POLAND
3.2 Briefly explain the investment restrictions for any special/restricted sectors. In general, the same rules apply to the domestic, European and other entities in the matter of requirements to meet in order to run a business in certain sectors. Economic freedom is one of the principles stated in the Constitution of the Republic of Poland; however, conducting business may be subject to restrictions.
Among the areas of activity that are subject to special restrictions, there are the following examples:
Mining sector: private entities may explore mineral resources only on the basis of the real right known as mining usufruct, which may be granted on the basis of an agreement between an entrepreneur and the Minister of Environment. A person who intends to operate a mining undertaking should also obtain a relevant mining permit (which may be granted after a tender procedure) and a decision on environmental conditions which specifies the environmental conditions to operate the undertaking.
Financial services sector: banking, insurance, financial markets and other financial services are subject to supervision by the Financial Supervisory Authority (KNF). Economic activity in these areas usually requires special permit. The KNF issues a number of regulations and undertakes other legal measures to provide regular operation of the financial market.
Energy sector:manufacturing and trading in fuels and energy is subject to the Energy Law Act. The main authority in this area is the Energy Regulatory Office, which is competent for granting licences and monitoring the energy market. Companies intending to conduct business activities in electricity, gaseous fuels, heat or liquid fuels need to obtain a relevant licence.
3.3 Which authority oversees competition clearance, when is notification mandatory, and briefly explain the merger clearance process. Competition matters in Poland – including the merger clearance process – are under the supervision of the president of the Office of Competition and Consumer Protection. The participants of the planned transaction must obtain prior clearance from the president when their turnover in the year preceding the application exceeds €1 billion globally or €50 million in Poland.
4 Tax and grants
4.1 Are there tax structures and/or favourable intermediary tax jurisdictions that are particularly useful for FDI into the country? There are no tax structures that could be indicated as useful particularly for FDI in Poland; however, Poland is party to the double tax treaties which cover relations with all developed countries.
As for the favourable intermediary jurisdictions, the most popular are companies in Cyprus. Among other typical foreign vehicles to operate in Poland, are UK limited companies, Dutch and Luxembourg companies.
4.2 What are the applicable corporate tax rates? Poland remains among the most favourable EU countries in respect of the corporate tax rate, and the corporate income tax (CIT) in Poland is calculated at flat rate of 19%.
4.3 Does the government have any FDI tax incentive schemes in place? The Polish legal system provides several incentives for entrepreneurs. Regarding the tax law area, the two main incentives should be indicated:
• Income tax exemption: the exemption applies to investors operating in Special Economic Zones (SEZs). In order to establish a business in a SEZ, an entrepreneur should obtain a special permission. Receiving state aid
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requires the investor to meet several conditions, including that business activity and new jobs should be maintained for a specified period. Moreover, the minimum level of investment enabling the use of public aid is €100 000.
• Exemption for real property tax: the exemption may be granted by the municipal council as one form of state aid. In general, the level of public aid depends on such factors as costs of investment and the costs of creating new jobs.
4.4 Other than through the tax system, does the government provide any other financial support to FDI investors? If so, please provide an overview. The Polish government offers governmental grants. The support may be provided on the basis of an agreement between the minister of economy and the investor. However, the entity that operates the procedure for obtaining financial aid is the Polish Information and Foreign Investment Agency. The financial support is offered for significant investments in the area of the specified priority sectors. The investor may also apply for public aid in other sectors if the project’s minimum eligible costs and number of new jobs exceed a specified level.
5 Operating locally
5.1 What is the most common governing law of contracts and local business language? The local business language is Polish, and the Polish law of contracts is subject to the Civil Code Act of April 23 1964, which applies to the entire jurisdiction.
5.2 Explain any local content or local participation requirements relevant to foreign investors. There are no particular requirements related to foreign investors in this matter.
5.3 How difficult is it for foreign investors to secure expatriate visas for shareholder representatives and workers? As a rule, the citizens of the member states of the EEA and Switzerland have full right to enter and live in Poland due to the EU free movement of people principle. For foreigners from third party states, entrance and stays in Poland require a visa.
A foreigner who wishes to work in Poland is required to obtain a work permit issued by the appropriate regional governor. This rule is subject to several exceptions (for instance, the citizens of the member states of the EEA may generally work in Poland without obtaining a work permit), and simplified procedures are envisaged in certain circumstances, for example, in relation to persons authorised to represent a foreign entrepreneur in their branch or representative office.
5.4 What foreign currency or exchange restrictions should foreign investors be aware of? Whereas Poland, as a European Union member state, is subject to the free movement of capital rule, in general there are no specific restrictions in the area of foreign currency and exchange.
5.5 Does the country prohibit domestic companies from doing business in any foreign jurisdictions? Polish law does not prohibit domestic companies from operating business activity in any particular foreign countries. Nevertheless, Poland, as a member of international organisations (such as the United Nations), may be obliged to undertake specific actions such as sanctions and embargoes. Furthermore, foreign trade in some crucial areas may be subject to government control (goods of strategic importance for national security and the maintenance of international peace and security).
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