2023 Investment Climate Statements: Poland

Policies Towards Foreign Direct Investment

Poland welcomes foreign investment as a source of capital, growth, and jobs, and as a vehicle for technology transfer, research and development, and integration into global supply chains. The government’s Strategy for Responsible Development identifies key goals for attracting investment, including improving the investment climate, stabilizing the macroeconomic and regulatory environment, and high-quality corporate governance, including in state-controlled companies. As in previous years, the largest inflow of foreign direct investment to Poland in 2022 occurred in the service sector, reflecting the change of Poland’s economy to a more service-oriented and less capital-intensive structure.

Foreign companies generally enjoy unrestricted access to the Polish market. However, Polish law limits foreign ownership of companies in selected strategic sectors, and limits acquisition of real estate, especially agricultural and forest land. The current government has increased the percentage of domestic ownership in some industries such as media, banking, and retail, which have large holdings by foreign companies, and has employed sectoral taxes and other measures to advance this aim. While the government continues to acknowledge the value of FDI as a driver of growth, it has tended to focus on lessening Poland’s dependence on foreign capital by championing re-industrialization as well as shifting to more self-reliance in lending to small- and medium-sized firms in the banking sector.

There are a variety of agencies involved in investment promotion:
The Ministry of Economic Development and Technology has two departments involved in investment promotion and facilitation: the Investment Development and the Trade and International Relations Departments. The Deputy Minister supervising the Investment Development Department is also the ombudsman for foreign investors. https://www.gov.pl/web/przedsiebiorczosc-technologia/ 

The Ministry of Foreign Affairs (MFA) promotes Poland’s foreign relations including economic relations, and along with the Polish Chamber of Commerce (KIG), organizes missions of Polish firms abroad and hosts foreign trade missions to Poland. https://www.msz.gov.pl/ ; https://kig.pl/ 

The Polish Investment and Trade Agency (PAIH) is the main institution responsible for promotion and facilitation of foreign investment. The agency is responsible for promoting Polish exports, for inward foreign investment and for Polish investments abroad. The agency operates as part of the Polish Development Fund, which integrates government development agencies. PAIH coordinates all operational instruments, such as commercial diplomatic missions, commercial fairs, and programs dedicated to specific markets and sectors. The Agency has opened offices abroad including in Chicago, Houston, New York, and Los Angeles. PAIH’s services are available to all investors. https://www.paih.gov.pl/en 

The American Chamber of Commerce has established the American Investor Desk – an investor-dedicated know-how gateway providing comprehensive information on investing in Poland and investing in the USA: https://amcham.pl/american-investor-desk 

PAIH and AmCham cooperate to promote and create favorable conditions for the development of exports and investments on the Polish and American markets. The basis for this cooperation is an agreement signed in July 2021.

Limits on Foreign Control and Right to Private Ownership and Establishment

Poland allows both foreign and domestic entities to establish and own business enterprises and engage in most forms of remunerative activity per the Entrepreneurs’ Law which went into effect on April 30, 2018. Poland does place limits on foreign ownership and foreign equity for a limited number of sectors. Polish law limits non-EU citizens to 49 percent ownership of a company’s capital shares in the air transport, radio and television broadcasting, and airport and seaport operations sectors. Pursuant to the Broadcasting Law, a television broadcasting company may only receive a license if the voting share of foreign owners does not exceed 49 percent and if the majority of the members of the management and supervisory boards are Polish citizens and hold permanent residence in Poland. Licenses and concessions for defense production and management of seaports are granted on the basis of national treatment for investors from OECD countries.

The governing Law and Justice (PiS) party aims to decrease foreign ownership of media, particularly outlets critical of their governing coalition. Approaches have included proposals to set caps on foreign ownership, the use of a state-controlled companies to purchase media, and the application of economic tools (taxes, fines, advertising revenue) to pressure foreign and independent media. In the insurance sector, at least two management board members, including the chair, must speak Polish. The Law on Freedom of Economic Activity (LFEA) requires companies to obtain government concessions, licenses, or permits to conduct business in certain sectors, such as broadcasting, aviation, energy, weapons/military equipment, mining, and private security services. The LFEA also requires a permit from the Ministry of Economic Development for certain major capital transactions. A detailed description of business activities that require concessions and licenses can be found here: https://www.paih.gov.pl/publications/how_to_do_business_in_Poland 

Polish law restricts foreign investment in certain land and real estate. Land usage types such as technology and industrial parks, business and logistic centers, transport, housing plots, farmland in special economic zones, household gardens and plots up to two hectares are exempt from agricultural land purchase restrictions. Investors from outside of the European Economic Area or Switzerland need to obtain a permit from the Ministry of Internal Affairs and Administration (with the consent of the Defense and Agriculture Ministries), pursuant to the Act on Acquisition of Real Estate by Foreigners, prior to the acquisition of real estate or shares which give control of a company holding or leasing real estate. Permits may be refused for reasons of social policy or public security. The exceptions to this rule include purchases of an apartment or garage, up to 0.4 hectares of undeveloped urban land, and certain other cases. Laws to restrict farmland and forest purchases came into force April 30, 2016, and are addressed in more detail in the Real Property section.

Other Investment Policy Reviews

The government has not undergone any third-party review focused on investment policy by a multilateral or civil society organization in the last five years.

The OECD published its 2023 economic survey of Poland. It can be found here:
https://www.oecd.org/economy/poland-economic-snapshot/ 

In December 2022, the OECD Working Group on Bribery concluded its fourth evaluation of Poland’s implementation of the OECD Anti-Bribery Convention. The report concludes that Poland’s fight against foreign bribery has stalled: https://www.oecd.org/corruption/poland-oecdanti-briberyconvention.htm#:~:text=%E2%80%8C%E2%80%8CPoland’s%20Phase%204%20Monitoring%20Report,Phase%203%20evaluation%20in%202013 

Business Facilitation

In 2022, government activities and regulations focused primarily on addressing challenges related to combating high inflation, dealing with an energy crisis, and managing the influx of refugees from Ukraine.

The Polish government has continued to implement reforms aimed at improving the investment climate with a special focus on the small- and medium-enterprise (SME) sector and innovations. Poland reformed its R&D tax incentives with new regulations and changes encouraging wider use of the R&D tax breaks.

Despite reforms, some investors have expressed serious concerns regarding over-regulation, over-burdened courts and prosecutors, and overly burdensome bureaucratic processes. Tax audit methods have changed considerably. In many cases an appeal against the findings of an audit must now be lodged with the authority that issued the initial finding rather than a higher authority or third party.

An e-Tax Office is available online at https://www.podatki.gov.pl/ . Through the website it is possible to settle all tax matters in a single user-friendly digital location. The Ministry of Finance plans to continue adding new functionalities and developing digital services related to filing of taxes. In 2023, Blik, a digital payment platform similar to Venmo or PayPal will be added as a new form of payment at the e-Tax Office.

A special tax unit, the “Investor Desk,” has been established at the Finance Ministry to handle tax matters of strategic investors. This unit, working with other agencies focused on foreign investments in Poland, supports large investors with particular administrative requirements.

Since 2021, a new law on public procurement is in force. It aims to reorganize the public procurement system, further harmonize it with EU law, and improve transparency.

