U.S. Department of State

Openness To, and Restrictions Upon, Foreign Investment

Foreign investment has been at the center of Poland’s economic transformation since 1989. It is broadly welcomed not only as a source of finance, but also as a means of technology transfer, human resource development, and Polish integration into global supply chains and R&D. Since 1990, Poland has attracted over $180 billion in foreign direct investment (FDI), principally from Western Europe and the United States. Investors report they are attracted to Poland’s young, well educated, low-cost work force; its proximity to major markets; its membership in the European Union (EU); its political stability; and its long-term growth prospects. Foreign companies invest largely, though not exclusively, to service Poland’s dynamic local market of nearly 40 million people and the larger European market of nearly 500 million. Foreign companies generally enjoy unrestricted access to the Polish market. However, Polish law limits foreign ownership of companies in selected strategic sectors, and limits foreign acquisition of real estate, especially agricultural land.

Poland ranked a relatively low 70 in the World Bank’s 2010 “Doing Business” report, due in part to burdensome business regulation, a cumbersome tax system, and slow permitting. In recent years, Poland has introduced reforms to improve the climate for foreign and domestic investment. In 2007-2010, telecommunication regulations were relaxed, the foreign exchange law was simplified, the overall tax burden was reduced, new acts shaping public-private partnerships came into force, starting and closing a business and registering property became easier, and positive changes appeared on the labor market. Work to improve the bankruptcy law and the administration of real estate registers continues, while national and local governments are working to introduce a “zero-stop shop” process of easing new business registration. Despite these reforms, many foreign investors complain of an overly burdensome regulatory environment.

EU Integration

Integration into the EU has been a gradual process. In the years prior to Poland’s May 1, 2004, accession to the EU, Polish governments undertook widespread institutional and regulatory reforms. Adoption of EU legislation allowed Poland to reform the way in which its economy is regulated and restrict government intervention in the private sector. Changes in areas such as financial markets, company and competition law, accounting, and intellectual property rights have created a better environment for business.

When it acceded to the EU, Poland committed to adopt the Euro at a future date not specified. Prime Minister Tusk’s effort to bring Poland into the Eurozone in 2012 was derailed by the global economic crisis. Though no new date has been set, 2015 or later is now considered more realistic. .

Since 2004, Poland’s accession has come to be perceived by many firms as having reduced Poland's country and investment risks. EU membership also resulted in an influx of billions of Euros in new financial resources such as structural funds and the Cohesion Fund, which can be used to support investments in transport infrastructure, environmental protection, and introduction of new production technologies. Access to EU aid funds helped Poland keep its head above water during the recent financial crisis. With a 1.8% increase in output in 2009, Poland was the only EU member state to post growth as the global crisis battered other economies.

Major Laws and Regulations

The basic legal framework for establishing and operating companies in Poland, and in particular companies with foreign investors, is found in the Commercial Companies Code which entered into force in January 2001, and the Law on Freedom of Economic Activity, which entered into force on July 2, 2004. Also relevant is the Act on European Economic Interest Grouping and the European Company of March 4, 2005 which allows a "European Company" to move its registered office from one EU state to another without losing legal personality.

With few exceptions, foreign investors are guaranteed national treatment. Companies that did not have any subsidiary established in an EU country before May 1, 2004, but that conduct, or plan to commence business operations in Poland must observe all EU regulations, and may not be able to benefit from all privileges to which EU companies are entitled.

Under the amended 2000 Commercial Companies Code, companies can be established as: joint-stock companies, limited liability companies, limited joint-stock partnerships, professional partnerships, registered partnerships, and limited partnerships. These corporate forms are available to a foreign investor, provided they come from a member state of the EU or the European Free Trade Area (EFTA), or have the right of permanent residence in Poland and are based in a country offering reciprocity for Polish enterprises. The United States offers such reciprocity. If the above conditions are not met, the investor may establish one of the following: a limited partnership, a limited joint-stock partnership, a limited liability company, a joint-stock company or they may purchase shares of such entities.

According to the Law on the National Court Register of October 1997, all companies, commercial partnerships, and sole proprietorships must be registered in the Register of Entrepreneurs, a part of the National Court Register managed by district courts. The Register of Entrepreneurs is open to the public. Post is unaware of any laws or regulations specifically authorizing private firms to adopt articles of incorporation or association which limit or prohibit foreign investment, participation or control.

Under the Law on Freedom of Economic Activity, branch offices are registered in the National Court Register under the name of the foreign investor, with the notation "branch in Poland." A branch office can perform any activity within the scope of business of the parent foreign investor that established the branch. In contrast, representative offices must limit their activities to promotion and advertising for the parent foreign investor. Representative offices are registered in a special log kept by the Minister of Economy. The law specifies certain situations in which registration may be refused (e.g., if required documents are not submitted on time or on national security grounds).

Screening and Licensing

Poland does not have any general screening mechanism for entry and establishment of businesses by foreign firms. Authorization requirements and foreign equity limits do exist for a limited number of sectors, such as broadcasting and air transport. The Law on Freedom of Economic Activity requires a permit from the Treasury Ministry for certain major capital transactions (i.e., to establish a company when an enterprise owned wholly or partially by a legal resident is contributed in-kind to a company with foreign ownership.) A permit from the Treasury Ministry is also required to lease assets to or from a state-owned enterprise. Licenses and concessions for defense production and management of seaports are granted on the basis of national treatment for investors from OECD countries.

Polish law limits non-Polish ownership to 49% of a company’s capital shares in the air transport and the radio and television broadcasting sectors. This requirement does not apply to EU investors. Waivers of these requirements are not available. Furthermore, in the insurance sector at least two members of management boards must speak Polish. In the broadcasting sector, the number of Polish citizens on supervisory and management boards must be higher than the number of foreigners.

All investors must obtain governmental concessions, licenses or permits to engage in certain activities. Sectors in which concessions are required include broadcasting, aviation, energy, weapons, mining, and private security services. Some examples are;

- The Polish Financial Supervision Authority (KNF) grants authorization to operate insurance companies and investment funds, and grants licenses for brokerage and banking activities;

- The National Broadcasting Council issues radio and television broadcasting licenses;

-- The Ministry of Economy issues permits for wholesale trade in alcohol, and wholesale and processing of precious stones and metals;

-- The Ministry of Health authorizes permits for the pharmaceutical and medical materials sectors;

-- The Ministry of Infrastructure provides licenses for air, road and rail transport, and for mail services. Recent legislation removed the requirement for a concession to construct highways or express roads in an effort to facilitate development of this sector;

-- The Ministry of Interior and Administration licenses the defense industry and security services;

-- Local governments provide permits for buses and taxis, waste disposal, pharmacies, and extraction of minerals.

The June 2004 Law on Freedom of Economic Activity introduced “regulated activity,” which allows for engagement in certain activities on the basis of an entry into the regulated activity register. For example:

-- Telecom, postal, and courier services;

-- Manufacturing of tobacco products, manufacturing and bottling of alcohol and wine.

