Polish Investment Zone – from conditions to tax benefits

The Polish Investment Zone (PSI) is a key instrument supporting business development in Poland, offering attractive tax breaks for companies planning new investment projects. The system allows for public aid in the form of corporate income tax (CIT) or personal income tax (PIT) relief under clearly defined terms. Which ones? We explain below.

How to get support for new investments in Poland?

The Polish Investment Zone (PSI Polska Strefa Inwestycji) is a mechanism for supporting entrepreneurs by offering them corporate income tax (CIT) or personal income tax (PIT) exemptions on income from new investments in Poland. This relief was introduced by the Act of May 10, 2018, on supporting new investments, replacing the existing special economic zones (SSE Specjalna Strefa Ekonomiczna).

The support offered under the PSI is regional public aid, implemented in the form of a tax exemption. The limit of this exemption is strictly defined and depends on the permissible aid intensity for a given voivodeship. The relief covers income derived from specific economic activities specified in the support decision, and its duration ranges from 10 to 15 years, depending on the investment location.

How to meet PSI requirements? Quantitative and qualitative criteria

To obtain a decision on support, the investment must meet precisely defined quantitative and qualitative criteria in the regulations.

Quantitative criteria define the minimum eligible investment costs that an entrepreneur must incur, with the level of these costs depending on both the size of the company and the economic situation of the investment region. Generally, the higher the unemployment rate in a given district (relative to the national average), the lower the required level of expenditure. For large enterprises investing in districts with a very low unemployment rate (below 60% of the national average), this threshold is PLN 100 million. In the least developed regions (above 250% of the national average or in so-called medium-sized cities losing their functions), a large company must invest only PLN 10 million. Appropriately lower requirements apply to medium-sized, small, and micro-sized enterprises. Additional incentives are provided for investments in the modern business services sector and in research and development (R&D), where the minimum expenditure level is lower and treated at the level appropriate for smaller entities.

In addition to meeting financial requirements, the investment must also demonstrate an impact on economic and social development, assessed based on qualitative criteria. The regulations provide for 10 qualitative criteria, divided into two groups: economic sustainability and social sustainability.

The quality criteria include:

• implementation of investments in preferred sectors consistent with the country’s development policy or the region’s smart specializations,
• conducting R&D activities,
• implementing innovations,
• automation and robotization of processes,
• pro-ecological investments (OZE),
• cooperation with local suppliers (creating cooperative links),
• supporting employees (e.g. subsidizing childcare, employing people with disabilities),
• creating high-quality jobs (stable employment in specialized positions),
• locating the project in a district with very high unemployment or in a city losing its socio-economic functions.

Each criterion is assigned a specific point value, most often 1 point for meeting a given requirement. The applicant indicates which criteria they intend to implement. They must obtain the required minimum number of points and at least one point in each of the two categories: economic and social. It is worth emphasizing that the detailed sets of criteria vary depending on the type of investment. Separate, though similar, criteria apply to industrial projects and service ventures.

The procedure for obtaining a decision on support – authorities, application, validity period, beneficiary’s obligations

An application for a support decision should be submitted to the appropriate SSE Manager, acting on behalf of the Minister of Development and Technology. Fourteen SSE Managers (operating as commercial companies) have been designated in Poland. The relevant SSE Manager will be the one who manages the area (district) where the investment covered by the support decision is to be located.

The application itself is submitted on a form. In addition to the applicant’s details, the form must include the new investment implementation plan, eligible investment costs, employment information (current employment levels and the number of employees planned for the new investment), and qualitative criteria that the applicant undertakes to meet as part of the planned investment. In addition to the above information, the form must also include a number of declarations (including information on public aid received to date and the applicant’s financial situation).

The form must also be accompanied by: (i) a detailed business plan for the new investment, (ii) financial statements for the last three financial years (if the applicant operated for that number of years before submitting the application for the decision) and (iii) an information form presented when applying for de minimis aid with detailed information on the economic situation of the applicant, its capital connections and the type of business activity conducted by the applicant.

The key issue in the procedure for obtaining a decision on support is that the application, together with annexes, should be submitted to the relevant SSE Manager before the commencement of the new investment, i.e. (i) before the commencement of construction works related to the investment covered by the project, or (ii) before the applicant signs the first legally binding commitment to order equipment, or another commitment that makes the investment irreversible.

The decision on support will be issued by the relevant SSE Manager, acting on behalf of the Minister of Development and Technology. The condition for issuing the decision on support is that the applicant meets all the conditions for granting public aid (meeting quantitative and qualitative criteria) as well as formal criteria (providing all required information and documents).

If the applicant disagrees with the decision issued by the SSE Manager acting on behalf of the Minister of Development and Technology, an appeal procedure exists. Under this procedure, the applicant may submit a request to the Minister of Development and Technology for reconsideration of the matter, and then to the Provincial Administrative Court in Warsaw.

Pursuant to the Act of May 10, 2018, on Supporting New Investments, a support decision is issued for a fixed period, no shorter than 10 years and no longer than 15. The validity period of the decision depends on the aid intensity established for the given area. Decisions with a maximum validity period (15 years) are available to entrepreneurs whose investment will be located in an area that is at least 51% within the boundaries of a special economic zone, as defined by Article 2 of the Act of October 20, 1994, on Special Economic Zones.