Beginning in July 2021, commercial companies were required to submit electronically all applications for registration, deletion, and changes to the National Court Register. All company files are now available electronically and the registration process should speed up significantly.
National Court Register (KRS): https://www.gov.pl/web/gov/uslugi-dla-przedsiebiorcy 

Agencies with which a business will need to file in order to register in the KRS include:

Central Statistical Office to register for a business identification number (REGON) for civil-law partnership http://bip.stat.gov.pl/en/regon/subjects-and-data-included-in-the-register/ 
ZUS – Social Insurance Agency http://www.zus.pl/pl/pue/rejestracja 
Ministry of Finance http://www.mf.gov.pl/web/bip/wyniki-wyszukiwania/?q=business percent20registration 
Poland’s Single Point of Contact site for business registration and information is: https://www.biznes.gov.pl/en/ 

Outward Investment

The Polish Agency for Investment and Trade (PAIH), under the umbrella of the Polish Development Fund (PFR), plays a key role in promoting Polish investment abroad. More information on PFR can be found in Section 6, Financial Sector and at its website: https://pfr.pl/ .

Poland co-founded and actively supports the Three Seas Initiative, which seeks to improve north-south connections in road, energy, and telecom infrastructure in 12 countries on NATO’s and the EU’s eastern flank. As of March 2023, there were nine core sponsors involved in the Fund ( https://3siif.eu/  ). The Three Seas Initiative may potentially play a significant role in the inclusion process for Ukraine in European structures and be a platform for Ukraine’s recovery.
Since July 2019, Poland’s development bank (BGK), the European Investment Bank, and four other development banks (French Deposits and Consignments Fund, Italian Deposits and Loans Fund, the Spanish Official Credit Institute, and the German Credit Institute for Reconstruction), have been implementing the “Joint Initiative on Circular Economy” (JICE), the goal of which is to eliminate waste, prevent its generation, and increase the efficiency of resource management. The initiative supports circular economy projects and programs in the European Union (EU) and has a total target volume of EUR 10bn until 2023. PFR TFI S.A, an entity also under the umbrella of PFR, supports Polish investors planning to or already operating abroad. PFR TFI manages the Foreign Expansion Fund (FEZ), which provides loans, on market terms, to foreign entities owned by Polish entrepreneurs. See https://www.pfrtfi.pl/  and https://pfr.pl/en/offer/polish-international-development-fund.html 

Transparency of the Regulatory System

As a member of the EU, Poland complies with EU directives by harmonizing rules or transposing them into national legislation. Rule-making and regulatory authority exist at the central, regional, and municipal levels. Various ministries are engaged in rule-making that affects foreign business, such as pharmaceutical reimbursement at the Ministry of Health or incentives for R&D at the Ministry of Economic Development and Technology. Regional and municipal level governments can levy certain taxes and affect foreign investors through permitting and zoning.

Polish accounting standards do not differ significantly from international standards. Major international accounting firms provide services in Poland. In cases where there is no national accounting standard, the appropriate International Accounting Standard may be applied. However, investors have complained of regulatory unpredictability. Foreign and domestic investors must comply with a variety of laws concerning taxation, labor practices, health and safety, and the environment. Complaints about these laws, especially the tax system, center on frequent changes, lack of clarity, and strict penalties for minor errors.

Poland has improved its regulatory policy system over the last several years. The government introduced a central online system to provide access for the general public to regulatory impact assessments and other documents sent for consultation to groups such as trade unions and business. Proposed laws and regulations are published in draft form for public comment, and ministries must conduct public consultations. Poland follows OECD recognized good regulatory practices, but investors say the lack of regulations governing the role of stakeholders in the legislative process is a problem. Participation in public consultations and the window for comments are often limited.

Bills can be submitted to Parliament for debate as “citizens’ bills” if authors collect 100,000 signatures in support of the draft legislation. NGOs and private sector associations most often take advantage of this avenue. Parliamentary bills can also be submitted by a group of parliamentarians, a mechanism that bypasses public consultation and which both domestic and foreign investors have criticized. Changes to the government’s rules of procedure introduced in 2016 reduced the requirements for regulatory impact assessments for preparations of new legislation.

Administrative authorities are subject to oversight by courts and other bodies (e.g., the Supreme Audit Chamber – NIK), the Office of the Human Rights Ombudsperson, special commissions and agencies, inspectorates, the Prosecutor and parliamentary committees. Polish parliamentary committees utilize a distinct system to examine and instruct ministries and administrative agency heads. Committees’ oversight of administrative matters consists of reports on state budget implementation and preparation of new budgets, citizens’ complaints, and reports from NIK. In addition, courts and prosecutors’ offices sometimes bring cases to Parliament’s attention.

The Ombudsperson’s institution works relatively well in Poland. Polish citizens have a right to complain and to put forward grievances before administrative bodies. Proposed legislation can be tracked on the Prime Minister’s webpage, RPL Strona Główna (rcl.gov.pl)  and the Parliament’s webpage: https://www.sejm.gov.pl/sejm9.nsf/proces.xsp 

Currently, there are no specific local law regulations that would impose an obligation of considering ESG factors when making investment decisions. However, the Sustainable Finance Disclosure Regulation (SFDR), Non-Financial Reporting Directive (NFRD) and amended MiFID II regulations apply to Polish financial market participants and financial advisers, as well as to other, non-finance, market participants. Under those acts, the obliged entities are required to report on whether they consider the sustainability risks in their investment decisions and advice.

All other market participants are encouraged to disclose their ESG strategies, policies, and other ways of implementing ESG considerations in line with the UN Sustainable Development Goals (SDGs) in their businesses on a voluntary basis. It should be underlined however that in 2023, the NFRD will be replaced by the Corporate Sustainability Reporting Directive (CSRD), meaning the number of entities that are obliged to take into account ESG considerations and to disclose will rise in the following years.

The government promotes and encourages companies’ environmental, social, and governance (ESG) disclosure. For example, the Strategic Investments Program launched by Bank Gospodarstwa Krajowego (BGK) offers co-financing, up to 95 percent of the value, for investments by local governments. As part of the assessment of applications, implementation of innovative technologies and compliance with sustainable development goals are taken into account. Tax relief for corporate charities, intended for all entrepreneurs, came into force in 2022. Companies are able to deduct an additional 50 percent from the tax base for costs incurred on charitable activities such as sports, culture, higher education, and science. Corporate donations relief may be deducted up to the amount of income obtained in the tax year. The government also organizes or supports conferences and campaigns such as “Our Climate” and “TOGETAIR” with the aim of raising awareness of ways to transition to a climate-neutral, green, competitive, and inclusive economy. In mid-2022, the Ministry of Finance initiated work on a roadmap for the development of sustainable finance in Poland.

Poland’s budget and information on debt obligations are widely and easily accessible to the general public, including online. The budget is substantially complete and considered generally reliable. NIK (Polish SAI) audits the government’s accounts and made its reports publicly available, including online. The budget structure and classifications are complex, and the Polish authorities agree more work is needed to address deficiencies in the process of budgetary planning and procedures. State budgets encompass only part of the public finances sector. In March 2023, Polish government announced that it will prepare a bill consolidating public finances.

International Regulatory Considerations

Since its EU accession in May 2004, Poland has been transposing European legislation and reforming its own regulations in compliance with the EU system. Poland sometimes disagrees with EU regulations related to renewable energy and emissions due to its significant domestic coal industry.

Poland participates in the process of creation of European norms. There is strong encouragement for non-governmental organizations, such as environmental and consumer groups, to actively participate in European standardization. In areas not addressed, the Polish Committee for Standardization (PKN) introduces norms identical with international norms, i.e., PN-ISO and PN-IEC. PKN actively cooperates with international and European standards organizations and with standards bodies from other countries.