Other regulated activities can be found in the Law. In an effort to remove barriers to doing business, the government announced its intention to amend the Law on Freedom of Economic Activity, removing requirements for permits and concessions and replacing them with entries in the regulated activity register. On March 31, 2009 a "one window" option for business registration became available; however it often takes longer to register a business than before. Also, a bill passed by the Council of Ministers in November 2010 will enable applicants to register a limited liability company in 24 hours starting January 1, 2012. This will require filling out an e-form (a simplified deed of the company), signing it with an electronic signature, and sending it to the registry court via internet. An e-platform with records of all economic activity entities (Central Registration and Information for Economic Activity) is scheduled to launch in July, 2011.

Limits on Foreign Ownership of Agricultural Land and Real Estate

The sale of agricultural land to foreigners has long been a sensitive issue. Since EU accession, citizens of the EU-27, as well as Iceland, Liechtenstein and Norway, generally do not need permission to purchase real estate, or to acquire or receive shares in a company owning real estate in Poland. One exception is in the acquisition of agricultural real estate. Poland was granted consent to introduce a transition period, lasting until 2016, with respect to unrestricted acquisition of agricultural real estate by foreigners (with certain exceptions). Citizens from countries other than the EU-27, Iceland, Liechtenstein and Norway are allowed to own an apartment, 0.4 hectares (4,000 square meters) of urban land, or up to one hectare of agricultural land without a permit. Better classes of agricultural land require approval by the Minister of Agriculture for legal transfer. Such land is not available to foreign ownership.

Citizens from countries other than the EU-27, Iceland, Liechtenstein and Norway must still obtain a permit from the Ministry of Internal Affairs and Administration (with the consent of the Defense and Agriculture Ministries), pursuant to the Act on Acquisition of Real Estate by Foreigners. A foreign business intending to buy real estate in Poland may apply for a provisional permit from the Ministry of Interior and Administration, which is valid for one year from the date of issue, during which time the company is expected to assemble documents demonstrating it is a viable business. Permits may be refused for reasons of social policy or public security.

A second form of land title is the perpetual lease, under which the lease holder generally controls the property for 40 to 99 years, and which can be extended for up to 99 additional years. Such a perpetual tenant has the right to dispose of its interest in the land by sale, gift, or bequest. Companies report that procedures to acquire real estate are transparent and that the process is not burdensome.

Laws pertaining to agricultural land available for lease from the Ministry of Agriculture’s property agency are under review with new leases suspended. This action may impact larger food processors in dairy or meats as these enterprises need additional land to comply with environmental regulations. The draft law would void current leases now valid for ten years and has chilled new agricultural investments, causing concern among U.S. investors.

Privatization Program

The pace of privatization, which had slowed in the recent years, accelerated strongly in 2010; reaching $7.3 billion (PLN 22.0 billion) in privatization revenue, compared with $2.2 billion (PLN 6.9 billion) in 2009. The government was close to meeting its ambitious $8.3 billion (PLN 25 billion) target set for privatization revenues in 2010 and hopes to raise an additional $5.0 billion (PLN 15 billion) in 2011. Targeted industries include coal, electric power, gas, finance, chemical, and defense. In general, employees and trade unions welcome private investors, whose involvement in a company is often seen as a change for the better.

With relatively few exceptions, in major privatizations the Polish government has invited foreign investors to compete for a strategic interest. In general, bidding criteria have been clear and the process has been transparent. Some commentators have expressed concern about the level of foreign ownership of the Polish economy, especially in the banking sector, where foreign-controlled banks hold around 80% of assets.

Discrimination against Foreign Investors

Generally, foreign investors receive similar treatment as domestic investors, both at the time of initial investment and after an investment has been made. In the past, there were complaints about discrimination in public procurement contracts resulting from provisions in legislation favoring domestic firms. Since May 2004, all public authorities must apply the Public Procurement Law of January 2004, as amended by the November 2007 consolidated Act on Public Procurement, when selecting suppliers and service providers in public contracts. Under this law, a joint venture between foreign and domestic firms qualifies as "domestic" for procurement considerations. On joining the EU, Poland acceded to the WTO Government Procurement Agreement.

Measure	Year	Index/Ranking
TI Corruption Index	2010	5.3/41
Heritage Economic Freedom	2010	63.2/71
World Bank Doing Business	2010	NA/70

Note: Poland is not on the MCC (Millennium Challenge Corporation) list.

Source: http://www.transparency.org

http://www.doingbusiness.org/economyrankings/

http://www.heritage.org/Index/Country/Poland

Conversion and Transfer Policies

Foreign exchange is widely available through commercial banks as well as exchange offices. Payments and remittances in convertible currency may be made and received through a bank authorized to engage in foreign exchange transactions, and most banks have such authorization. Foreign investors have not complained of any significant difficulties or delays in remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties, or management fees.

Foreign currencies can freely be used for settling accounts.

Poland provides full IMF Article VIII convertibility for current transactions. The October 1, 2002 Polish Foreign Exchange Law, as amended, fully conforms to the OECD Codes of Liberalization of Capital Movements and Current Invisible Operations.

The Foreign Exchange Law distinguishes between residents and non-residents. It defines residents as natural persons whose center of vital (economic or personal) interests is in Poland or individuals who spend more than 183 days in a tax (calendar) year in the country; companies having their registered office in Poland; and branches, representative offices and enterprises created by non-residents within the territory of Poland. Poland's ability to tax this income, however, may be limited by the provisions of an applicable tax treaty. Under the Law, non-residents include: natural persons with foreign residence; companies seated outside Poland; and branches, representative offices and enterprises created by residents outside the territory of Poland.

Countries that are members of the European Economic Area (EEA) and OECD are accorded the same treatment as countries that are members of the EU. In general, foreign exchange transactions with the EU, OECD and EEA countries are not restricted.

The Foreign Exchange Law also distinguishes between;

(i) Countries that are members of the EU, EEA or OECD, and (ii) other "third" countries. A number of transactions/payments, particularly those with third countries, require individual foreign exchange permits issued by the president of the National Bank of Poland (NBP). Such permits are issued upon request unless doing so would be contrary to the public interest or Poland's international obligations. Also, a general foreign exchange permit regulation specifies some exceptions to the permit requirement, particularly for business relations with countries with whom Poland has signed a bilateral investment treaty (BIT).

Except in cases where a permit is required (which are limited), a foreigner may convert or transfer currency to make payments abroad for goods or services and also may transfer abroad his share of after-tax profit due from operations in Poland. Capital brought into Poland by foreign investors may be freely withdrawn from Poland in instances of liquidation, expropriation, or decrease in capital share. Full repatriation of profits and dividend payments is allowed without obtaining a permit. However, a Polish company (including a Polish subsidiary of a foreign company) must file and pay withholding taxes with the Polish tax authorities on any distributable dividends unless a double taxation treaty is in effect. A double taxation treaty is in place between Poland and the United States. An exporter may open foreign exchange accounts in the currency it chooses.

