of both PIT and CIT income tax on income generated in connection with the new investment covered by the decision on support. Importantly, the exemption cannot be used by companies forming a tax capital group established or for which the period of operation has been extended since June 30, 2018.

The exemption applies to income from business activities specified in the support decision subject to taxation in Poland, thus also those realized through a plant. The exemption also applies to shareholders of unincorporated companies in proportion to their share of profit in the company concerned.

Exemption from taxation of income derived from a new investment is available after the date of issuance of the decision on support and for qualified costs incurred after that date, until the expiration of the said decision or exhaustion of the regional aid limit. Importantly, the concept of a new investment does not exclude the use of assets already existing in the enterprise, while investments of a replacement nature (change of assets) are not subject to this state aid, as long as they do not lead to a significant change in the production process (provision of services).

The decision on support is issued on an application, the form of which is specified in the Decree of the Council of Ministers of December 27, 2022 on public aid granted to certain entrepreneurs for the implementation of new investments The applicant shall indicate in it the type of business under which the new investment will be implemented, as well as the area of its implementation.

Investors applying for a decision on support are required to meet the following criteria, i.e.:

Quantitative criteria in the form of a minimum value of eligible costs incurred in connection with the investment which depends on the location of the investment and ranges from PLN 10 million to PLN 100 million for large taxpayers. This threshold is reduced for micro, small and medium-sized enterprises by 98%, 95% and 90%, respectively.

Significantly, reinvestments in the form of investments in tangible or intangible assets, related to:

  • increasing the production capacity of an existing plant,
  • diversifying the production of a plant by introducing products previously not produced at the plant, or
  • a fundamental change concerning the production process of an existing plant.

Meet the definition of a new investment. In this case, the required eligible costs of the new investment are reduced by 50%. The qualitative criteria are described in detail in Annex 1 to the Ordinance and relate to the impact of the investment on socio-economic development.