Tax 

Upcoming amendment to the Act on Investment Incentives will allow extending deadlines for complying with conditions

In response to the current pandemic situation, the government brings another support measure (Document of the Chamber of Deputies no. 1059) that would allow investment incentive recipients to extend the deadline for complying with general statutory conditions by up to two years. The proposed draft bill is being discussed in a state of legislative emergency, so it can be expected to come into effect very soon.

The complete Document no. 1059 is available on the website of the Chamber of Deputies.

Current situation

The general conditions differ based on the type of the supported investment and they primarily concern:

1. Investment of a minimum value in tangible and intangible fixed assets;

2. Creation of a minimum number of new job vacancies; or

3. Higher added value.

These general conditions always have to be met within three years after issuing the decision to grant the incentive. If the investor does not meet these general conditions within three years of the issuance of the decision, the decision legally becomes invalid.

The Income Taxes Act follows and sets a 10-year period for drawing the investment incentive in the form of tax relief, whereby the company has to start drawing the tax relief no later than in the taxation period where three years have elapsed since the issuance of the decision.

 

Proposed change

The Ministry of Industry and Trade could newly extend the deadline for meeting the aforementioned conditions by as much as two years following the recipient’s request, provided that the company proves that it cannot meet the conditions within the original deadline as a result of the spread of COVID-19. The request has to be filed at least 30 days before the original 3-year deadline has expired.

The extension of the deadline for meeting the general conditions in the Act on Investment Incentives will also postpone the obligatory start of the 10-year period for drawing the income tax relief.

Based on the transitional provisions, this option will also apply to decisions to grant investment incentives issued before the amendment comes into effect.

 

Who can request the deadline extension?

  • Holders of decisions to grant investment incentive whose original three-year deadline for meeting the conditions will elapse after the Act comes into effect (taking into account the minimum 30-day period for filing the request), i.e. recipients whose decision was issued at the end of 2017 or later.
  • Holders of decisions to grant investment incentive who expect that meeting the general statutory conditions for drawing the investment incentive within the standard deadline will be difficult for them due to the spread of COVID-19.
  • Holders of decisions to grant investment incentive for whom it is efficient to postpone the obligatory start of drawing the tax relief due to expected lower profitability during the 10-year period of using the investment incentive.

How can we help you?

  • We will evaluate your situation and assess whether the possibility of requesting an extension of the deadline for meeting the statutory conditions is applicable to you.
  • We will prepare your deadline extension request and advise you on the argumentation regarding proving the fact that the statutory conditions cannot be met as a result of the spread of COVID-19.
  • We will propose alternative options of financing the investment from other public sources.
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