An increase in the number of research units in Poland

In recent years, Poland has significantly increased its expenditure on research and development. According to the Central Statistical Office (GUS), expenditures on R&D activities in Poland in 2022 reached PLN 44.7 billion, up  by 18.6 percent y/y. The share of expenditure on R&D in the Polish GDP amounted to 1.46 percent, thanks to which we are gradually reducing the distance to the EU average, which is 2.24 per cent.

Poland is included in the global trend of increasing investments in innovation and technological development. Within two decades, our country has moved up from 21st to 14th place in the European Union in terms of the size of the share of expenditure on R&D in our GDP.

This results in, among other things, the development of research and development infrastructure. According to the Central Statistical Office, in 2022 there were 7431 entities involved in research and development activities in Poland. However, there are only 61 R&D centres on the  the Ministry of Development and Development  official list (as of April 2024)  that can apply for tax support for their operation.

Tax relief

The amount of support is considerable. The R&D relief allows you to deduct from the tax base all expenses that are related to research and development. It is available to all entrepreneurs who conduct R&D activities and allows for the deduction from the tax base of 200 percent of personnel costs (employees involved in research and development projects) and 100 percent of other eligible costs.

You can also take advantage of the IP Box preference, which entitles you to take advantage of a preferential 5 percent tax rate on income obtained from qualified intellectual property rights. These rights include, among other things, patents and proprietary computer programs.

Since 2022, there has also been a tax relief for prototypes, which  allows you to deduct 30 percent of tax-deductible costs related to the launch of a new product or trial production from the tax base.

Another possibility is  relief for innovative employees, under which a business entity paying personal income tax may not transfer tax advances to the tax office. This is possible when the employee spends at least 50 percent of their working time on R&D tasks.

Foreign investments as a driver of growth in the R&D sector

Since 2003, Poland has attracted 472 foreign greenfield investments related to research and development activities. As part of these investments, 94 research and development units were created, 19 of which were established between 2022-2024. The largest foreign investor in Poland’s R&D sector is the United States, which is responsible for 41 percent of all capital expenditures. American companies such as Google, Intel, and IBM have invested in Poland not only because of our competitive labour costs, but also because of access to highly qualified engineering staff and the proximity to other European markets.

In addition to the United States, Poland has attracted investors from other countries such as the United Kingdom, Germany, France, and Sweden. These investments not only support the development of the Polish technology sector, but also promote the transfer of technology and knowledge – the main building block of local innovation capabilities. Foreign companies often cooperate with Polish universities and research institutions, which leads to the creation of new patents, research projects and start-ups.

Leading industries and location of R&D projects

When analysing the sectors that dominate in foreign investment projects marked as R&D, the software and IT services sector is in  first place, accounting for 62.3 percent of all projects. However, in terms of the value of investments, the communications sector leads with a total  expenditures of USD 1.7 billion.

Most of the R&D projects are located in five major Polish cities: Warsaw, Krakow, Wroclaw, Gdansk and Lodz. Interestingly, in terms of value, as many as one third of the projects were implemented in our capital.

International cooperation opportunities

Poland offers a wide range of opportunities for international cooperation, both through public-private partnerships and within the framework of EU programmes. Initiatives such as Horizon Europe – the largest research and innovation programme in the EU – create an opportunity for Polish institutions to cooperate with international partners. Poland can also serve as a gateway to the CEE markets, offering a strategic location and access to a wide consumer market.

Economic and social impact

The development of the R&D sector in Poland also had a positive impact on the economy and society. Creating new jobs, improving the qualifications of employees and transferring knowledge and technology are just some of the benefits of developing research and development activities. Thanks to the support of education and cooperation with local academic institutions, investments in R&D also affect the development of local communities.

Poland, being in the group of “emerging innovators” (according to the European Innovation Ranking), must cope with the challenges of not only increasing financial outlays, but also effectively developing its R&D and innovation capabilities.

Source:

• Polish Economic Institute, Economic Weekly, 34/2024
• EY, Research and development (R+D) – what is research and development activity?