PKN also cooperates with the American Society for Testing and Materials (ASTM) International and the World Trade Organization’s (WTO) Agreement on Technical Barriers to Trade (TBT). Poland has been a member of the WTO since July 1, 1995, and was a member of GATT from October 18, 1967. All EU member states are WTO members, as is the EU in its own right. While the member states coordinate their positions in Brussels and Geneva, the European Commission alone speaks for the EU and its members in almost all WTO affairs. PKN runs the WTO/TBT National Information Point in order to apply the provisions of the TBT with respect to information exchange concerning national standardization. https://www.pkn.pl/en/about-pkn/international-cooperation/cooperation-international-standards-organizations

Legal System and Judicial Independence

The Polish legal system is code-based and prosecutorial. The main source of the country’s law is the Constitution of 1997. The legal system is a mix of Continental civil law and remnants of communist legal theory. Poland accepts the obligatory jurisdiction of the European Court of Justice (ECJ), but with reservations. In civil and commercial matters, first instance courts sit in single-judge panels, while courts handling appeals sit in three-judge panels. District Courts handle the majority of disputes in the first instance. When the monetary value of a dispute exceeds a certain amount or the subject matter requires more expertise (such as those regarding intellectual property rights), Circuit Courts serve as first instance courts. Circuit Courts also handle appeals from District Court verdicts. Courts of Appeal handle verdicts of Circuit Courts as well as generally supervise the courts in their region.

The Polish judicial system generally upholds the sanctity of contracts. Foreign court judgements, under the Polish Civil Procedure Code and European Community regulation, can be recognized. There are many foreign court judgments, however, which Polish courts do not accept or accept partially. There can also be delays in the recognition of judgments of foreign courts due to an insufficient number of judges with specialized expertise. Generally, foreign firms are wary of the slow and over-burdened Polish court system, preferring other means to defend their rights. Contracts involving foreign parties often include a clause specifying that disputes will be resolved in a third-country court or through offshore arbitration. (More detail in Section 4, Dispute Settlement.)

Since coming to power in 2015, the PiS-led government has pursued far-reaching changes to Poland’s judicial system. The changes have led to legal disputes with the European Commission over threats to judicial independence. The changes have also drawn criticism from legal experts, NGOs, and international organizations. Poland’s government contends the changes are needed to purge Communist influence from an unreformed structure and increase efficiency and democratic oversight of the judiciary.

Observers have noted, in particular, the introduction of an extraordinary appeal mechanism in the 2017 Supreme Court Law. The extraordinary appeal mechanism states that final judgments issued since 1997 can be challenged and overturned in whole or in part during a three-year period starting from the day the legislation entered into force, April 3, 2018, later extended to April 3, 2024. During 2022, the Extraordinary Appeals Chamber received 1,523 new complaints of which 1,478 were recognized and accepted for examination.

On April 29, 2020, the European Commission launched an infringement procedure regarding a law that came into effect on February 14, 2020. The law allows judges to be disciplined for impeding the functioning of the legal system or for questioning another judge’s professional status or the effectiveness of his or her appointment. The Commission stated the law “undermines the judicial independence of Polish judges and is incompatible with the primacy of EU law.” It also stated the law “prevents Polish courts from directly applying certain provisions of EU law protecting judicial independence and from putting references for preliminary rulings on such questions to the [European] Court of Justice.” Poland is required to address this issue as a precondition of Poland’s National Recovery Plan and to access EU pandemic recovery funds. The dispute is ongoing.

Laws and Regulations on Foreign Direct Investment

Foreign nationals can expect to obtain impartial proceedings in legal matters. Polish is the official language and must be used in all legal proceedings. It is possible to obtain an interpreter. The basic legal framework for establishing and operating companies in Poland, including companies with foreign investors, is found in the Commercial Companies Code. The Code provides for establishment of joint-stock companies, limited liability companies, or partnerships. These corporate forms are available to foreign investors who come from an EU or European Free Trade Association (EFTA) member state or from a country that offers reciprocity to Polish enterprises, including the United States.

With few exceptions, including national security screening, foreign investors are guaranteed national treatment. Companies that establish an EU subsidiary and conduct or plan to commence business operations in Poland must observe all EU regulations. However, in some cases they may not be able to benefit from all privileges afforded to EU companies. Foreign investors without permanent residence and the right to work in Poland may be restricted from participating in day-to-day operations of a company. Parties can freely determine the content of contracts within the limits of European contract law. The Civil Code is the law applicable to contracts.

Links to useful websites (in English) to help navigate laws, rules and reporting requirements for foreign investors:
Polish Investment and Trade Agency (PAIH): https://www.paih.gov.pl/en 
Polish Financial Supervision Authority (KNF): https://www.knf.gov.pl/en/ 
Office of Competition and Consumer Protection (UOKIK): https://uokik.gov.pl/legal_regulations.php 

Biznes.gov.pl is intended for people who plan to start a new business in Poland. The portal is designed to simplify the formalities of setting up and running a business. It provides up-to-date regulations and procedures for running a business in Poland and the EU; it supports electronic application submission to state institutions; and it answers questions regarding running a business. Information is available in Polish and English.
https://www.biznes.gov.pl/en 
https://www.biznes.gov.pl/en/przedsiebiorcy/ 

In 2022, the Polish Government introduced a new measure – an investment agreement – for strategic investors who would like to obtain clarity and certainty regarding the tax consequences of a given investment. The agreement (commonly referred to as “Interpretation 590”) is concluded with the Ministry of Finance and is binding on tax administration.

Interpretation 590 includes the following features:

• Its objective is to provide flexibility, completeness, and comprehensiveness in determining the tax consequences of an investment project.
• It is available to investors planning an investment in Poland worth at least PLN 100 million (approximately $22 million) and, from 2025 onward, PLN 50 million (approximately $11 million).
• An agreement is valid for a defined period, limited to five tax years (with the possibility to extend).
• Separate applications to various tax authorities are not required as all matters are covered with one investment agreement.
• The scope of information provided in the agreement should not be limited by the provisions of the Tax Code governing individual tax rulings. One agreement could cover all potential tax consequences of an investment.
• The agreement is subject to a fee of PLN 50,000 (approximately $11,200) for the initial application and PLN 100,000 to 500,000 (approximately $22,400 to $112,000) after concluding the agreement, with the exact fee depending on the volume of the investment and scope of the investment agreement).

The above changes reflect an increasing focus of the Polish Government to attract significant investments into Poland.

A special tax unit, the “Investor Desk” has been established, at the Finance Ministry, to handle tax matters of strategic investors. This unit, along with other agencies focused on foreign investments in Poland, will support significant investors in undertaking particular administrative requirements.

The tax authorities are often open to discussing strategic investments and providing support in applying formal measures which, with new measures in place, should be even more common and accessible to investors.

Competition and Antitrust Laws

Poland’s Office of Competition and Consumer Protection (UOKiK) is well within EU norms for structure and functioning, with the exception that the Prime Minister both appoints and dismisses the head of UOKiK. While the intention to conform with EU norms has been expressed, as of April 2023, the Prime Minister was still exercising his right to remove and nominate UOKiK’s presidents.

In 2022, the President of UOKiK issued over 950 decisions regarding practices restricting competition and infringing on collective interests of consumers, imposing nearly $100 million (PLN 430 million) in fines.

