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Investing in Polish Special Economic Zones: Meaning, Procedure & Tax Exemptions

In this article, we will be examining why investing in Polish Special Economic Zones is better and we will also discuss the various tax exemptions in the SEZs.

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Investing in Polish Special Economic Zones (SEZ)

The Polish Government established Special Economic Zones (SEZ) as a consequence of the requirements of a few specific regions with the demands of foreign investors looking to set up businesses in Poland.

The special economic zones of Poland (SEZ) are a magnet for investors and investment in Poland by providing tax-free income to business activities.

It is an isolated, uninhabited part of the territory where business activities are carried out under special conditions.

The goal for the Special Economic Zones is to:

  • It assists to stimulate the growth of the economy of various regions in Poland;
  • Develop better new jobs opportunity to;
  • Attract foreign investors to Poland;
  • Oversee post-industrial infrastructure and property.

In this article, we will be examining why investing in Polish Special Economic Zones is better at this time. We will also discuss the various tax exemptions of investing in Polish Special Economic Zones.

What are Polish Special Economic Zones (SEZ)

First Special Economic Zone located in Poland was established in Mielec in the year 1995 & the majority of the other SEZs came into existence two years later.

The 14 currently operating SEZs differ in terms of area geographical location, type, conditions for development, infrastructure, and Telecommunication and technical networks.

The majority of entrepreneurs who choose to establish companies in one of the fourteen Polish Special Economic Zones get the chance to run their business with preferential terms and also with the promise of many benefits like reduced taxes within Poland

Furthermore, they can start their business from scratch with the advantage of having fully-equipped premises. Here we’ve described the details procedure for entering into polish Special economic zones.

Procedures to enter Special Economic Zones

Investors who are interested in setting up an enterprise within Poland within one of these special economic Zones need permission from the board of management of the zone in question.

To collect an operating license within an Economic Zone, a Special Economic Zone, an investor must:

  • Examine the rules and regulations formulated by the Council of Ministers referring to the kind of business and determine whether the business meets the criteria.
  • Select which Polish Special Economic Zone he wishes to finance in.
  • Make a formal proposal to local authorities, stating his intentions of investing in the particular area is at a minimum of EUR 100,000.
  • Participate in an auction run through authorities of the Special Economic Zone authorities. In the event of winning, the winner will be granted the certificate.

Read More: Business Licenses And Permits

Tax exemption for income tax in SEZs

The most significant benefit of investing in the Particular Economic Zone in Poland is the chance to get a tax exemption for corporations. The corporate tax on income for corporations in Poland can be as high as 19%.

The highest tax exemption on income is calculated based on the amount of state aid that is available to investors in a specific project. There are a variety of variables that affect the value of the aid from the state: The location where you invest and its size, firm as well as the size of its investment.

The amount of government aid is evaluated devotedly:

  • 30-50% of the eligible costs for larger companies.
  • 40% to 60% of eligible costs for medium-sized businesses.
  • 50-70% of costs that are eligible for small-sized businesses. 

Medium-sized businesses operate with less than 250 workers and have a turnover of fewer than 50 million euros. Smaller businesses have less than 50 employees and have more than 10 million euros in annual turnover or balance.

Based on the place of business according to the location of the company in Poland, the maximum aids range between 30 and 50%.

Real estate tax exemption in an SEZ

Investors who manage their businesses within an SEZ in Poland might be eligible for a real tax exemption for real estate following an order issued by the local authorities in the area. 

Investors must invest in the region and create jobs to be eligible to receive a real estate tax exemption. 

Additionally, investors must:

  • Announce their intention to apply for assistance from authorities before launching the investment.
  • Keep investing in the region for at minimum five years.

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Conclusion

Investing in Polish Special Economic Zones brings benefits for both, as the foreign investors receive advantages from their businesses and those who are in Polish Special Economic Zones will benefit from a lower rate of unemployment and a well-developed infrastructure, as well as increased economic competitiveness and rapid economic growth.

Odint Consultancy will be pleased to offer assistance and advice for Investing in Polish Special Economic Zones &  setting up a business within Poland.

FAQ’s

The term “special economic zone” refers to an isolated, uninhabited portion of the nation’s territory where business can be conducted at preferential terms set out within the Act on Special Economic Zones of Poland.

The principal objective of the SEZ Scheme focuses  on the generation of extra economic activity, the promotion of exports of goods as well as services, the promotion of investments both from foreign and domestic sources, create job opportunities, the and construction of facilities for infrastructure.

SEZs are situated within the boundaries and their goals include boosting trade balance, employment, more investments, job creation, and efficient administration.

SEZs are a great way to attract investors, create jobs, and increase exports both directly and indirectly if they are successful in establishing links with the wider economy.

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