Foreign exchange regulations require non-bank entities dealing in foreign exchange or acting as a currency exchange bureau to submit reports to the National Bank of Poland (NBP). As of January 1, 2010, new reporting requirements apply. These can be found in the Journal of Laws no 184 of November 3, 2009, item 1437 (Dziennik Ustaw 184 z 3.11.2009, pozycja 1437). Reports must be submitted electronically via http://sprawozdawczosc.nbp.pl, which requires a special certificate issued free of charge by the NBP.

Poland does not prohibit remittance through a legal parallel market; including one utilizing convertible negotiable instruments (such as dollar-denominated Polish bonds in lieu of immediate payment in dollars). As a practical matter, however, such payment methods are rarely, if ever, used.

Expropriation and Compensation

Article 21 of the Polish Constitution states: "expropriation is admissible only for public purposes and upon equitable compensation." The Law on Land Management and Expropriation of Real Estate provides that property may be expropriated only in accordance with statutory provisions such as those concerning construction of public works, national security considerations or other specified cases of public interest. Full compensation at market value must be paid for the expropriated property. Building new major highways in Poland generally involves some expropriation of land.

Dispute Settlement

Some investment disputes have arisen in the last few years. Often they have involved state-owned enterprises, difficulties obtaining required permits, or government actions in sectors subject to heavy regulation.

Among the disputes:

-- Dutch insurer Eureko and the Polish government on October 2, 2009, settled a decade-long dispute over Eureko’s purchase of a controlling stake in Polish Insurance giant PZU. The end of the dispute opened the door for PZU’s privatization, which took place in 2010.

--Since 2003, a U.S. – Canadian joint venture investment group has been involved in a dispute for compensation related to the construction and operation of a grain handling import/export facility in Northern Poland. A Polish Arbitration Court declined to award damages to the U.S. – Canadian group. The investors filed a formal complaint to the European Commission and are in the process of filing a Notice of Arbitration under the Canada-Poland BIT and the U.S. – Poland BIT. The legal case is ongoing.

The sale of state-owned enterprises, the government's move towards full adoption of EU regulations and the passage of legislation more clearly defining the role of the state in economic activity have lead to a reduction in investment disputes.

Legal System

Like the "civil" French and German legal systems, the Polish legal system is code-based and prosecutorial. The judiciary acts independently. The Polish judicial system generally upholds the sanctity of contracts. Monetary judgments are usually made in local currency. Generally, foreign firms are wary of the slow and over-burdened Polish court system, preferring to rely on other means to defend their rights. Contracts involving foreign parties frequently include a clause specifying disputes will be resolved in a third-country court or through offshore arbitration.

The Bankruptcy Law of February 28, 2003 was amended in 2009. The amendments, eliminating defective or imprecise provisions and encouraging broader use of rehabilitation proceedings, entered into effect in May 2009. Declarations of bankruptcy may be filed either by a company’s creditors or its governing bodies (i.e., its Board of Directors or another body, depending on the corporate form of the debtor). Creditors of an insolvent company must file a claim in writing. The Creditors Preliminary Assembly has the right to decide, at the initial stage of the bankruptcy process, whether a work-out agreement is possible or whether assets of a bankrupt company should be liquidated. Liabilities are repaid in the following order: cost of legal proceedings; employee remuneration; liabilities to the State and Social Security Fund (ZUS) secured by a mortgage or pledge; other liabilities secured by mortgages or pledges; other taxes and other public liabilities; other liabilities. The Mortgage Banking Act of 1997 and the Law on Registered Pledges and Pledge Registry of 1997 (with later amendments) protect qualified mortgagors and secured creditors against subsequent tax liens and other secured and unsecured claims.

A new institution in Polish law, consumer bankruptcy, appeared in 2009. The Consumer Bankruptcy Act of December 2008 allows for debtors who have fallen into a state of insolvency through no fault of their own to exit the debt spiral. The new regulation benefits not only the general public, but also entrepreneurs who are the creditors of insolvent debtors. An individual’s ability to invoke this bankruptcy is limited to once every ten years.

Arbitration

A permanent arbitration tribunal to settle disputes arising from international commercial activities operates through the Polish Chamber of Commerce. There is a number of arbitration bodies associated with chambers representing various sectors of the economy, employers’ confederations or local chambers of commerce. It is also possible to appoint ad hoc conciliatory tribunals to settle a particular dispute.

Decisions by an arbitration body are not automatically enforceable in Poland. They must be confirmed by a Polish court. Under the Polish Civil Code, judgments of foreign courts are accepted and enforced by local courts. Poland is party to four international agreements on dispute resolution, with the Ministry of Finance acting as the government's representative:

1. The 1923 Geneva Protocol on Arbitration Clauses

2. The 1958 New York Convention on the Recognition and Enforcement of International Arbitration Awards

3. The 1961 Geneva European Convention on International Trade Arbitration

4. The 1972 Moscow Convention on Arbitration Resolution of Civil Law Disputes in Economic and Scientific Cooperation

Poland is not a member of the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

Performance Requirements/Incentives

Poland has not notified the WTO of any measures it maintains that are inconsistent with its obligations under the TRIMS Agreement.

Poland generally does not impose performance requirements for establishing or maintaining an investment. However, in previous privatizations of certain large companies the government and the purchasers negotiated terms that included performance requirements.

In April 2002, the Polish Parliament passed a law addressing financial support for investments. In line with this law a company investing in Poland, whether foreign or Polish, may receive assistance from the Polish government. In June 2005, the Council of Ministers adopted a document outlining the system of financial support for major investment projects of special importance to the Polish economy. These incentives are subject to relevant EU requirements and have on occasion been found non-compliant by EU authorities.

A number of incentives are potentially available to foreign investors in Poland:

- Income tax and real estate tax exemption in Special Economic Zones (SEZ);

- Investment grants of up to 50% (70% for small- or medium-sized enterprises) of investment costs;

- Grants for research and development;

- Grants for other activities, such as environmental protection, training, logistics or creating renewable energy sources;

- Potential partial forgiveness of commercial debt owed to a state-owned bank incurred for the acquisition of technology; and

- Varying incentives related to acquiring or developing new technology.

Regulations on special economic zones and on public assistance to entrepreneurs provide the basis for exemptions from income tax or other incentives. These were reviewed as Poland negotiated its entry into the EU and EU norms on the allowable level of public assistance to private companies apply. Since April 2005, shared services centers providing accounting, auditing, and bookkeeping services, as well as call centers, may be located in SEZs.

In 2007, changes to tax exemption limits were introduced as a result of changes in the classification of Polish regions for public aid purposes. According to the 2007-2013 map of regional aid, the maximum admissible amount of regional aid in Poland is:

Region	Maximum Admissible Amount
Warsaw	30%
Mazovia region	30%
Pomerania, West Pomerania, Upper and Lower Silesia, and Wielkopolska	40%
Other regions of Poland	50%

 

For small and medium size enterprises, the maximum aid amount can be increased by an additional 20% and 10% respectively. Also, there is a special formula applied for calculating the admissible amount of aid for investment projects where qualifying expenditures exceed EUR 50 million. New service centers may apply for public subsidies to the value of employment costs for two years.