In May 2022, the President of the Republic of Poland signed an amending act, extending the Polish Competition Authority’s responsibilities regarding foreign investment control of acquisitions of Polish companies relevant to the public order, security, or health for another 36 months, i.e., until July 24, 2025.

In 2023, UOKiK intends to update its investment control guidelines, supplementing them with clarification of uncertainties in application of the Control of Certain Investments Act. This should make it easier for businesses to assess whether a case is notifiable to the President of UOKiK under that act.

Beginning July 2023, the UOKiK takes over the ICPEN Presidency from the Australian Competition and Consumer Commission (ACCC) for one year.

Expropriation and Compensation

Article 21 of the Polish Constitution states that “expropriation is admissible only for public purposes and upon equitable compensation.” The Law on Land Management and Expropriation of Real Estate states that property may be expropriated only in accordance with statutory provisions such as construction of public works, national security considerations, or other specified cases of public interest. The government must pay full compensation at market value for expropriated property. Acquiring land for road construction investment, and for the Central Communication Port (CPK) and the Vistula Spit projects, has been liberalized and simplified to accelerate property acquisition through a special legislative act.

Post is not aware of any recent expropriation actions against U.S. investors, companies, or representatives.

ICSID Convention and New York Convention

Poland is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID, or Washington Convention), but is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Dispute Settlement

Poland and the United States share a bilateral investment treaty. The United Nations Conference on Trade and Development ( UNCTAD) database  for treaty-based disputes lists two cases for Poland involving a U.S. party over the last decade. The majority of Poland’s investment disputes are with companies from other EU Member States. According to the UNCTAD database, over the last decade, Poland has had 18 known disputes with foreign investors.

International Commercial Arbitration and Foreign Courts

Poland is party to the following international agreements on commercial dispute resolution, with the Ministry of Finance acting as the government’s representative: the 1923 Geneva Protocol on Arbitration Clauses; the 1961 Geneva European Convention on International Trade Arbitration; and the 1972 Moscow Convention on Arbitration Resolution of Civil Law Disputes in Economic and Scientific Cooperation.

Poland does not have an arbitration law, but provisions in the Polish Code of Civil Procedure of 1964, as amended, are based to a large extent on UNCITRAL Model Law. Under the Code of Civil Procedure, an arbitration agreement must be concluded in writing. Commercial contracts between Polish and foreign companies often contain an arbitration clause. Arbitration tribunals operate through the Polish Chamber of Commerce, and other sector-specific organizations. A permanent court of arbitration also functions at the business organization Confederation Lewiatan in Warsaw and at the General Counsel to the Republic of Poland (GCRP). GCRP took over arbitral cases from external counsels in 2017 and began representing state-owned commercial companies in litigation and arbitration matters for amounts in dispute over PLN 5 million ($1.12 million). The list of these entities includes major Polish state-owned enterprises in the airline, energy, banking, chemical, insurance, military, oil, and rail industries as well as other entities such as museums, state-owned media, and universities.

A Civil Procedures Code amendment in January 2016, with further amendments in July 2019, implements internationally recognized commercial arbitration standards and creates an arbitration-friendly legal regime in Poland. The amendment applies to arbitral proceedings initiated on or after January 1, 2016, and introduced one-instance proceedings to repeal an arbitration award (instead of two-instance proceedings). This change encourages mediation and arbitration to solve commercial disputes and aims to strengthen expeditious procedure. The Courts of Appeal (instead of District Courts) handle complaints. In cases of foreign arbitral awards, a Court of Appeal is the only instance. In certain cases, it is possible to file a cassation (or extraordinary) appeal with the Supreme Court of the Republic of Poland. In the case of a domestic arbitral award, it is possible to file an appeal to a different panel of the Court of Appeal.

In September 2022, the Polish parliament began work on revision of the Code of Civil Procedure. With regard to the arbitration rules, the draft changes introduce the possibility for the parties to submit a dispute already pending before a court to arbitration until the court renders its final judgment. Therefore, the parties will also be able to conclude a compromissory arbitration clause after the dispute has been brought before the court, including in many cases, in appellate proceedings.

Polish state courts generally respect the wide autonomy of arbitration courts and show little inclination to interfere with their decisions as to the merits of the case. Arbitral awards are likely to be set aside only in rare cases. An arbitration-friendly approach is also visible in other areas of Poland’s legal system, such as in the broad interpretation of arbitration clauses.

Bankruptcy Regulations

Bankruptcy in Poland is criminalized if a company’s management does not file a petition to declare bankruptcy when a company becomes illiquid for an extended period of time or if a company ceases to pay its liabilities.

In order to reduce the risk of overwhelming the bankruptcy courts with an excess of cases resulting from the COVID-19 pandemic, changes were introduced in the bankruptcy process, shifting part of the duties to a trustee. A second significant change was the introduction of simplified restructuring proceedings. During restructuring proceedings, a company appoints an interim supervisor and is guaranteed protection against debt collection while seeking approval for specific restructuring plans from creditors. The simplified proceedings enjoy great support among entities at risk of insolvency. These changes were originally intended to remain in force only until June 30, 2021, however, the popularity of simplified restructurings among distressed entrepreneurs led the Polish Parliament to retain them for an indefinite period of time.

Investment Incentives

Poland’s Plan for Responsible Development has identified eight industries for development and investment incentives: aviation, defense, automotive parts manufacturing, ship building, information technology, chemicals, furniture manufacturing, and food processing. Poland encourages energy sector development through its energy policy adopted by the government in February 2021 with later amendments.

On March 29, 2022, the government adopted an update to “Poland’s Energy Policy until 2040” (PEP2040). According to the update, Poland will strengthen its energy sovereignty through faster development of renewable energy sources, including hydroelectric plants, photovoltaics, and offshore windmills. By 2040, these energy sources should account for nearly half of the national electricity production, an increase from 34 percent assumed in the previous plan. On March 13, 2023, the President of the Republic of Poland signed an act amending the regulations on the location of new onshore wind farms changing the required minimum distance between new wind farms and existing residential buildings from 500 to 700 meters.

The draft document updating the current Energy Policy of Poland until 2040, indicates the cost of investments in the development of new power generation capacities planned until 2040 will reach nearly $170 billion (PLN 730 billion). Offshore wind farms and nuclear plants will cost the most. The government will discuss the draft update in mid-April 2023.
An economic program introduced in January 2022 and later amended called the “Polish Deal” includes significant changes to the tax system including incentives to attract capital to Poland. The program consists of support schemes for enterprises, new investment and development projects, and incentives for innovators, as well as reforms of the healthcare system and social welfare, education, environmental, and energy policies.

Incentives for innovators include “IP Box” tax treatment for revenues deriving from patents and licenses, and tax relief for R&D costs, innovative employers, robotization and prototype development. Other incentives include tax relief for expansion, consolidation, IPOs, and corporate philanthropy. The government has a strategy for establishing a commercial 5G network in all cities by 2025. Due to repeated postponements of frequency auctions and failure to enact enabling legislation, this goal may not be attainable.

The “Productivity Strategy” covers industrial policy. It draws from the Industry Development White Paper, which identified the most significant barriers to industrial activity. The specific objectives of the document include preparation of competent staff for the needs of a digitized economy, automation, robotization and digitization of enterprises; increasing the intensity of the use of knowledge and technology in the economy; and the development of an algorithmic data-based economy, with a particular focus onthe development of artificial intelligence technologies and their implementation in key areas of the economy.

