Poland's Special Economic Zones have been replaced by the Polish Investment Zone, which is a new tax relief mechanism. Since 2018, Poland has become one large special economic zone, offering income tax exemptions to enterprises, especially those involved in the establishment or expansion of production plants.

The regulations governing the Polish Investment Zone provide income tax exemptions regardless of the investment location, effectively extending tax incentives to nearly 100% of Poland’s investment space.

Eligibility Criteria for Tax Relief in Poland

Foreign Investors undertaking investment projects may qualify for the tax exemption if they engage in the following activities:

  • Establishment of a new enterprise
  • Increase in production capacity
  • Introduction of new products
  • Fundamental changes in the overall production process
  • Acquisition of assets from a permanent establishment that has closed or would have closed without the purchase.
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Determining the Value of Tax Exemption

The tax exemption amount for Corporate Income Tax (CIT) or Personal Income Tax (PIT) is calculated by multiplying the regional aid intensity by the eligible costs or the two-year labor cost of employees hired within the new investment. The regional aid intensity varies based on the investment location and enterprise size, with a basic range between 20% and 50%. Micro and small enterprises receive an additional 20% increase, while medium enterprises receive a 10% increase. The duration of the investment support decision can range from 10 to 15 years, depending on the investment location and regional aid intensity. The validity period determines the length of time the taxpayer can declare tax-exempted income, which is a minimum of 10 years in all cases.

Obtaining the Investment Support Decision in Poland

The tax exemption is granted through an administrative decision issued by the Area Administration of each Special Economic Zone. This decision specifies the investment’s location, the activities covered by the new investment, and the income eligible for tax exemption. Any activities not included in the decision are subject to standard income tax.

Criteria for Obtaining Investment Support Decision in Poland

To obtain the investment support decision, the foreign investor must meet two types of criteria:

  • Quantitative criteria: These criteria set a minimum value for eligible costs based on the unemployment rate at the investment location and the enterprise size.
  • Qualitative criteria: These criteria vary based on the type of investment, with different requirements for industrial and service investments. The investor must score a minimum of 4-6 points, including at least 1 point in each group, depending on the location.

Utilizing Multiple Investment Support Decisions in Poland

Under the new regulations, it is possible to obtain multiple investment support decisions. Tax relief settlements from multiple decisions follow the chronological order in which the decisions are issued, and the support is settled jointly.

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Małgorzata Samborska

Partner, Tax Advisor

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