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Sources of support for business operations

The seamless transition from the currently binding Multi-annual financial framework of the whole of the European Union to the 2021-2027 perspective is approaching rapidly. It is still possible to apply for the last available funds in the period from 2014-2020. However, there are not many of these resources left – more than 90% have already been allocated, and less than 10% will be earmarked for ad hoc competitions which have to be finalized in the coming weeks. Representatives of the retail and FMCG sectors will not be able to take advantage of most of them; however, in the future there may not only be many more possibilities, but more interesting ones than those which have been available to date. 

What awaits us in the foreseeable future? Which sources of support are already available and which will be available in the near future. What aid amounts will be available?

European Union expenditure planned for the years 2021-2027 is to exceed EUR 1.8 trillion. It is to support investments to counteract climate change, for digitization and R&D activities. This amount will consist of funds from two sources:

In the first framework all New Cohesion Policy instruments have been agreed, including grants for e.g. supporting research and innovation, SMEs, environment, transport and increasing employment. In addition, the Just Transition Fund will also be made available (environmental expenditure and investments aimed at achieving the goal of climate neutrality). The overall budget for Poland will be up to EUR 3.8 billion.

Funds for the “European Funds for the Modern Economy” programme, which is the direct continuation of the previously binding “Smart Development 2014-2020” project (PO IR) are also accounted for in the budget. Consultations on its final form are currently underway. Its key assumptions comprise:

  • support for the entire R&D&I process (Research and Development, and Infrastructure);

  • support for enterprises at every stage of development;

  • cooperation between education and business;

  • concentration on National Smart Specializations.

Support will be offered in the form of subsidies and the Programme’s budget will amount to approx. EUR 7.9 billion, and as much as 55% is earmarked for enterprises. This time potential beneficiaries will be serviced by institutions engaged for the purpose, depending on the size of the enterprise. The National Centre for Research and Development will cooperate with large corporations, and SMEs will fall under the aegis of the Polish Agency for Enterprise Development. 

The so-called project modularity (understood as the possibility of combining various areas of projects, from R&D through greening the enterprise, to implementing a ready operating solution and promoting it on European markets) should be considered the key innovation under the Programme. In addition, the Programme will support digitization of enterprises which can be understood very broadly, e.g. as the automation of processes or the development of sales platforms.

This last element may prove to be key for Retail and FMCG segment participants. Retail trading – now more than ever – needs to take another technological leap, transferring its sales channels to online platforms; and in the case of traditional sales, automation and contactless sales are becoming more and more important. Moreover, sales forecasting is gaining importance, as well as maximizing the profitability of store space. This is related to a dynamic growth in the performance of e-commerce in recent years, which testifies to a given entity’s innovativeness and allows it to increase its turnover.

Therefore, the Programme will make it possible to combine the following modules:

  • Implementation; 

  • Digitization;

  • Greening of enterprises; 

  • Internationalization; 

  • Competences; 

  • R&D or R&D Infrastructure – a mandatory module.

No matter how attractive the Programme assumptions seem to be, we will have to wait until the beginning of 2022 for it to actually come into force.

From a short-term perspective, the NextGenerationEU fund will also be of key importance – the budget of approx. EUR 750 billion will be earmarked for the repair of direct economic and social damage caused by the COVID-19 pandemic.

In respect of this instrument, at the end of February 2021, the Polish Government presented the National Recovery Plan (NRP) In accordance with the current information approx. EUR 58 billion will be transferred to the Polish market, of which EUR 24 billion will take the form of subsidies.

The NRP subsidies will be earmarked entirely for pro-development, innovative investments in the following areas:

Source: The National Recovery and Resilience Plan, Warsaw, February 2021, p. 18.

After social consultations the final document was submitted to the European Commission in May 2021. After the EC’s approval, we will be able to learn more details of how the funds will be distributed, and what specific actions will be supported. According to optimistic assumptions, it will be possible to apply for support using the above funds in the second half of 2021.

Currently available sources of aid

Irrespective of the funds which may be obtained in the foreseeable future, there are currently several sources of finance available in Poland which can be used successfully both by entities planning, for example, to create a modern logistics centre to service their own goods between various premises, and by smaller companies which want to transfer to online sales or enterprises which want to develop a completely new way of handling retail sales in traditional stores. These include:

  • Polish Investment Zone (previously known as the Special Economic Zones programme).

  • A program for supporting investments of particular importance to the Polish economy for the years 2011–2030 (the so-called Government Grant).

  • Tax incentives for innovations:

    • R&D relief; 

    • IP Box;

    • and in the foreseeable future – a relief for automation and robotization, and for prototypes.

The first of these is the possibility to obtain corporate income tax exemption based on a decision on granting support (i.e. the Polish Investment Zone), which can be issued for several types of investments which meet specified quantitative and qualitative criteria, depending on the location and size of the enterprise. What is important is that support is granted not only for manufacturing investments, but it is also possible to obtain a decision for example for logistics centres, shared service centres or even so-called call centres.

In terms of fulfilling the ESG assumptions, the latter criteria are crucial – to obtain support certain requirements have to be met. One such criteria is for example – conducting business with a low negative impact on the environment, confirmed by appropriate certificates (e.g. ISO 14001). Such a commitment which may bring the investor closer to obtaining income tax exemption, is aimed at having a positive impact on clean manufacturing or more ecological running of business activities as a whole. 

A similar relationship can be found in the Government Grant. This programme is one of the instruments that enable (cash) support for new investment projects particularly important for the Polish economy. Under the programme co-financing may be obtained both for large strategic projects and for medium-sized innovative ones in the following areas: 

  • Manufacturing;

  • Innovative (modern services) e.g. providing R&D services, Centre of Advanced Business Services, broadly understood IT, etc.

Qualitative criteria are also important, which are adapted to the type of project. Projects are evaluated in the areas of structural development, scientific, territorially sustainable, HR and social responsibility. The impact of the project on the sector/industry at regional and country level is taken into account. Its impact on competition, human capital and the local environment is also analysed.

For example, qualitative criteria may include such items as Corporate Social Responsibility (CRS) actions, responsible waste management or applying ecological solutions (e.g. energy-efficient).

With respect to tax reliefs, the research and development relief is especially worth mentioning. Under this instrument it is possible to deduct so-called qualified costs of R&D operations from the tax base. Experience shows that many companies do not even realize that they have within their structures R&D development processes which make it possible to effectively reduce their tax charges. For example, R&D activities do not only comprise globally innovative prototypes of machines, but also include implementing new sales processes in company stores, developing devices for identifying goods, e-kiosks, e-commerce platforms, using AI to research customer preferences, etc.

Conclusion

To remain competitive on the market, Polish entrepreneurs will be forced to be proactive, in particular in such areas as development research, digitization or ecology. Inclusion in the new EU budgetary framework is an opportunity to obtain support for a number of investments. On the other hand, it may also be the moment when a given enterprise ceases to be noticeable and perceived as attractive on the market. This is why it is so important to use the available sources of support that can effectively reduce the tax and other financial charges of the enterprise. This generates huge opportunities for a revolution in sales, logistics or customer service.

Contact us

Mieczysław Gonta

Mieczysław Gonta

Partner, PwC Poland

Tel: +48 22 746 4907

Barbara  Brzezińska

Barbara Brzezińska

Manager, PwC Poland

Tel: +48 519 507 467

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