A company investing in Poland, either foreign or domestic, may receive assistance from the Polish government. Foreign investors have the potential to access certain incentives such as: income tax and real estate tax exemptions; investment grants; grants for research and development; and grants for other activities such as environmental protection, training, logistics, or use of renewable energy sources.

As of January 1, 2019, the IP Box reduces the tax rate applicable to income derived from intellectual property rights to 5 percent. Taxpayers applying the IP Box are entitled to benefit from the tax preference until a given right expires (20 years in the case of a patented invention). In order to benefit from the program, taxpayers are obliged to separately account for the relevant income. Foreign investors may take advantage of this benefit as long as the relevant IP is registered in Poland. Pursuant to new regulations in force from January 1, 2022, entrepreneurs are able to use the R&D relief and the IP Box relief simultaneously. Taxpayers have the right to deduct eligible R&D costs when determining income from qualifying intellectual property rights.

Effective starting the 2021 tax year, Poland introduced a set of optional rules, referred to as the “Estonian Corporate Income Tax (CIT),” or lump-sum tax that permits eligible companies to defer payment of corporate income tax up to the time they distribute their profits. As of the 1st of January 2023, a number of changes concerning the Estonian CIT were coming into effect. Their goal is to facilitate the use of this form of taxation and to encourage people to benefit from it. Some of the most important ones are listed here: https://cgolegal.com/news/changes-in-the-estonian-cit-in-2023/ 

The update of the National Reform Program (NRP) heralded the introduction of a new incentive measure for enterprises in the form of tax relief related to investments in automation and robotization (robotization relief). This relief is introduced for a period of 5 years and covers expenses from the beginning of the 2022 fiscal year until the end of the 2026 fiscal year. It is available to all entities subject to income tax and investing in robotization, regardless of the sector or size of operations. The new tax relief operates in a similar manner as the existing R&D tax relief, enabling taxpayers to make an additional deduction of eligible costs (expenses detailed in an exhaustive list) from the tax base. Within the framework of robotization relief, it is possible to deduct 50 percent of eligible costs.

Foreign Trade Zones/Free Ports/Trade Facilitation

Foreign-owned firms have the same opportunities as Polish firms to benefit from foreign trade zones (FTZs), free ports, and special economic zones (since January 2019, they make up the Polish Investment Zone). The 2004 Customs Law (with later amendments) regulates the operation of FTZs in Poland. The Minister of Finance establishes duty-free zones. The Minister designates the zone’s managing authorities, usually provincial governors, who issue operating permits to interested companies for a given zone. Over 40 percent of firms in Special Economic Zones are Polish.

Most activity in FTZs involves storage, packaging, and repackaging. As of October 2022, there were seven FTZs: Gliwice, near Poland’s southern border; Terespol, near Poland’s border with Belarus; Mszczonow, near Warsaw; Warsaw’s Frederic Chopin International Airport; Szczecin; Swinoujscie; and Gdansk. Duty-free shops are available only for travelers to non-EU countries.

There are bonded warehouses in: Bydgoszcz-Szwederowo; Krakow-Balice; Wroclaw-Strachowice; Katowice-Pyrzowice; Gdansk-Trojmiasto; Lodz-Lublinek; Poznan-Lawica; Rzeszow-Jasionka, Warszawa-Modlin, Lublin, Szczecin-Goleniow; Radom-Sadkow, and Olsztyn-Mazury. Commercial companies can operate bonded warehouses. Customs and storage facilities must operate pursuant to custom authorities’ permission. Only legal persons established in the EU can receive authorization to operate a customs warehouse.

The Polish Investment Zone (PSI), a system of tax incentives for investors which replaced the previous system of special economic zones (SEZ), was launched September 5, 2018. Under the law on the PSI, companies can apply for a corporate income tax (CIT) exemption for a new investment to be placed anywhere in Poland. The CIT exemption is calculated based on the value of the investment multiplied by the percentage of public aid allocated for a given region based on its level of development (set percentage). The CIT exemption is for 10-15 years, depending on the location of the investment. Special treatment is available for investment in new business services and R&D. A point system determines eligibility for the incentives. Entities operating in special economic zones are entitled to change the depreciation rates for new assets starting in 2021.

The deadline for utilizing available tax credits from the previous SEZ system is the end of 2026 (extended from 2020). The regulations also contain important changes for entities already operating in SEZs, even if they do not plan new investment projects. This includes the possibility of losing the right to tax incentives in the event of fraud or tax evasion. Investors should consider carefully the potential benefits of the CIT exemption in assessing new investments or expansion of existing investments in Poland.

On January 1, 2022, an amendment to the Act on Special Economic Zones came into force, which was largely related to a change in the regional aid map. Information on the latest changes is available at: https://www.paih.gov.pl/why_poland/Polish_Investment_Zone 

Performance and Data Localization Requirements

There is little data on localization requirements in Poland, however, Poland has no policy of “forced localization” designed to require foreign investors to use domestic content in goods or technology and there are no requirements for foreign information technology (IT) providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software or turn over keys for encryption). Exceptions exist where data are important for national security, such as critical telecommunications infrastructure, and in gambling.

Operators of public telecommunications networks and providers of publicly available telecommunications services must store certain telecommunications data in the territory of Poland for a period of 12 months. In the case of online gambling, the devices for processing and archiving of data concerning gambling games are installed and stored in the EU/EEA. Financial sector laws restrict or preclude the ability of certain entities (e.g., banks, payment service providers) to outsource some key activities to providers located or operating outside of the EU.

In Poland, there are several statutory minimum or maximum data retention periods set out by law. In other cases, retention periods must be established based on the GDPR storage limitation principle stating that personal data should not be retained for longer than is necessary. In the case of personal data processing in relation to journalistic, artistic, or literary activity, retention periods do not apply.

In the telecommunication sector, the Office of Electronic Communication (UKE) ensures telecommunication operators fulfill their obligations. In radio and television, the National Broadcasting Council (KRRiT) acts as the regulator. Polish regulations protect an individual’s personal data that are collected in Poland regardless of where the data are physically stored. The Personal Data Protection Office (UODO) enforces personal data regulations.

On December 8, 2021, the provisions of the Act on Open Data and the Re-use of Public Sector Information entered into force. This Act is based on the principle of unconditional and free-of-charge access to or provision of public sector information for the purpose of its commercial or scientific re-use. It aims to make the re-use of public sector information more efficient and bring about an increase in the innovation of products and services of the private sector that uses this data. The regulations make it possible to increase the volume of public data that can be used, for example, to carry out analysis and research, or for the needs of AI solutions or the Internet of Things.

At the end of 2022, the European Commission published its eighth ‘Open Data Maturity (ODM) Report.’ This is an assessment that began in 2015 to measure the progress among EU members in promoting open data publication and reuse. In the 2022 report, Poland was ranked 3rd, a promotion from the 4th place in 2021, which was possible thanks to a successful cooperation in the field of open data within public administration.

Real Property

Poland recognizes and enforces secured interests in property, movable and real. There are two types of publicly available land registers in Poland: the land and mortgage register, the purpose of which is to register titles to land and encumbrances thereon; and the land and buildings register, the function of which is more technical as it contains information concerning physical features of the land, class of land, and its use. Generally, real estate in Poland is registered and legal title can be identified on the basis of entries in the land and mortgage registers which are maintained by relevant district courts. Each register is accessible to the public and excerpts are available on application, subject to a nominal fee. The registers are also available online.

