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New rules for investment support - a tailored-made grant

The year 2020 was undoubtedly exceptional and brought many changes for the modern business services industry – in Poland and Europe, as well as worldwide.

A YEAR FULL OF CHALLENGES

In 2020, the Polish Investment and Trade Agency (PAIH) supported 44 projects from the BSS sector and 15 from the R&D sector – despite investors’ caution in the first and second quarter, the end of the year resulted in exciting projects, the effects of which were already visible at the beginning of 2021. Interestingly, several companies from the BSS sector have decided to locate their investments in Poland, even though the investors could not personally come to the country due to the pandemic. Making such a decision at a distance is not easy. Still, at PAIH – thanks to our flexibility and ability to face new challenges – we have adapted our activities to the existing conditions.

As the Polish Investment and Trade Agency, we provide comprehensive and free of charge support to investors at every stage of the investment process. As a bridge between private investors and state institutions, we listen to the needs of entrepreneurs and respond to them. According to data from fDi Markets – a cross border investment monitor run by the Financial Times – Poland is the third most preferred location in the world for foreign investors. Undoubtedly, such a good result is due to a stable economy, educated and proactive employees and well-tailored support tools. To a large extent, the instruments of public aid adjusted to the market situation may be the deciding factor for implementing investment in Poland. It is worth mentioning that when it comes to projects located in the Polish Investment Zone in the first half of 2020, 75% of them were Polish companies.

NEW RULES OF SUPPORT FOR NEW INVESTMENTS

In response to the investors’ needs, to stimulate investment in the wake of the COVID-19 outbreak, the Programme for the Support of Investments of Significant Importance to the Polish Economy for 2011–2030 (the ‘Programme’) was amended on 25 March 2021. New investments can receive support in the form of a government grant of up to 25% of eligible costs or up to PLN 20,000 for each new job created. The level of support depends on the location of the investment and the number of quality criteria met. The current rules will be in force until the end of this year, with a possibility of extension.

The modification of the Programme included four main aspects:
1. Lowered entry thresholds (necessary outlays to be incurred and jobs to be created), making support available to a larger group of entrepreneurs. Thanks to that, support is available not only to companies that can implement large investments, but also to companies from the micro, small and medium-sized enterprise (SME) sector. This solution will allow for adjusting the requirements to the capabilities of entrepreneurs, taking into consideration the scale of their activity, thus preventing the elimination of smaller entities from the support system.
2. Modified quality criteria – many entrepreneurs combine the grant with the CIT exemption obtained under the Polish Investment Zone (PIZ). Thanks to simplification and clarification of quality criteria, as well as a direct reference to the act on supporting new investments (PIZ), combining support instruments is now even easier!
3. Simplification of the application procedure – it has been possible to abandon the lengthy application procedure involving external entities.
4. Individual approach to the entrepreneur – in some cases it is possible to lower declared by the investor quantitative criteria. This allows for a more individual approach to entrepreneurs and the problems they may have to face in the current economic situation.

Noteworthy, a new category of developing entrepreneur has also been introduced, i.e. an entrepreneur employing less than 1,000 people, whose annual turnover or balance sheet total does not exceed EUR 250 million. They can benefit from entry thresholds reduced by half. This is a significant facilitation for many companies which have lost the status of medium-sized entrepreneur and thus lost the opportunity to benefit from many public aid programmes aimed at the SME sector.


WHAT COSTS CAN BE COVERED BY THE GOVERNMENT GRANT?

Under the Programme, support is granted based on: eligible costs of creating new jobs (2-year labour costs) or eligible investment costs, and covers both manufacturing and BSS investments.

Support under the costs of creating new jobs is provided for investments in the Business Services Centre and in the Research and Development Centre (the latter may also apply for support under the investment costs).

The Business Services Centre is an investment in the modern business services sector, in which specific processes are implemented, with investment costs of at least PLN 1 million and the number of new workplaces amounting to at least 100. In the case of having the status of SME, these requirements are significantly reduced. A micro-entrepreneur can apply for support by creating only 10 new jobs and incurring outlays of PLN 300,000.

On the other hand, a Research and Development Service Centre is an investment in the modern business services sector with investment costs of at least PLN 1 million and the number of new jobs for people with higher education is at least 10, in which only processes consisting in the provision of research and development services are realised.

WHAT SUPPORT CAN I COUNT ON?

An investment in a Business Services Centre can be supported up to PLN 15,000 for each newly created job, while Research and Development Services Centres can count on a grant of up to PLN 20,000 for each new employee or up to 25% of the investment costs (depending on which of these amounts is higher).

The final amount of the grant depends on the location and the number of quality criteria met.

A great mechanism is also the possibility of obtaining an additional training grant. In case of offering training and opportunities to improve professional qualifications to employees, support may be increased even up to PLN 7,000 per one employee.

It’s worth remembering that according to the Programme, a large entrepreneur is obliged, during the period of maintaining the investment, to incur costs in the scope of cooperation with entities forming the system of higher education and science or with secondary schools in the amount of at least 15% of the value of the granted subsidy. The investors serviced by PAIH appreciate the wide range of forms of cooperation – from offering internships or co-- organising courses, through participation in the ‘Implementation Doctorate’ programme, to e.g. equipping schools with the necessary equipment.

HOW CAN I APPLY FOR SUPPORT?

The operator of the Programme and the authority granting state aid is the Minister responsible for the economy. The Polish Investment and Trade Agency (PAIH) is responsible for preparing and providing the Interministerial Committee with the dossier of investment projects and for preparing all documents required to carry out the entire procedure of providing financial support. Each project is subject to an individual assessment by the Committee based on criteria laid down in the Programme.

The Programme is entirely financed from the state budget. The support is granted in the form of a grant on the basis of a bilateral agreement concluded between the minister competent for economy and the investor. The agreement regulates in detail the conditions for the payment of the grant, maintaining the principle that the grant is paid out in proportion to the degree of fulfilment of the obligations.

The PAIH’s Centre for Strategic Investments is responsible for providing information on government grants. Applications are accepted on a continuous basis. However, it is crucial that the investment has not been commenced before submitting the application for state aid. As the Polish Investment and Trade Agency, we support investors not only by providing macroeconomic, human resources, legal and sectoral data or by advising on the choice of an appropriate location, but we also take care to plan together with the investor the schedule of the investment implementation and application for support – so that the whole process runs smoothly. In this context, it is also worth bearing in mind the change in the regional aid map planned from 2022, related to the EU regulations on state aid. The available levels of support will change in some regions of Poland. For this reason, it is worth considering your company’s development plan now to be ready for the upcoming changes and make a timely decision.

I encourage you to contact us already at the stage of initial investment plans – the experienced, business-oriented team of the Centre for Strategic Investments will make sure that your investment process runs as smoothly as possible.

Author: Zofia Kilian, Senior Consultant, Centre for Strategic Investments, Polish Investment & Trade Agency

Polish Investment and Trade Agency (PAIH)