Large investments considered crucial for the Polish economy may qualify for the Multi-Annual Support Program. This program usually combines different types of aid, e.g. employment grants, exemptions from corporate income tax in SEZs and the possibility of a preferential purchase price for land owned by the government. In 2010, the Ministry of Economy prepared a proposal for changes to the investors’ support system. The new program for granting support to strategic sectors/branches (car industry, electronics, civil aviation, bio-technology, modern business services, and R&D) in the years 2011-2020 awaits the government’s approval. The Ministry of Finance, looking for savings to slow the growing public finance deficit, has expressed some reservations about this program. It would like to reduce public assistance to foreign investors by withdrawing the possibility of combining EU subsidies with government grants. Financing of aid for investment projects under the new program is to begin in 2012.

The level of tax or other investment incentives is based on the relative prosperity of the region where the investment is made, the size of the investment, the number of jobs created, and the sector of the economy involved. Strategic investors may obtain an exemption from or reduction in real estate tax, as well as additional local incentives. All such exemptions must be negotiated with local authorities.

Offset Requirements

The Polish government imposes offset requirements on some defense-related contracts. Its stated policy objective is to ensure the participation of foreign suppliers in the restructuring and development of the Polish economy, in particular of the defense industry, of Polish exports, of technology transfer, of Polish universities and R&D centers, and of the knowledge economy.

Legislation adopted in 1999 and the Regulation of the Council of Ministers of May 18, 2007, governs the imposition of “compensation agreements” concluded in connection with contracts for deliveries from a foreign supplier of armament or military equipment. Agreements are obligatory when the value of contracts for the delivery of armaments or military equipment exceed an equivalent of EUR 5 million with respect to one foreign supplier within three subsequent years. The Ministry of Economy is planning amendments to the offset regulations in order to make them compliant with the Code of Conduct on offsets and EU Directives 2009/81/WE, 2004/17/WE and 2004/18/WE. Further information can be found in English on the Ministry of Economy’s website at the following URL: http://www.mg.gov.pl/English/ECONOMY/Offset+Programmes/Basic+information/

Foreign Participation in Government Financed Research

Foreign companies have not participated in government-funded research and development projects managed by the Committee for Scientific Research. Nonetheless, there is no proscription against such participation with the exception of biotechnology. At present, there are over 100 R&D institutions backed by a majority of foreign capital (including American). Of these, 56 belong to foreign investors and are carrying out research across various sectors of the economy. According to current law, private companies cannot conduct research with public institutions in the field of agricultural biotechnology.

Visa and Work Permit Requirements

Foreign investors can and do bring personnel to Poland. Shortages of labor in some sectors of the Polish economy intensify inflows of foreign workers to Poland.

All EU citizens, including workers from newly admitted Romania and Bulgaria, are free to work in Poland without first obtaining a work permit. In addition, Poland has opened its labor market to workers from member countries of the European Free Trade Area (EFTA).

On February 1, 2009, amended regulations on employment of foreigners entered into force. They simplify the procedure and reduce the amount of required documents. This pilot system received a positive assessment in 2010 and will remain in force until the situation in the labor market and the needs of the economy require further amendments.

Citizens from Ukraine, Belarus, Georgia, Moldova and Russia, and countries with which Poland cooperates with regard to work migration can undertake temporary work (up to six months per year) without a permit; however a written statement by the employer of his intention to employ the foreigner is required. Foreigners must have a visa allowing them to take up employment in Poland.

U.S. citizens continue to be subject to Poland's work and residency permit regulations, unless they have otherwise established permanent residency in Poland or elsewhere in the EU. Poland's visa and work permit regulations offer the possibility for non-EU/EFTA citizens to live and work in Poland under certain conditions. However, in practice, foreign firms and persons have experienced difficulty in obtaining both visas and work permits. Poland requires an applicant to receive his or her visa in his or her home country, rather than in Poland or in neighboring countries. This procedure is often burdensome. Work permits are issued by local authorities, which vary greatly in the speed and willingness with which they issue permits.

As of January 1, 2010, processing of applications for work permits for non-EU/EFTA citizens was transferred from provincial employment offices to provincial voivodship offices (the same offices that are responsible for issuance of residency permits). This is a result of the Polish government’s declared effort to simplify the procedures for foreigners who want to work and establish residence in Poland, and to contain these procedures within one branch of the government. A work permit is issued for a maximum of three years; for up to five years when a foreigner acts as a board member of a legal entity. Conditions for issuance of work permits and simplified procedures associated with it are included in the Regulation of the Minister of Labor and Social Policies dated 29 January 2009 (Journal of Laws No.16 item 84)

Discriminatory or Preferential Export/Import Policies

The government supports exporters through export credit guarantees from a state-owned insurance entity (KUKE). KUKE provides credit guarantees for all firms registered in Poland (including foreign firms and firms with foreign capital). State-owned Bank Gospodarstwa Krajowego (BGK), on the basis of an agreement signed in 2002 with the Ministry of Finance on subsidies of interest and export credits, makes it easier for exporters to obtain cheaper credit to finance exports.

Right to Private Ownership and Establishment

Domestic and foreign private entities have a general right to freely establish, acquire or dispose of a business, and to engage in almost all forms of lawful economic activities. Participation of foreigners is restricted in the broadcasting and air transportation sectors, while foreign ownership of other than a small amount of real estate property requires a government permit.

The Civil Code, as amended, regulates property rights among individuals or legal entities. Civil Code regulations are based on the principles of equality of all parties regardless of their ownership status, equivalency of obligations, discretion, protection of private ownership, and freedom of contracts.

Protection of Property Rights

Poland has a non-discriminatory legal system accessible to foreign investors that protects and facilitates acquisition and disposition of all property rights, including land, buildings and mortgages. Many investors - foreign and domestic - complain that the judicial system is extremely slow. Foreign investors often voice concern about frequent or unexpected changes in laws and regulations. The Polish government continues to work on Civil Code amendments.

Regarding physical property, the 1997 Mortgage Banking Act provided that a recorded mortgage by a licensed mortgage bank takes priority over subsequent tax liens and other secured and unsecured claims. Outstanding residential mortgage debt grew rapidly from 2005 to 2008. In comparison to most Western countries, the mortgage market in Poland is still relatively small at around 20% of GDP.

Intellectual Property

Poland ratified the WIPO Performance and Phonograms Treaty on October 21, 2003, and the WIPO Copyright Treaty on March 23, 2004. Piracy of intellectual property still remains a problem in Poland. To comply with its obligations to the EU and under the WTO TRIPS Agreement, in 2000 Poland adopted comprehensive legislation governing intellectual property rights. Upon EU accession, the Minister of Culture issued a regulation mandating creation of a register of information concerning optical disk production and identification codes. In May 2007, the Parliament updated regulations governing patents, trademarks, and other industrial property. After these changes, the length of protection afforded to proprietary research test data submitted by pharmaceutical companies now matches EU standards. In May 2007, the parliament closed a loophole that had blocked prosecution of downstream sellers of pirated goods. The Ministry of Culture heads the Team for Counteracting Infringements of Copyright and Related Rights that produces an annual strategy for improving respect for intellectual property rights in Poland. Within the framework of the above group, a team to combat counterfeit medicines has also been formed.