Poland has a non-discriminatory legal system accessible to foreign investors that protects and facilitates acquisition and disposition of all property rights, including land, buildings, and mortgages. However, foreigners (both individuals and entities) must first obtain a permit to acquire property. Foreign companies and individuals may lease real property in Poland without having to obtain a permit. Many investors, foreign and domestic, complain the judicial system is slow in adjudicating property rights cases. Under the Polish Civil Code, a contract to buy real property must be made in the form of a notary deed.

It is sometimes difficult to establish clear title to properties. There are no comprehensive estimates of land without clear title in Poland.

The 2016 Agricultural Land Law banned the sale of state-owned farmland under the administration of the National Center for Support of Agriculture (NCSA) for five years. Long-term state-owned farmland leases are available for farmers looking to expand their operations up to 300 hectares. Foreign investors can (and do) lease agricultural land. The 2016 Agricultural Land Law also imposed restrictions on sales of privately-owned farmland, giving the NCSA preemptive right of purchase. In June 2019, the Polish Parliament amended the Agricultural Land Law to loosen land sale requirements. The new owner is not allowed to sell the land for five years. The Law on Forest Land similarly prevents Polish and foreign investors from purchasing privately held forests and gives state-owned entities preemptive right to buy privately held forest land.

Intellectual Property Rights

Intellectual property in Poland is governed by two principle legal acts: the Copyright Act and the Industrial Property Act. In some ways, Polish intellectual property rights (IPR) law is considered more strict than European Commission directives require.  Poland is a member of the World Intellectual Property Organization (WIPO) and a party to many of its treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty. Enforcement is improving across all sectors of Poland’s IPR regime.

Poland does not appear either on the 2021 Notorious Market List or in the U.S. Trade Representative’s Special 301 Report.

Piracy in Poland is sanctioned by the Penal Code and the Act on Copyright and Related Rights. In cases of IPR violations, Polish law requires a rights holder to start the prosecution process.  In Poland, authors’ and creators’ organizations and associations track violations and share these with prosecutors.  Police actively cooperate with various Polish IP associations and participate in training aimed at increasing their knowledge in combating crimes related to intellectual property infringements. Rights holders express concern that penalties for digital IPR infringement are not high enough to deter violators.

In April 2022, the Chancellery of the Prime Minister of Poland published the proposal of the new Act on Industrial Property Law for public consultation. The act prepared by the Polish Patent Office and the Ministry of Economic Development and Technology would replace the current Act of June 30, 2000 – Industrial Property Law. The draft act aims to regulate institutions and procedures for the protection of intellectual property, proposes new solutions to protect exclusive rights, and simplify and shorten processes, including the granting of protection. The adoption of the draft of the new legislation was planned for the first quarter of 2022 but as of April 2023 has not yet been enacted.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/ 

Capital Markets and Portfolio Investment

The Polish regulatory system is effective in encouraging and facilitating portfolio investment. Both foreign and domestic investors may place funds in demand and time deposits, stocks, bonds, futures, and derivatives. Poland’s equity markets facilitate the free flow of financial resources. Poland’s stock market is the largest and most developed in Central Europe. In September 2018, it was reclassified as developed market status by FTSE Russell’s country classification report. The stock market’s capitalization generally falls in the range of 30-40 percent of GDP. Although the Warsaw Stock Exchange (WSE) is itself a publicly traded company with shares listed on its own exchange, after its partial privatization in 2010, the state retains a significant percentage of shares which allows it to control the company.

The WSE, over the three decades of its operation, has become a hub for foreign institutional investors targeting equity investments in the region. WSE operates the regulated market for shares of stock and other derived instruments as well as the alternative share market NEW CONNECT for growth companies. WSE also developed CATALYS – a market designated for issuers of corporate bonds, municipality bonds, and for the energy market. It has also become an increasingly significant source of capital. In addition to the equity market, Poland has a wholesale market dedicated to the trading of treasury bills and bonds (Treasury BondSpot Poland). This treasury market is an integral part of the Primary Dealers System organized by the Finance Ministry and part of the pan-European bond platform. Wholesale treasury bonds and bills denominated in zlotys and some securities denominated in euros are traded on the Treasury BondSpot market. The capital market is a source of funding for Polish companies. While securities markets continue to play a subordinate role to banks in the provision of finance, the need for medium-term financial support for the modernization of the electricity and gas sectors is likely to lead to an increase in the importance of the corporate bond market.

According to the Federation of European Securities Exchanges (FESE) WSE took first place in Europe in 2022, in increase of share trade, and third place in value of the initial offering. At the end of 2022, WSE was also deemed to be the second-best market in Europe with respect to liquidity.

The Polish government acknowledges the capital market’s role in the economy in its development plan. Foreigners may invest in listed Polish shares, but they are subject to some restrictions in buying large blocks of shares. The pandemic and the war in Ukraine generated volatility in financial markets but improved liquidity.

In July 2022, the Ministry of Finance initiated work on a roadmap for the development of sustainable finance in Poland. The project will help identify strengths of the Polish capital market and potential challenges thereto, within the context of financing climate-resilient transformation. The aim of the project is to formulate a catalogue of actions and recommendations for market participants as well as public administration, serving the development of sustainable financial products and services in the country. These actions are in line with the EU Renewed Sustainable Finance Strategy and the 2018 EU Action Plan for Financing Sustainable Growth. One of its key elements will be the establishment of the Polish Sustainable Finance Platform as a forum for discussion and exchange of ideas among stakeholders.

Poland is one of the most rigorously supervised capital markets in Europe according to the European Commission. High-risk venture capital (VC) funds are an increasingly important segment of the capital market, which is developing fast. The funds remain active, and Poland is a leader in this respect in Central and Eastern Europe. In 2022, the Polish VC market slowed down but maintained a value of transactions that was close to 2021, a breakthrough year for Polish start-up firms.

Poland provides full IMF Article VIII convertibility for currency transactions. Banks can and do lend to foreign and domestic companies. Companies can and do borrow abroad and issue commercial paper, but the market is less robust than in Western European countries or the United States. The Act on Investment Funds allows for open-end, closed end, and mixed investment funds, and the development of securitization instruments in Poland. In general, no special restrictions apply to foreign investors purchasing Polish securities.

Credit allocation is on market terms. The government maintains some programs offering below-market rate loans to certain domestic groups, such as farmers and homeowners. Foreign investors and domestic investors have equal access to Polish financial markets. Private Polish investment is usually financed from retained earnings and credits, while foreign investors utilize funds obtained outside of Poland as well as retained earnings. Polish firms raise capital in Poland and abroad.

On November 25, 2022, the stage of collecting opinions was completed on a draft act to amend legislation regarding the development of the financial market and protection of investors in this market. As follows from the justification to the draft act, the act aims to organize and improve the functioning of financial market institutions by eliminating barriers to access, improving supervision, protecting clients of financial institutions and minority shareholders, and increasing the level of digitization in performance of supervisory duties by KNF. The draft act provides for tightening of administrative sanctions that may be imposed on entities subject to the supervision of KNF. In practice, this may lead to the imposition of fines in a much higher amount, which in turn will significantly increase the need for due diligence related to the conduct of business activity subject to supervision.

Money and Banking System

The Polish financial sector is well capitalized and has limited direct exposure to Russia, Ukraine, and Belarus. The economic fallout from the pandemic and the war in Ukraine has not threatened banking stability.

