Exemptions and preferences

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Saturday, 21 May 2011 08:51

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Exemptions and preferences

Entrepreneurs operating within the area of W-M SSE who hold a Licenceto conduct business activity in the area of the Warmia-Mazury Special Economic Zone, are entitled to benefit from public aid in the form of income tax exemptions. The investor can be entitled to this exemption in two ways – for a new investmentand for creating new jobs. Entrepreneurs can decide to choose the entitlement that they want to benefit from.

While benefiting from public aid for a new investment, the basis for calculating the maximum amount of aid is the total amount of eligible capital expenditures. The definition of eligible expenditures is provided by § 6 ROZPORZADZENIA RADY MINISTRÓW z dnia 10 grudnia 2008 r.w sprawie pomocy publicznej udzielanej przedsiebiorcom działajacym na podstawie zezwolenia na prowadzenie działalnosci gospodarczej na terenach specjalnych stref ekonomicznych.

A condition for granting aid for a new investment is the involvement of the entrepreneur’s own means in the amount of at least 25% of total investment costs. The minimum value of the investment must be EUR 100,000.

While benefiting from public aid for creating new jobs, the basis for calculating the maximum aid is the amount of two-year costs of labour of newly-hired employees.

For the Warmia and Mazury Province, the regulations establish the maximum amount of aid at the level of 50% of eligible costs of a new investment, or 50% of two-year labour costs of newly hired employees.

In the case of medium enterprises, the regulations increase the maximum amount of aid by 10%, and in the case of small enterprises – by 20% (excluding businesses in the transport sector). The definition of medium and small enterprises is provided at the end of this article.

Examples of calculating maximum amounts of aid in the area of the Warmia-Mazury Province

Aid for a new investment

Purchase of 1 ha of land	PLN 200,000
Buildings and structures	PLN 2,500,000
Equipment	PLN 3,300,000
Total cost of investment	PLN 6,000,000

Enterprise size	Exemption percentage	Maximum amount of aid to be used
Small	70%	PLN 4,200,000
Medium	60%	PLN 3,600,000
Large	50 %	PLN 3,000,000

Aid for creating new jobs.

Number of employees	100
Average monthly cost of labour of one person	PLN 2000.
Total labour cost in a two-year period (100 x 2000 x 24)	PLN 4,800,000

Enterprise size	Exemption percentage	Maximum amount of aid to be used
Small	70%	PLN 3,360,000
Medium	60%	PLN 2,880,000
Large	50%	PLN 2,400,000

An example of using the aid

Assuming that:

1. The maximum amount of aid for the entrepreneur is PLN 4,200,000.

2. The entrepreneur has earned income from which he is to pay PLN 300,000 of income tax.

3. The entrepreneur conducts business activity in the area of W-M SSE and holds a valid Licence.

In such a case, the entrepreneur does not pay income tax, and his maximum amount of aid to be used is reduced by the amount of the unpaid tax. As a result of this operation, the amount of PLN 3,900,000 is left to be used by this entrepreneur.

The entrepreneur can follow this scheme until he uses the maximum amount of aid, but not longer than by December 31, 2020.

Definition of small and medium enterprises.

A medium enterprise is an enterprise that hires less than 250 employees and whose annual turnover does not exceed EUR 50,000,000 and/or an annual balance-sheet total does not exceed EUR 43,000,000.

A small enterprise is an enterprise that hires less than 50 employees and whose annual turnover and/or total balance do not exceed EUR 10,000,000.