The support decision will impose obligations on the beneficiary related to the implementation of the new investment (meeting quantitative criteria), employment, and meeting qualitative criteria. These include the deadline for completion of the new investment, the deadline for incurring costs (at the agreed level), and the period from which and for which the appropriate level of employment related to the new investment must be maintained. In practice, particularly with large and complex investments, delays in the investment process may occur, resulting in the inability to meet the deadlines specified in the support decision. In such a situation, an application to amend the support decision should be submitted to the Minister of Development and Technology as soon as possible, within the scope of the deadlines specified therein, applicable to the entrepreneur. The application to amend the support decision must include detailed justification and evidence supporting the claims made in the application (usually factual circumstances beyond the entrepreneur’s control that result in the inability to meet the deadlines related to the investment). Similarly, after the investment is completed, if the beneficiary encounters any difficulties resulting in the inability to meet the obligations specified in the support decision, it is necessary to submit an application for a change of this decision as soon as possible in order to avoid conducting business in a way that does not meet the criteria specified in the decision.

The obligations specified in the support decision must be strictly observed. Failure to fulfil these obligations or to remedy any violations in their implementation entitles the Minister of Development and Technology to repeal the decision in question. If the decision is repealed, the beneficiary will be obligated to immediately repay the public aid granted. A similar situation will occur if the business activity ceases during the period of validity of the support decision.

Settlement of support – reporting obligations and rules for discounting public aid (PSI)

Taking advantage of tax exemption entails specific reporting and record-keeping obligations for the investor. The entrepreneur is required to maintain separate records (accounting books) that allow for precise determination of tax-exempt income.

In practice, this requires assigning revenues and costs to:

• Activities covered by the support decision (i.e. those benefiting from the exemption).

• Activities taxed under general rules.

Taxpayers receiving public assistance under the PSI must determine its present (net) value at the time the support decision is issued. This value is crucial and requires:

• Discounting investment expenditure when calculating the maximum allowable value of aid.

• Discounting the hypothetical value of income tax (PIT/CIT) on income covered by the exemption, which is an element of settling the public aid used.

The obligation to discount expenses and the hypothetical tax arises from the need to reduce future benefits (tax exemptions) to their present value, in accordance with the net present value (NPV) principles applied under state aid regulations.

Discounting public aid is crucial for ensuring the comparability of investment values and tax exemptions over time. This process involves reducing future expenditures and tax exemptions to their present value (PV). This approach allows for a comparison of the value of investment outlays with the value of public aid (tax exemption) received, even if these values occurred in different accounting periods.

The discounting mechanism is crucial when combining public aid from different sources within the same investment project. Polish regulations allow for combining tax relief resulting from the decision on support (SSE/PSI) with other forms of support, such as grants, EU subsidies, or property tax exemptions. Compliance is contingent on the total value of the cumulated aid not exceeding the maximum permissible regional aid intensity established for a given area, which is typically 30%, 40%, or 50% of the investment value.

Statute of limitations for claims for the repayment of public aid within the Polish Investment Zone (PSI)

It is important to remember that the statute of limitations for claims for reimbursement of aid granted under the Polish Investment Zone (PSI) is 10 years. Due to this long period and the fact that the tax exemption is “rolled over” (i.e., carried over and used in subsequent tax years), the beneficiary is required to maintain complete accounting records throughout the investment implementation and the period of benefiting from the tax exemption. Any errors in PSI settlements made in the past directly translate into irregularities in future settlements. Furthermore, zone administrators require periodic reporting of investment progress, which includes submitting information on project completion, capital expenditures incurred, and the level of new employment achieved.

Maximizing support: the potential and key limitations of the PSI tax reliefs

Income generated from activities covered by the PSI (Polish Investment Scheme) is exempt from income tax (CIT or PIT). At the standard 19% income tax rate, this mechanism allows the company to retain a significant portion of its net profit. However, it should be noted that the maximum amount of this tax exemption is strictly limited by the regulations governing regional investment aid.

The tax exemption under the PSI applies only to income directly related to the new investment. In practice, this means that the entrepreneur must precisely separate the activity covered by the support decision, for example, by creating a separate technological line, a new production facility, or introducing a new product. Therefore, exempt income only includes the profit generated under the decision. If the taxpayer also conducts other activities, they are required to allocate revenues and expenses between the portion covered by the tax relief and the portion subject to taxation. This requirement raises numerous practical challenges and often becomes the subject of disputes with the tax authorities. These authorities strictly require that the taxpayer demonstrate a close connection between the income and the supported investment, in accordance with the terms of the decision. Although court decisions have already emerged on these issues, interpretations of the regulations continue to evolve in line with current tax practice.

Another significant limitation is the state aid limit. A business is not entitled to benefit from the exemption in an amount exceeding the permissible regional aid intensity. This is particularly important when the taxpayer also receives other forms of support, such as subsidies, government grants, or local tax exemptions. In such cases, all aid is cumulative and cannot exceed the permissible ceiling established for a given region, requiring the beneficiary to continuously monitor its current value.

It is also worth mentioning industry-specific restrictions, as not every business is eligible for PSI support. Entire sectors are excluded from the program, including tobacco and alcohol production, retail and wholesale trade, financial services and development, education, healthcare, and many other intangible services. The PSI program primarily targets industrial production and modern business services. At the same time, from June 2025, the defence industry can also benefit from PSI exemptions.

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