The banking sector plays a dominant role in the financial system, accounting for about 70 percent of financial assets. While many banks are privately owned, the state controls over 40 percent of the banking sector and the biggest insurance company. Poland had 30 locally incorporated commercial banks at the end of 2022, according to KNF; this number has been declining in recent years, in part due to growing capital requirements, lower prospects for profit generation, and uncertainty about legislation addressing foreign currency mortgages has pushed banks towards mergers and acquisitions. KNF welcomes this consolidation process, seeing it as a “natural” way to create an efficient banking sector. The state owns eight banks. Poland’s 493 member-owned, cooperative banks play a secondary role in the financial system but are widespread.

The Polish National Bank (NBP) is Poland’s central bank. At the end of 2022, the banking sector was overall well capitalized and solid. Poland’s banking sector meets European Banking Authority regulatory requirements. The share of non-performing loans decreased over 2021 and 2022 after a sharp rise in 2020. In December 2022, the share of non-performing loans was 5.4 percent of portfolios, an improvement from 6.8 percent in 2020. Poland’s central bank is willing and able to provide liquidity support to the banking sector, in local and foreign currencies, if needed.

Poland is a member of the EU, but not of the Eurozone or banking union. As a result, it shares a single market and many harmonized economic rules with the EU but retains its own currency and monetary policy.

The banking sector is liquid, remains profitable, and major banks are well capitalized, although disparities exist among banks. Banks remained under pressure in 2022 due to the issue of conversion of Swiss francs mortgage portfolios into Polish zlotys, mortgage credit holidays made available to all borrowers regardless of income or actual distress, and a special levy on financial institutions (0.44 percent of the value of assets excluding equity and Polish sovereign bonds). Banks managed to restore their profits in 2022, but the low profitability of the banking sector remains a challenge, especially for smaller banks, although it does not generate risks to the system’s stability.

Legal risks for foreign exchange mortgages issued in primarily Swiss francs during 2006-2008 remain a major source of risk in the banking system. In a process begun by the government and shaped by court decisions handed down by the European Court of Justice and Poland’s Supreme Court, since 2019 Polish citizens have been able to convert Swiss franc denominated loan principal into local currency while continuing to pay interest on the terms of the original loan agreement (Swiss franc LIBOR) with the banks absorbing any foreign exchange loss. About one-fifth of housing loans are still in foreign currency, particularly Swiss francs, according to the NBP. This is down from 62 percent at the start of 2011, but the fall in the value of the zloty has made such loans costly for borrowers and a risk to commercial banks’ asset quality. The financial regulator has restricted the availability of loans in euros or Swiss francs in order to minimize the banking system’s exposure to exchange risk resulting from fluctuations.

Foreign Exchange and Remittances

Foreign Exchange

Foreign exchange is available through commercial banks and exchange offices. Payments and remittances in convertible currency may be made and received through a bank authorized to engage in foreign exchange transactions, and most banks have authorization. Foreign investors have not complained of significant difficulties or delays in remitting investment returns such as dividends, return of capital, interest, or principal on private foreign debt, lease payments, royalties, or management fees. Foreign currencies can be freely used for settling accounts.

Poland provides full IMF Article VIII convertibility for currency transactions. The Polish Foreign Exchange Law, as amended, fully conforms to OECD Codes of Liberalization of Capital Movements and Current Invisible Operations. In general, foreign exchange transactions with the EU, OECD, and European Economic Area (EEA) are accorded equal treatment and are not restricted.

Except in limited cases which require a permit, foreigners may convert or transfer currency to make payments abroad for goods or services and may transfer abroad their shares of after-tax profit from operations in Poland. In general, foreign investors may freely withdraw their capital from Poland, however, the November 2018 tax bill introduced an exit tax. Full repatriation of profits and dividend payments is allowed without obtaining a permit. A Polish company (including a Polish subsidiary of a foreign company), however, must pay withholding taxes to Polish tax authorities on distributable dividends unless a double taxation treaty is in effect, which is the case for the United States. An exporter may open foreign exchange accounts in the currency the exporter chooses.

Remittance Policies

Poland does not prohibit remittances, including through legal parallel markets utilizing convertible negotiable instruments (such as dollar-denominated Polish bonds in lieu of immediate payment in dollars). As a practical matter, such payment methods are rarely, if ever, used.

Sovereign Wealth Funds

Poland does not have a sovereign wealth fund. However, the Polish Development Fund (PFR) is often referred to as Poland’s Wealth Fund. PFR is an umbrella organization pooling resources of several governmental agencies and departments, including EU funds. PFR supports the implementation of the Responsible Development Strategy. PFR operates as a group of state-owned banks and insurers, investment bodies, and promotion agencies. The group implements programs enhancing long-term investment and economic potential and supporting equal opportunities as well as environmental protection. The budget of PFR initially reached PLN 14 billion ($3.1 billion), which managers estimate is sufficient to raise capital worth PLN 90-100 billion ($20-22 billion). Various actors within the organization can invest through acquisition of shares, through direct financing, seed funding, and co-financing venture capital. Depending on the instruments, PFR expects different rates of return. While supportive of overseas expansion by Polish companies, the PFR’s mission is domestic.

The Polish Development Fund is also responsible for financing the tasks included in the KPO. In August 2022 Ministry of Finance  (MRiPS) and the Ministry of Development Funds and Regional Policy (MFiPR) signed an agreement with PFR. The agreement opens the way to the possibility of pre-financing investments that have already started and have been submitted – under the KPO – by individual ministries.

PFR group has been used by the government to implement several unique policy projects, including emergency support to private sector entities, promotion of the private pension savings scheme and, more recently, the provision of sizable financial support (PLN 100 billion or $22 billion) to the private sector during the COVID-19 pandemic.

OECD Guidelines on Corporate Governance of SOEs

In Poland, the same rules apply to SOEs and publicly listed companies unless statutes provide otherwise. The state exercises its influence through its rights as a shareholder in proportion to the number of voting shares it holds (or through shareholder proxies). In some cases, an SOE is afforded special rights as specified in the company’s articles, and in compliance with Polish and EU laws. In some non-strategic companies, the state exercises special rights as a result of its majority ownership. Despite some of these specific “public good” or “social benefit” obligations, the state’s aim is to create long-term value for shareholders of its listed SOEs by adhering to the good management practices included in the OECD’s SOE Guidelines. State representatives who sit on supervisory boards must comply with the Commercial Companies Code and are expected to act in the best interests of the company and its shareholders. Despite this, the European Commission has noted that “Polska Fundacja Narodowa” (an organization established to promote Polish culture worldwide and funded by Polish SOEs) was involved in the organization and financing of a campaign supporting the controversial judiciary changes by the government. The Commission stated this was broadly against OECD recommendations on SOE involvement in financing political activities.

SOE employees can designate two-fifths of the SOE’s Supervisory Board’s members. In addition, according to Poland’s privatization law, in wholly state-owned enterprises with more than 500 employees, the employees are allowed to elect one member of the management board. SOEs are subject to a series of additional disclosure requirements above those set forth in the Company Law. The supervising ministry prepares specific guidelines on annual financial reporting to explain and clarify these requirements. SOEs must prepare detailed reports on management board activity, plus a report on the previous financial year’s activity, and a report on the result of the examination of financial reports. In practice, detailed reporting data for non-listed SOEs are not easily accessible. State representatives to supervisory boards must go through examinations to be able to apply for a board position. Many major state-controlled companies are listed on the Warsaw Stock Exchange and thus also subject to the “Code of Best Practice for WSE Listed Companies.”

