/ Economy and Politics

Recent changes to the rules of granting state aid within the Special Economic Zones (SEZ’s)

Date24 Nov 2014

getsix Poland

On 12th November, 2014 the Council of Ministers approved a draft of the Ruling on state aid granted for initiatives operating under a permit to conduct business activity in SEZ’s. The Ruling should take effect by the end of 2014. The rules of granting regional aid have been adjusted for investments in SEZ’s between the years of 2014 – 2020, to the community provisions provided for in the Commission Regulation (EC) No. 651/2014 of 17th June, 2014.

When comparing to the previous guidelines, the main changes concern primarily the granting of aid in the Mazowieckie province, which is referred to as the ‘c’ zone. This means the aid can only be approved for larger initiatives which are already involved in business activities within the Mazowieckie province, to try and support them to make early investment in a new business activity. These new business activities must belong to a class which is different to that of the current activity in the Polish organisation of economic activities (PKD).

Additionally, resulting from the adjusted provisions, the definition of a new investment associated with the purchase of an initiative will change and the condition demanding the purchase of assets from third parties, which are not connected to the purchaser does not apply when a small initiative is purchased by a family member of the original owner, or by a person employed with this initiative.

The Ruling has also presented a further condition for distinguishing the venture as a larger investment project. Inside the framework of the new rulings, in addition to the unchanged requirement of EUR 50 million, the size of the investment would be to be analysed at the group level, in the same sub-region specified at the third level (NTS 3).

Due to the changes a new aid map and formula for calculating the maximum aid amount for larger investment projects was announced. Thus, the classification for larger investment projects will be costs exceeding EUR 50 million. Additionally, the meaning ‘large undertaking’ was specified by announcing the requirement that the size of the investment would be analysed at the group level, in the same sub-region specified at the third level (NTS 3). These latest requirements consist of extra conditions for allowing investment aid to an undertaking to make fundamental changes to the manufacturing process, or to diversify the current institution.

This Ruling also provides for circumstances where the aid establishes individual aid and, as such, is subject to the obligation to file an announcement and receive a licence from the European Commission according to the ‘Guidelines on Regional state aid for 2014 – 2020’.

This will apply if:

  1. the expected aid for an investment project with costs over EUR 100 million, is greater than the total calculated according to the appropriate formula;
  2. the enterprise has ended its business activities in the European Economic Area (EEA), within a period of two years, before filing the submission for aid and these activities were classified under the same class, or when it plans, on the day of filing the submission for the aid, to end such activities within two years after the end of an investment which requires a licence.

This above-mentioned change included within point 2 gives rise to the largest inconsistencies in interpretation and it is expected that this will cause complications with the transfer of investment projects not only within the EEA but also within individual countries. It cannot be excluded that the end of business activities within the EEA in the meaning of the amended EU provisions, will imply not only a relocation from one country of the EEA to another, but also a relocation within one area or even province of a single country.

It will be collective notion that the changes to the rules relating to the functioning of SEZ’s in Poland, which result from Commission Regulation (EU) No. 651/2014 of 17 June, 2014 and the Guidelines of the European Commission on regional state aid for 2014 – 2020, may cause a reduction in the interest in the introduction of investment projects in the SEZ’s.

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