Linking Europe’s West with the East

R&D: A special tax deduction is available to companies that perform R&D activities. Up to 110% of eligible R&D costs may be deducted from the tax base. It means that the costs are effectively deducted twice (first as a regular tax-deductible cost and then as part of the R&D tax deduction).

A few instruments are aimed at technology centers that focus on applied research, development, and innovation of technically advanced products, technologies, and manufacturing processes, including the creation and innovation of their software intended for use in production and to increase value added. They may benefit from all four incentive tools: corporate income tax exemption, grant for job creation, and training grant. The cash grant on capital investment is available to strategic projects (that create a large number of jobs and have high capital expenditures).

Jobs creation & CAPEX: Investments in manufacturing can obtain a corporate income tax exemption (up to 10 years). In districts with higher unemployment two additional instruments are available: a grant for job creation and a training grant. To qualify, manufacturing projects need to meet quantitative criteria (reaching the threshold of minimum investment in assets) and a requirement of ‘high added value’. It is met by offering competitive wages and including an R&D component in the production process. A cash grant on capital investment is available to strategic investments that either create a large number of jobs and have high capital expenditures or are in sectors such as pharmaceutical, electronics and optical devices, spacecraft, aircraft, and engines, that have an R&D component. The same four instruments are available for investments in the production of strategic products (i.e. medical products, chips, e-mobility, and energy production equipment).

Projects in the shared services sector can benefit from corporate income tax exemption (up to 10 years). Larger (strategic) project investments may also receive a cash grant on capital investment up to 20% of eligible costs.

Training: Training and retraining grant up to 50% of training costs (up to 70% for SMEs) is offered to manufacturing projects in regions with high unemployment rate. This restriction does not apply to investments in technology centres.

Green and other: Property tax exemption is available in special industrial zones. The programmes from the EU funds (2021-2027 perspective) are being developed and they may focus i.a. on decarbonisation. Currently, most of the green incentives are directed at retrofitting or at natural persons and municipalities.