Due to the improving protection of IP, Poland was removed from the USTR Special 301 Watch List in April 2010. Nevertheless, internet piracy remains a problem. Other challenges are a lack of competition among entities responsible for collecting and distributing royalties for use of intellectual property.

Transparency of Regulatory System

Regulatory unpredictability and high levels of administrative red tape are recurring complaints of investors. Foreign and domestic investors must comply with a variety of laws concerning taxation, labor practices, health and safety, and the environment. Complaints about these laws, especially the tax system, center on the lack of clarity and often-draconian penalties for minor errors. Under the Law on Freedom of Economic Activity, inspections are fewer and shorter. Establishment of the Central Anti-Corruption Office (CBA) in 2006 increased the number of institutions authorized to perform inspections in companies. However, the CBA is entitled to perform inspections of companies only in cases where the Treasury's interest is linked with a business interest (e.g. cases where a government official carries out economic activity, or government officials make decisions in such areas as privatization, public tenders, licensing, exemptions, quotas, or guarantees favoring certain firms or persons).

The government is working on a complex reform package aimed at streamlining bureaucratic hurdles, such as procuring the licenses and permits required to open a business. Although similar reform efforts in the past have failed to win parliamentary approval, the Tusk government managed to adopted amendments to a number of business related regulations in such areas as foreign exchange, taxes, public procurement and consumer bankruptcy, creating a friendlier environment for entrepreneurs. .

Revisions to the corporate tax code, which started in 1999, improved transparency and lowered rates. Since 2004, the corporate income tax (CIT) rate has been 19%. Amendments to the Act on Corporate Tax passed since 2006 include changes to definitions of a small tax payer and a foreign company and extend the catalogue of tax deductible costs. Amendments to the PIT and CIT Laws came into force in May 2009. These changes increase the income limit of a small tax payer to EUR 1.2 million ($1.6 million) from EUR 800,000 (around one million dollars) previously; unify PIT and CIT regulations with VAT regulations; and comply with the limit applied in the Law on Accountancy. The definition of a foreign company was modified using the OECD model. The list of tax deductible costs was expanded to include, for example, the costs of canceled (discontinued) investments.

The GoP raised VAT rates in July 2010 as part of a package of measures to reduce Poland's budget deficit. As of January 2011, the standard VAT rate is 23%, 1% higher than 2010. There are reduced rates of 8% and 5% on certain food, books, newspapers and the supply of a limited number of services. The Ministry of Finance indicated plans to continue VAT increases by annual 1% increments until it reaches 25%, the EU limit, by 2013.

Proposed laws and regulations are published in draft form for public comment, but in practice the period allotted for public consultations tends to be limited. Starting February 2011, Polish citizens will be able to view the legislative process taking place within the PM’s Chancellery on the government’s webpage. Citizens will be able to see who authored a given bill and how work on it is progressing. From July 1, 2011, the proposed webpage will show records of directives issued by the head of each ministry.

Pharmaceuticals

Global innovative pharmaceuticals companies consistently report that the process by which the Ministry of Health adds new products to the government’s drug reimbursement list remains non-transparent and slow. Meaningful access to the Polish pharmaceuticals market often hinges on whether a drug appears on the reimbursement list, since doctors most often prescribe drugs from the list. Purchases from it are subsidized by the Polish National Health Fund, making them more affordable for patients.

In 2008, the Ministry of Health adopted a practice of requesting recommendations on reimbursement applications from the Health Technology Assessment Agency. Pharmaceuticals companies contend that this has decreased transparency further and increased the delay in acting on reimbursement applications. Inability to add new products to the reimbursement list has seriously undermined U.S. and international innovative drug producers’ market position in favor of the Polish generics industry.

Furthermore, the Polish government has also taken other steps that according to the U.S. innovative pharmaceutical industry have had disproportionate impact on foreign companies. First, in July 2006, the Polish government instituted a 13% across-the-board price cut on all imported pharmaceutical products. In response to complaints that this measure was discriminatory, in November 2007 the Polish government cut the prices paid to domestic producers to reflect a 13% reduction in the value of imported inputs.

Standards-setting Organizations

Government agencies set industry standards. These agencies are not required to consult with domestic or foreign firms when establishing standards, but usually do so. Domestic firms tend to have more influence than foreign firms in the consultation process.

Efficient Capital Markets and Portfolio Investment

Capital Markets

Poland has healthy equity markets that facilitate the free flow of financial resources. Banks can and do lend to foreign and domestic companies. Companies can and do borrow abroad and issue commercial paper.

Equity markets include the Warsaw Stock Exchange (WSE), the "New Connect" trading platform, the Central Table of Offers ("CeTO"), an over-the-counter market, and the Electronic Treasury Securities Market, which operates on a basis similar to the NASDAQ. Since the opening of the WSE in 1991, the number of listed joint stock companies has increased from five to 400 and capitalization has grown from $142 million in 1991 to over $180 billion in 2010. On September 30, 2009, the WSE launched CATALYST, the first organized market in debt securities in Central and Eastern Europe. The system facilitates and optimizes corporate and municipal bonds issuance.

In July 2010, Warsaw signed a contract to use the NYSE Euronext trading platform, making it easier for American investors to trade shares from Poland and other countries in the region that are listed on the exchange. The agreement is part of the WSE president’s plan to make Warsaw the dominant exchange for Central Europe, with listings from countries like Romania, Ukraine and the Balkans.

In January 2011, Poland’s Stock Exchange extended its daily trading sessions (0800GMT-1730GMT)and changed the calculation of trading statistical data (calculation will be based on the value of transactions, not on the sum of sales and purchases as it has been so far) in an effort to attract more foreign investors.

The regulatory framework for operations on the capital markets is contained in the 1997 Law on Public Trading and Securities, as amended. Since September 19, 2006, the Financial Supervision Commission has performed the regulatory tasks formerly performed by the Securities and Exchange Commission. In 2009, Polish regulations were adjusted to the provisions of the Transparency Directive, making the market more favorable for foreign investors and foreign public companies. Increasing attention is applied to market communication, protection of minority investors, counteracting fraud and insider trading.

The May 27, 2004 Act on Investment Funds allows for open-end, closed-end, mixed investment funds, and the development of securitization instruments in Poland. In general, no special restrictions apply to foreign investors purchasing Polish securities. . . Investment funds, the segment of Poland’s capital markets which suffered the most during the global crisis, began recovery in 2009 and continued in2010.