Privatization Program

The Polish government has completed the privatization of most of the SOEs it deems not to be of national strategic importance. With few exceptions, the Polish government has invited foreign investors to participate in major privatization projects. In general, privatization bidding criteria have been clear and the process transparent.

The majority of SOEs classified as “economically important” or “strategically important” are in the energy, mining, media, telecommunications, and financial sectors. The government intends to keep majority share ownership of these firms, or to sell tranches of shares in a manner that maintains state control. The government is currently focused on consolidating and improving the efficiency of the remaining SOEs.

Climate Issues

The updated nationally determined contributions (NDC) as of December 18, 2020, submitted by Poland envision an at least 55 percent domestic reduction in GHG emissions by 2030 compared to 1990.

On March 29, 2022, the Council of Ministers adopted the assumptions for updating the “Energy Policy of Poland until 2040” (PEP2040) – Strengthening Energy Security and Independence. The updated energy policy of Poland will take into account energy sovereignty, a particular element to ensure rapid independence of the national economy from imported fossil fuels from the Russian Federation. The assumptions provide for increasing technological diversification and expansion of capacities based on domestic sources, including further development of renewable energy sources and consistent implementation of nuclear energy and improvement of energy efficiency, but also further diversification of supplies and providing alternatives to oil and natural gas.

Actions taken will be aimed at the development of new low-carbon technologies and their integration into the energy system. Priority will be given to actions that strengthen the development of electricity grids and energy storage, while the use of coal-fired units may continue to be deployed in the face of uncertainty in the natural gas market. Poland has also expressed its intention to negotiate efforts to reform EU climate policy mechanisms to enable a low-carbon and ambitious transformation, contributing to the achievement of the EU’s targets, while otherwise permitting the temporary increased use of conventional generation capacity. Following Russia’s full-scale invasion of Ukraine, the Polish government announced a ban on Russian coal imports, actively sought alternative import sources, and announced increased domestic hard coal production in the response to the perception of looming shortages and fears of a wider energy crisis.

Originally the government assumed that coal units would be replaced more quickly and to a greater extent by gas units, but under current circumstances there will be a greater transition directly from coal sources to renewables and nuclear energy. The requirement to end the use of coal by 2049 will still be binding.

The Ministry of Climate and Environment has also proposed amendments to PEP2040. These include the end of lignite by 2044, the development of renewable energy sources (the total capacity installed in RES is to amount to 88 GW compared to current 22 GW), a departure from gas reliance by increasing use of hydrogen, as well as through the modernization of some 200-megawatt coal-fired units. The plan includes development of both large nuclear reactors and small modular reactors (SMRs), with the first large units coming online in 2033 and the first SMRs being deployed in the late 2020s or early 2030s. PEP2040 anticipates that nuclear projects will be both state-led and private sector-led.

Even though Poland has committed to the EU “Fit for 55” package, it has not yet adopted an individual commitment to become climate-neutral by 2050. Instead, Poland continues to interpret the goal to apply to the EU as a whole in becoming climate-neutral by that date, suggesting that other EU members will need to achieve negative emissions by 2050 to make up for Poland’s emissions. The PEP2040 with recent amendments, however, does establish a path for reducing the use of coal and gas while increasing the role of RES (wind, solar, biomass) and nuclear.

The private sector is already implementing some solutions to achieving relevant targets and goals due to EU regulations and pressure from the financial/banking sector, foreign investors, and the global community more broadly.

Poland has an unfavorable energy mix due to its heavy dependency on coal (69 percent of electricity currently comes from coal fired plants). If adverse costs on human health, biodiversity loss, and environmental degradation are set aside, the economic cost of transitioning to a net-zero economy by 2050 are estimated to be approximately 350 billion euros ($370 billion) and will be realized through the implementation of several programs which aim to achieve clean air, preserve biodiversity, and promote ecological solutions. Most of the government’s flagship programs should be implemented by 2030 or 2040.

Available tax incentives and loans include:

• Thermo-modernization relief up to PLN 53,000 ($12,000) per taxpayer in the home, to be used for items such as insulation or replacement of the heating system. In the case of spouses who are co-owners of a building, the limit increases to PLN 106,000 ($24,000).
• R&D relief which allows the deduction of up to 200 percent of R&D expenses. In practice, most of the activities eligible for the R&D tax credit can be described as ecological, such as an increase in energy efficiency, improvement in the recyclability of materials, and various industrial innovations, including obtaining and maintaining a patent.
• A tax on non-recycled plastic in force since the beginning of 2021. The fee is added to Poland’s EU membership fee and has not yet been passed on to businesses. In addition, a so-called “plastic directive” prohibiting the sale of disposable cutlery, plates, and ear buds is making its way through the legislative process, scheduled to come into force in 2023. The Polish government is also working on a draft deposit return scheme for plastic bottles and new EPR law that will materially change the Polish scheme for packaging that is already in place.
• Zero excise tax for natural gas intended to power internal combustion engines, i.e., liquefied natural gas (LNG), compressed natural gas (CNG), biogas, and hydrogen and biohydrogen. The policy has been in force since August 2019.
• Zero excise tax on electric and hybrid vehicles (according to the Act of January 11, 2018, on electromobility and alternative fuels). The provision originally applied to hybrid vehicles only until January 2021 but was extended for two years for cars with internal combustion engines of no more than two liters.

Many companies in Poland have already earned the right to label their products with the European Ecolabel. The certificates are awarded by the Polish Centre for Testing and Certification (PCBC).

State foresters manage 23 percent of the land in Poland and have been heavily criticized for deforestation, most notably in UNESCO-protected forests. In March 2023, the European Court of Justice ruled Poland’s forestry laws do not adequately comply with EU conservation standards.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

The Polish Central Anti-Corruption Bureau (CBA) and national police investigate public corruption. The Justice Ministry and the police are responsible for enforcing Poland’s anti-corruption criminal laws. The Finance Ministry administers tax collection and is responsible for denying the tax deductibility of bribes. Reports of alleged corruption most frequently appear in connection with government contracting and the issuance of a regulation or permit that benefits a particular company. Allegations of corruption by customs and border guard officials, tax authorities, and local government officials show a decreasing trend. If such corruption is proven, it is usually punished.

Overall, U.S. firms have found that maintaining policies of full compliance with the U.S. Foreign Corrupt Practices Act (FCPA) is effective in building a reputation for good corporate governance and that doing so is not an impediment to profitable operations in Poland. Poland ratified the UN Anticorruption Convention in 2006 and the OECD Convention on Combating Bribery in 2000. Polish law classifies the payment of a bribe to a foreign official as a criminal offense, the same as if it were a bribe to a Polish official.

For more information on the implementation of the OECD Anti-Bribery Convention in Poland, please visit: http://www.oecd.org/daf/anti-bribery/poland-oecdanti-briberyconvention.htm 

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Centralne Biuro Antykorupcyjne (Central Anti-Corruption Bureau – CBA) al. Ujazdowskie 9, 00-583 Warszawa +48 800 808 808 kontakt@cba.gov.pl 

To report corruption, use this link: www .cba.gov.pl; and: https://www.cba.gov.pl/pl/zglos-korupcje/445,Zglos-korupcje-osobiscie-lub-pisemnie.html 
Contact at a “watchdog” organization:

The Batory Foundation, as part of a broader operational program (ForumIdei), continues to monitor public corruption, carries out research into this area, and publishes reports on various aspects of the government’s transparency. Contact information for Batory Foundation is: batory@batory.org.pl ; 22 536 0200.