Could you please provide an overview of Advicero Nexia’s work in the energy sector? What services do you offer to companies operating in the renewables sector?

At Advicero Nexia, we primarily specialize in tax advisory services for companies operating in the renewables sector. Our work involves assisting investors in acquiring renewable energy projects by conducting due diligence work, followed by transactional advisory and structuring. Additionally, we have received a significant number of requests from clients seeking assistance in establishing a presence in Poland, including investors, developers, and service providers operating in this sector.

What are the key legislative changes that have impacted the energy sector from a tax perspective in the past year?

An important legislative change that has had a significant impact on the energy sector relates to VAT taxation and obligatory split payments, which were introduced in November 2019. The new rules require the VAT amount to be transferred to a special VAT bank account, while the net amount is transferred to the regular bank account of the seller or service provider. This change was made to combat fraud related to VAT. Although it may seem complicated, having a proper advisor can help clients navigate the system with relative ease.

There is currently no explicit legal obligation for taxpayers to verify their contractors’ bank accounts through the white list. However, the new rules indirectly impose an obligation to execute bank transfers using bank accounts published in the e-register (for all B2B transactions exceeding PLN 15,000 including VAT). Sanctions for making payments to bank accounts other than those mentioned in the white list came into force on January 1st, 2020, and concern non-deductibility of related input VAT as well as non-inclusion in tax costs.

How does Poland compare in terms of offering a safe environment for investors, considering the legal instability that can be a significant challenge?

Although there have been issues in the past, such as sudden changes in real-estate tax policy, Poland currently offers a safe environment for investors. The sudden changes in real estate tax policy increased the burden of this tax by approximately four times, impacting investors’ projections and expected returns. This, together with a delay in auctions, led to a situation where many investors exited the Polish market. However, those who decided to stay either negotiated with local authorities or went for court proceedings, and eventually, as a result of another change in real estate tax law, managed to restore the tax to its initial level.

To encourage innovation in Poland, an R&D tax relief has been introduced. Who can benefit from this incentive?

The R&D tax incentive, introduced in 2016 and amended in 2019 to allow more companies to make use of it, is an excellent instrument for encouraging innovation. Presently, R&D activities that qualify for tax deduction include not only traditional scientific studies but also any development works – for instance, combining existing knowledge to improve manufacturing processes, increase efficiency or the quality of products. R&D relief is thus potentially available to all businesses that carry out improvements, not just disruptive innovations.

Tax relief also applies to wages of employees that carry out R&D, the purchase of commodities and raw materials, the cost of expert opinions and patent rights, protection rights, and registration of industrial design. Although this incentive has been well-received, there are still taxpayers who are not aware of its existence and would benefit greatly from it.

In your experience, what are some common challenges that investors face when entering the Polish market?

One of the most significant challenges that investors face when entering the Polish market is opposition from Parliament members who are not in favor of renewable energy. This inevitably influences the population’s attitude towards renewable energy and, at times, leads to protests and beliefs that renewable energy has more disadvantages than benefits, especially wind farms.