Venture capital activity is conducted by investment funds, consulting companies, investment banks, special funds belonging to financial corporations, companies in the IT sector, and individuals. Many participants in this area are foreign companies or companies with a foreign shareholder that have funds and experience in this type of activity on the domestic market. Many companies established by venture capital funds operate in the IT and media sectors. In recent years the biggest increase in such investment was in the consumer goods sector, services and healthcare. The financial crisis has created some fundraising difficulties, in particular for venture capital funds focusing on high risk start ups and technology intensive companies. In spite of such difficulties, after a slow 2008 and 2009, in 2010 the private equity industry is expected to have had a record year for investments. However, this result is due a few very large deals rather than a wider revival in the sector.

Credit Allocation

Credit allocation is on market terms. The government however, maintains some programs offering below-market rate loans to certain domestic groups, such as farmers and homeowners. Foreign investors and domestic investors have equal access to the Polish financial markets. Private Polish investment is financed from retained earnings and credits, while foreign investment is mainly direct investment, using funds obtained outside of Poland. Polish firms raise capital both in Poland and in other countries.

Legal, Regulatory, and Accounting Systems

Polish accounting standards do not differ significantly from international standards. In cases where there is no national accounting standard, the appropriate International Accounting Standards may be applied. As of January 1, 2008 all banks are obliged to follow the principles of the New Capital Agreement Basel II. These regulations increase sensitivity to risk and should lead to improved performance in the banking sector. Poland is in the process of harmonizing legal, regulatory, and accounting systems with those in the EU. In August 2010 Poland’s Financial Supervision Authority (KNF), introduced stricter requirements on sales of foreign currency loans and is planning further limits on foreign currency lending. The major international accounting firms provide services in Poland and are familiar with U.S., EU and Polish accounting standards.

Portfolio Investment

The Polish regulatory system fosters and supervises the portfolio investment market. Both foreign and domestic investors may place funds in demand and time deposits, stocks, bonds, futures and derivatives. The stock and Treasury bill markets are fairly liquid, but many other investments, such as Treasury bonds, are not.

The Polish Securities and Exchange Commission had a reputation as a strong regulator of the stock market. In September 2006, a Financial Supervision Commission was established, which assumed the duties of the Polish Securities and Exchange Commission. Since assuming those duties, the Financial Supervision Commission has maintained the reputation established by the Polish Securities and Exchange Commission.

Banking System

The banking sector remains sound with major banks well capitalized. Supervision and risk management have proven efficient in containing excessive risk taking. At the end of September 2010, the banking sector was made up of 646 entities, the majority of which were small cooperative banks (576). Commercial banks dominate the sector with around 90% of total banking sector assets at the end of September 2010. Among commercial banks, four, including the largest bank by assets, PKO BP, were directly or indirectly owned by the state at the end of 2009. Foreign owned banks accounted for 68% of the Polish banking system’s assets in 2009. Market concentration is diminishing slowly, with the percent of assets held by the top five banks falling to 44.5% in 2010 from 46.4% in 2007.

The Polish banking system is considered one of the best regulated and supervised in Central and Eastern Europe and weathered the global financial crisis of 2008/2009 better than many in the region. The KNF reported that Polish banks recorded a sector profit of nearly $2.9 billion (PLN 8.6 billion) in January-September 2010, 26% higher than 2009. Lower deposit costs as well as lower write offs for credit risk helped improve bank performance in 2010. . At the end of September 2010, the banking sector had total estimated assets of over $380 billion; more than a 9% increase compared with September 2009.

In 2009-2010, large international players such as Goldman Sachs, Morgan Stanley and Credit Suisse opened local offices in Poland, mainly to take advantage of the acceleration in the privatization process and to service the small but increasing number of high-net worth individuals.

The share of foreign players in the banking sector has increased as the banking sector consolidates further. The merger of HVB (Germany) with UniCredit (Italy) has led to the merger of their Polish subsidiaries, Bank Pekao and BPH, creating one of the largest banks in Poland. Pressure from the government forced Pekao to divest itself of some 200 BHP branches. GE Money bought the remaining part in 2008. Mergers continue in the cooperative banks sector and among smaller commercial banks but are offset by the entry of new foreign and domestic players into the banking sector.

After falling in 2003-2008 the proportion of bad loans is now rising as households and enterprises feel the strain of economic downturn. At the end of September 2010, 12.3% of commercial bank claims on corporations (7.2% of household loans) were classed as non-performing, up from 9.6% (5.4% of household loans) at the end of September 2009.

Cross-shareholding

Cross-shareholding arrangements are rare and play a minor role in the Polish economy.

Hostile Takeovers

Neither the government nor private firms have taken measures to prevent hostile takeovers by foreign or domestic firms. Hostile takeover attempts are still rare.

Competition from State Owned Enterprises

State-owned entities (SOEs) still dominate some sectors, most notably heavy industry (coal, chemicals) and utilities. The same standards are generally applied to both private and public companies with respect to access to markets, credit and other business operations such as licenses and supplies. Officials at various levels of government occasionally exercise their discretionary authority to assist state-owned enterprises. For example, tax authorities have not pressed some large, troubled state-owned enterprises to pay taxes to avoid forcing those enterprises into bankruptcy. Nevertheless, in line with EU standards governing competition, the commercial code that took effect in 2001 established a more level playing field.

In general SOEs aspire to pay their own way, financing their operations and funding further expansion through profits generated from their own operations. SOEs are governed by a board of directors and most pay an annual dividend to the government. SOEs prepare and disclose annual reports.

Since EU accession, government activity favoring state-owned firms has received careful scrutiny from Brussels.

Corporate Social Responsibility (CSR)

CSR is a relatively new idea in Poland. Many Polish companies, particularly small and medium enterprises, lack the knowledge and experience to effectively implement generally accepted CSR practices, such as the OECD Guidelines for Multinational Enterprises. There is no specific legislation to promote CSR good practices among Polish companies; however, the Ministry of Economy has been tasked to support the implementation of CSR programs in Poland.

Multinational firms are leading the development of CSR in Poland. Most foreign invested companies have a CSR program in line with international standards. Additionally, the American Chamber of Commerce in Poland has a CSR committee to encourage implementation of responsible business practices and to support the development of quality CSR programs among member firms.

Political Violence

Poland is a politically stable country. Constitutional transfers of power are orderly. The next parliamentary elections will take place in October 2011.

There have been no confirmed incidents of politically motivated violence toward foreign investment projects in recent years. Poland has neither belligerent neighbors nor insurgent groups. The Overseas Private Investment Corporation (OPIC) provides political risk insurance for Poland but is not frequently used as competitive private sector financing and insurance is readily available.

Corruption

Poland has laws, regulations and penalties aimed at combating corruption. Although corruption remains a recognized and continuing problem, its scale and impact on economic growth and development has considerably diminished since the beginning of the 1989 transformation from Communism. In 2010, Transparency International ranked Poland 41st among 178 countries (with 1st place being least corrupt and 178th most corrupt) with a score of 5.3. In 2009, Poland was ranked 49th with a score of 5.0 (58th in 2008) among 178 countries.

