State aid in the eastern part of Poland is one of its greatest assets

The interview about the warehouse market in Eastern Poland sparked a lot of interest, especially in respect of financial benefits for investors and the location of logistic operations in this part of the country. That is why we asked Iwona Chojnowska-Haponik and Rafał Szajewski - JLL experts from Business Location Consulting department, what support instruments, incentives or tax exemptions can new entities on the real estate market in this part of the country count on. 

JLL's Business Location Consulting department is responsible for providing comprehensive advisory services in optimising location strategies by assisting in the selection of the most advantageous place to invest and in obtaining available state aid instruments.

The highest possible level of support in Poland

In four voivodships of Eastern Poland the available amount of regional state aid for large enterprises calculated as a percentage of qualified costs (investment expenditure in the case of logistics and production companies) is as much as 50%. In the case of medium-sized companies, the level of state aid intensity increases by 10 pp, for small and micro companies it is 20 pp higher.

“Companies planning to invest in setting up a new factory or expanding their existing operations can benefit from two types of investment incentives: non-reimbursable cash grants and tax exemptions. Thus, within the Polish Investment Zone, companies can take advantage of CIT income tax exemption,” says Iwona Chojnowska-Haponik, Business Location Consulting Director, JLL.

CIT income tax exemption

The income tax exemption limit is calculated as a percentage of the eligible costs of the new investment (capital expenditure incurred) or the 2-year cost of employing new staff minus all other forms of regional aid (e.g. grants).

To be able to apply for a tax exemption, certain quantitative and qualitative criteria must be met. The quantitative criteria depend on the location of the investment, the sector represented and the size of the entrepreneur. It is worth emphasising that in Eastern Poland the requirements in terms of investment outlays are significantly lower than in other parts of the country.

As far as the qualitative criteria are concerned, depending on the region, the applying companies must obtain from four (in Eastern Poland) to six out of a maximum of ten points, which concern, among others, such aspects as:

• investment in a sector in line with the country's current development policy in which Poland can gain a competitive advantage;
• pro-export nature of the investment;
• low negative impact on the environment;
• creation of specialised and stable jobs.

“The CIT income tax exemption can be used over a period of 15 years. The exemption period is counted from the date of receiving the decision on support. In the territory of four voivodships: Lubelskie, Podkarpackie, Podlaskie and Warmińsko-Mazurskie, both the amount of support and the period in which it is possible to use the exemption are more favourable than elsewhere. In this part of the country tax holidays are available for 15 years and state aid level is as high as 50% of eligible costs. The rest of the country can offer 10 or 12 years of tax holidays and up to 35% of state aid level,” says Rafał Szajewski, Business Location Consulting Director, JLL.

> Eastern Poland. Marcin Krupanek, JLL: This market just starts booming

Grants from the state budget

„The second instrument of support for entrepreneurs undertaking new investments are non-refundable grants from the state budget for investments, creation of new jobs and training of employees,” explains Iwona Chojnowska-Haponik.

The amount of support can be increased to as much as PLN 7,000 per employee when the entrepreneur offers training to employees.

Entities applying for cash grants must meet specific quantitative criteria related to investment outlays and employment, as well as qualitative criteria. Also in the case of this support programme - the entry thresholds in Eastern Poland are lower than in other parts of the country. 

The quantitative requirements depend on the type of investment (strategic, innovative R&D in the case of manufacturing companies), location (preference for Eastern Poland and counties in other regions with an unemployment rate higher than the national average) and the size of the company.

The qualitative criteria are almost identical as in the case of the Polish Investment Zone, except that the more points a company scores, the higher support it can count on.“The amount of the investment grant in Eastern Poland may reach up to 15% of eligible costs, while in the rest of the country it does not exceed 5%,” says Iwona Chojnowska-Haponik. 

Such significant financial support for enterprises results in the growing interest of investors in Eastern Poland region. One of the locations where potential investors may find an ideal place to launch a new investment in this part of the country is for example Sokołów Małopolski.