When Can an Investment Project Be Started?
One of the most important rules when applying for support under the Polish Investment Zone is the requirement that a support decision may be issued only for a new investment project that has not yet been started. This seemingly simple criterion, however, raises many doubts among entrepreneurs. It is therefore worth explaining precisely what "start of the project" means and why it is so important to keep the right order of actions.
Can the project be started after the application is submitted?
From a formal point of view - yes, the regulations do not prohibit starting the investment after the support application has been submitted. However, I strongly advise against doing so.
The answer is simple: the application may be rejected. In such a situation the entrepreneur ends up in a very difficult position - the project has already been started, which automatically rules out submitting another support application for that investment. The opportunity for tax relief, which can reach even several million zlotys, is then lost.
My recommendation is unequivocal: wait for the support decision to be issued. This is the safer path, which does not expose the entrepreneur to the risk of losing the right to preferential investment conditions.
What exactly does "start of works" mean?
The definition of the start of works can be found in Commission Regulation (EU) No 651/2014 of 17 June 2014. This is the key document governing the rules for granting state aid in the European Union.
According to this regulation:
"start of works" means either the start of construction works relating to the investment, or the first legally binding commitment to order equipment or another commitment that makes the investment irreversible, whichever comes first.
Importantly, the regulation also specifies what is not considered the start of works:
- the purchase of land - you can buy a plot for a future investment without fear of losing the right to support
- preparatory works, such as obtaining permits (including the building permit)
- carrying out feasibility studies
In the case of acquisitions of businesses, "start of works" means the moment of acquiring assets directly linked to the acquired establishment.
Practical examples - what already counts as the start of the project?
Please note a very important detail: ordering machinery is already the start of the project! This does not refer to a mere intention to buy or browsing offers, but to a legally binding commitment - signing a contract, paying a deposit or placing an order that binds both parties.
The same applies to construction works. The Construction Law clearly defines the moment construction begins - it occurs when preparatory works on the construction site are undertaken.
Preparatory works on the construction site include:
- geodetic staking out of structures on the ground
- site leveling
- site development together with the construction of temporary facilities (e.g. site facilities)
- making connections to technical infrastructure networks for construction needs
Consequences of starting the project prematurely
Starting the project prematurely can lead to serious consequences. Even if the authority has issued a positive support decision, an inspection may reveal circumstances that cause the entrepreneur to lose the right to tax relief.
Inspections carried out by the competent authorities may result in the loss of the right to support and additional financial consequences for the entrepreneur, which is why it is so important to observe the rule of not starting the project before receiving the support decision.
Summary - safety first
A support decision under the PSI is a powerful tool that can significantly reduce investment costs. However, the key to success is following the rules and the right order of actions:
- Preparing documentation - feasibility study, plans, analyses (this is not the start of the project)
- Purchasing land - if necessary (this is not the start of the project)
- Obtaining the building permit - if required (this is not the start of the project)
- Submitting the application for a support decision
- Waiting for the decision - this is the most important moment
- Only after receiving a positive decision - starting the actual investment activities
Patience really pays off in this case. A few weeks of waiting for the decision is a small price for safety and certainty that the investment will be able to benefit from tax relief for years to come.
Do you need help preparing a support application, or do you have doubts whether planned actions might be considered the start of the project? Please get in touch - I will help you carry out the whole process safely.
Konrad - Polish Investment Zone Expert