The Central Corruption Office (CBA) was established by the Polish parliament in 2006. It answers directly to the office of the Prime Minister and is the primary law enforcement agency responsible for investigating public corruption. It coordinates anticorruption activities with other public institutions, such as the police and the internal security services (particularly the Polish Internal Security Agency (ABW)). The Justice Ministry and the police are responsible for enforcing Poland’s anti-corruption criminal laws. The Finance Ministry administers tax collection and is responsible for denying the tax deductibility of bribes. .

Reports of alleged corruption most frequently appear in connection with government contracting and the issuance of a regulation or permit that benefits a particular company. Allegations of corruption by customs and border guard officials, tax authorities, and local government officials show a decreasing trend. If such corruption is proven, it is usually punished. Overall, U.S. firms have found that maintaining policies of full compliance with the U.S. Foreign Corrupt Practices Act is effective in building a reputation for good corporate governance and that doing so is not an impediment to profitable operations in Poland.

One of the chief tools in preventing corruption is a transparent system of government procurement by open tender at all levels of government. A 1997 law restricts economic activity for those holding public positions. This law prevents a public official from engaging in business activities where he or she would have a conflict of interest while he or she is an official and for one year thereafter. The law applies to parliamentarians, government officials, and local officials. On July 1, 2003, new penal code regulations combating corruption came into force. These amendments include: no punishment for those from whom bribes are extracted when they inform police about this fact, a broader definition of a public official, and seizure of assets if an accused person does not prove they derive from a legal source.

Bribery and abuse of public office are crimes under the Polish Criminal Code. Penalties include imprisonment from six months to 12 years, and forfeiture of items derived from an offense.

Poland ratified the OECD Convention on Combating Bribery in 2000. Implementing legislation, effective February 3, 2001, classifies the payment of a bribe to a foreign official as a criminal offense, the same as if it were a bribe to a Polish official.

Post is unaware of any case in which a foreign investor or major government official has been found guilty of corruption.

Several NGOs, including a Polish chapter of Transparency International as well as several business groups, including the American Chamber of Commerce have launched campaigns to increase public awareness. http://www.transparency.org

Bilateral Investment Agreements

As of March 2008, Poland had ratified 60 bilateral investment agreements: Albania (1993); Argentina (1992); Australia (1992); Austria (1989); Azerbaijan (1999); Bangladesh (1999); Belgium and Luxembourg (1991); Belarus (1993); Bulgaria (1995); Canada (1990); Chile (2000); China (1989); Croatia (1995); Cyprus (1993); the Czech Republic (1994); Denmark (1990); Egypt (1998); Estonia (1993); Finland (1998); France (1990); Germany (1990); Greece (1995); Hungary (1995); India (1997); Indonesia (1993); Iran (2001; although they support international sanctions regimes); Israel (1992); Italy (1993); Jordan; Kazakhstan (1995); Kuwait (1993); Latvia (1993); Lithuania (1993); Macedonia (1997); Malaysia (1994); Moldova (1995); Mongolia (1996); Morocco (1995); the Netherlands (1994); Norway (1990); Portugal (1993); Romania (1995); Serbia and Montenegro (1997); Singapore (1993); Slovenia (2000); Slovakia (1996); South Korea (1990); Spain (1993); Sweden (1990); Switzerland (1990); Thailand (1993); Tunisia (1993); Turkey (1994); Ukraine (1993); United Arab Emirates (1994); the United Kingdom (1988); the United States (1994); Uruguay (1994); Uzbekistan (1995); Vietnam (1994).

The United States and Poland signed a Treaty Concerning Business and Economic Relations in 1990; it entered into force in 1994 for an initial period of ten years. The Treaty grants U.S. investors domestic privileges and provides for international arbitration in the case of investment disputes. In 1974, the United States and Poland signed a double taxation treaty. Prior to accession to the EU Poland reviewed its agreements with third countries for their compatibility with EU law. In June 2004, Poland completed the necessary amendments to bring the bilateral U.S. - Poland economic treaty into compliance with EU regulations. Ratification of the amended bilateral treaty on business and economic relations took place in October 2004. The U.S. - Poland “Totalization Agreement” signed on April 2, 2008, became effective in April 2009. The Agreement stops dual taxation, opens the door for payments to suspended beneficiaries (i.e., Polish widows) and allows transfer of benefit eligibility.

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) provides political risk insurance for U.S. companies investing in Poland against political violence, expropriation, and inconvertibility of local currency. OPIC offers medium- and long-term financing in Poland through its direct loan and guarantee programs. Direct loans are reserved for U.S. businesses or cooperatives. Loan guarantees are issued to U.S. lending institutions.

The World Bank's Multilateral Investment Guarantee Agency also provides investment insurance similar to OPIC's for investments in Poland.

Poland maintains full convertibility of the zloty, apart from a few restrictions on short-term capital movements. Foreign currency is freely available from the banking system. At the height of the global financial crisis, short-term foreign currency lending, particularly interbank-lending, slowed following tightening by parent institutions (Poland’s banking sector is dominated by subsidiaries of large European banks). However, the government and Central Bank took some measures (similar to other major economy responses) to provide short-term liquidity and the problem has since eased. Since March 2000, Poland has maintained a freely floating exchange rate regime. As a requirement of EU membership, Poland must enter the European Exchange Rate Mechanism (ERM2). In 2008, the Polish government set an aggressive timetable for Euro convergence, but the recent global financial crisis pushed that target back somewhat. Most observers believe Poland will eventually meet the Maastricht requirements necessary for Euro-adoption but few expect this to happen before 2015.

Labor

Poland has a well-educated, skilled labor force. Productivity remains below western standards but is rising rapidly, and unit costs are competitive. At the end of 2010, the average gross wage in Poland was around $1300 per month. In 2010 wages in the enterprise sector increased by 3.3% compared with 4.4 % in the whole 2009 and 10.3% in 2008.

Poland's economy employed around 16 million people at the end of 2010, with unemployment at 9.8% in November 2010 (as measured according to standard EU and International Labor Organization (ILO) methodology.) Unemployment varied substantially from one region to another. At the end of 2010, the lowest levels of unemployment were in major urban areas.

In 2010, the labor market in Poland began to show signs of recovery. This was driven by employment growth amid contained wage pressure.

Polish workers are usually eager to work for foreign companies and have taken advantage of opportunities for employment in Great Britain, Ireland, Belgium and Holland. Since Poland joined the EU, over one million Poles have sought work in Western Europe and an estimated 2.2 million live abroad. This trend slowed in late 2008 as employment opportunities in Western Europe worsened.

Polish companies suffer from shortages of qualified workers. Among the most sought after specialists are engineers, IT specialists, salespersons, human resources experts, and technical advisors. Manufacturing companies are looking for welders, bricklayers, machinery and forklift operators. Shortages of workers in Poland are likely to worsen when Germany and Austria open their labor markets to Polish labor in May 2011.

Overall, employment in the public sector continues to shrink as the private sector grows. Employment has expanded in service industries such as information technology, manufacturing (driven by demand for Polish exports), and administrative and support service activities (driven by the increasing scale of outsourcing as a means of cost reduction). The state-owned sector still employs about a quarter of the work force, although employment in fields such as coal mining, steel, and energy is declining.

The influence of trade unions is gradually declining, though they remain powerful in the coal-mining industry and shipyards.

In 2009 Parliament passed, the Act to Ease the Effects of the Economic Crisis on Workers and Companies. This introduced more flexibility in working hours and will remain in force until the end of 2011.

Most aspects of employee-employer relations are governed by the 1996 Labor Code. This outlines employee and employer rights in all sectors, both public and private, and has been gradually revised in order to adapt to EU standards. The Polish government also adheres to the ILO Convention protecting worker rights.

Foreign Trade Zones/ Free Ports

Foreign-owned firms have the same investment opportunities as Polish firms to benefit from foreign trade zones (FTZs), free ports, and special economic zones. The operation of FTZs in Poland is regulated by the 2004 Customs Law. Duty free zones can be established by the Minister of Finance, in cooperation with the Minister of Economy. They are managed by authorities designated by the Ministers - typically provincial governors who issue the operating permit for a given zone.

Most activity in FTZs involves storage, packaging and repackaging. In 2009, there were seven FTZs: Gliwice, near Poland’s southern border; Terespol, near Poland’s eastern border; Mszczonow, near Warsaw; Warsaw’s Frederic Chopin International Airport (duty-free retail trade within the airport); Szczecin; Swinoujscie; and Gdansk. Duty-free shops are available only for travelers departing to non-EU countries.

There are also eight bonded warehouses: Gdynia (sea port); Krakow-Balice (airport); Wroclaw-Strachowice (airport); Katowice-Pyrzowice (airport); Gdansk-Trojmiasto(airport); Lodz(airport); Braniewo (near Olsztyn); and Poznan (airport).

Bonded warehouses and customs and storage facilities are operated pursuant to permission issued by the customs authorities, and can be operated by commercial companies. Bonded warehouses can be open to the general public, while a private warehouse is reserved for warehousing of goods by the warehouse keeper. The authorization to operate such a customs warehouse can be issued only to persons established in the EU.

When products are re-exported, customs duties are either partially or fully reimbursed to the importer (depending on how long the goods were in Poland). Reimbursement is made within 12 months of the date of customs clearance.

Foreign Direct Investment (FDI) Statistics

Poland is a net capital importer, ranked the 12^th top host economy for FDI in 2010-2012 by transnational corporations surveyed by the UN Conference on Trade and Development (UNCTAD). According to the National Bank of Poland’s (NBP) preliminary data, inbound FDI in 2009 amounted to $13.7 billion (3.2% of GDP) a sharp decline compared to the record $23.7 billion in 2007 (5.6% of GDP). Inbound FDI in 2010 is projected to reach $13 billion. At the end of 2009, according to the UNCTAD’s World Investment Report 2009, Poland's cumulative inbound FDI totaled $182.8 billion, equivalent to around 40% of GDP. Since 1998, inbound FDI has been most stable in the manufacturing sector. However, its share has diminished in favor of highly specialized services and R&D sectors.

Compared to the quantity of foreign capital invested in Poland, Poland’s overseas investments are small. According to preliminary data from the National Bank of Poland, in 2009 Polish firms invested $5.2 billion (PLN 14.8 billion) abroad versus $4.49 billion (PLN 12.8 billion) in 2008 (after revision). In the first quarter of 2010, Polish companies invested abroad around $1.54 billion (PLN 4.4 billion.) Cumulative outbound Polish FDI through 2009 amounted to $26.2 billion (PLN 74.4 billion) or around 6.0% of GDP. In December 2006, PKN Orlen acquired the Mazeikiu refinery in Lithuania for $2 billion (PLN 5.7 billion). This remains the most significant Polish foreign investment to date. Other leading destinations for Polish investment are Luxembourg, Belgium, Switzerland, Norway, Germany and Lithuania. The majority of Poland’s foreign investments are connected with the services sector.

According to NBP data, U.S. firms accounted for over $13 billion of the cumulative total of $182.8 billion FDI as of the end of 2009. Many investments by U.S. firms are attributed the third countries in the NBP's reporting (e.g. Belgium, Luxembourg, and the Netherlands) when the actual investment funds are transferred from a U.S. company's subsidiary based in that third country rather than from the United States. According to those imperfect official statistics, the U.S. is one of the top ten largest investors in Poland in terms of the volume of capital invested. The majority of investors come from the EU-25 with Germany often in the lead.

FDI by Country of Origin

Year	2009		2008
Country	USD millions	PLN millions	USD millions	PLN millions
Germany	2,951.3	9,286.7	2,364.0	5,669.0
France	1,946.5	5,896.4	828.0	1,996.0
Luxembourg	1,769.6	5,347.0	1,956.0	4,717.0
USA*	1,359.6	4,146.3	531.0	1,281.0
Sweden	1,315.4	4,051.1	1,622.0	3,911.0
Netherlands	672.9	2,037.8	2,343.0	5,650.0
Austria	671.3	2,120.0	664.0	1,602.0
Italy	664.7	1,907.5	428.7	1,014.7
Spain	553.8	1,677.0	445.0	1,074.0
Ireland	317.3	954.1	288.2	725.0
Great Britain	177.4	695.5	464.0	1,119.0
Total FDI (not cumulative)	13,698.1	42,562.4	14,728.0**	34,951.3**

Source: National Bank of Poland (report from November 2010)

*Excluding investments attributed to third country subsidiaries

**Data after NBP’s revision for year 2008. In last report it was $14,559.0 and PLN 35,101.0 respectively.

According to preliminary NBP data, inflow of foreign investment into Poland in January – June 2010 reached almost $4 billion and was 75% higher than in the corresponding period of 2009.

FDI by Sector

Year	2009		2008
Sector	USD millions	PLN millions	USD millions	PLN millions
Total Services	6,438.8	20,672.1	9,819.4	23,314.7
Manufacturing	4,749.6	14,272.2	2,106.8	4,946.9
Real Estate & Business Activities (Real estate, Computer activities and Research and development)	2,799.8	8,948.5	3,826.0	9,195.1
Financial Intermediation	2,243.8	7,013.7	4,466.7	10,544.8
Trade and Repairs	1,232.9	4,241.0	2,193.8	5,148.9
Electricity, Gas and Water	1,197.8	3,690.0	1,535.9	3,691.1
Construction	590.4	1,776.5	415.0	956.1
Not allocated	534.2	1,560.7	14.8	36.7
Transports, Communication	226.8	661.6	-756.5	-1,732.6
Hotel and Restaurants	40.6	118.6	-31.1	-91.2
Agriculture and Fishing	38.5	112.4	151.6	348.5
Total FDI (not cumulative)	13,698.1	42,562.4	14,728.0	34,951.3

Source: National Bank of Poland (report from November 2010)