In September 2009, the government of Poland announced a targeted tax change.



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Official letter from the EC to Poland, Brussels 18.9.2009:

Inception date: 18 Sep 2009 | Removal date: open ended

Tax or social insurance relief

On 18 September 2009, the European Commission allowed Polish authorities to grant operating aid for biofuels. The aid scheme is an amendment to the initial aid for biofuels No 580/2005 for the years 2007-2011 and includes changes in the rebates in excise tax, as well as the introduction of corporate income tax and fuel charge exemptions.
The biofuels concerned have to be used as pure fuels or blended with fossil fuels, given the standard petrol and diesel blends hold at least 2% of biofuels. Furthermore, the biofuels may be bioethanol or bioethanol derivatives, as well as esters.
One of the amendments involves a new excise duty rebate. In the initial framework, biofuels blended with petrol received an excise duty rebate of PLN 1500 (EUR 357.38) and those blended with diesel obtained a rebate of PLN 1000 (EUR 238.25) for each 1000 litre of biofuel. With the new regulations, the rebates are PLN 1565 and PLN 1048 respectively, meaning that biofuels added to fossil fuels are fully exempted from excise duty. Nonetheless, "the minimum excise rate of the final product is 10 PLN per 1000 litre".
Furthermore, "the new reduced rate for biofuels used as pure fuels is 10 PLN per 1000 litre". (para. 19, letter from the EC to Poland, Brussels 18.9.2009)
Another rebate to support biofuels was granted through corporate income tax exemptions. Polish authorities allowed "producers of biofuels to deduct from their income tax an amount not greater than 19% of the difference between the value of the biofuels produced and the value of the liquid, fossil fuels produced with the same calorific value, calculated according to the average prices" (para. 23).
The third instrument introduced was an exemption of the fuel charge for biofuels used as pure fuels. The fuel charge is usually paid in Poland for bringing motor fuels and gas on the market.
In addition, the Polish government introduced regulations forcing "companies producing or importing fuels and supplying these fuels in Poland '...' to supply a share of biofuels in the total amount of fuels placed on the market in the given calendar year" (para. 26). These shares were planned to be 4.6% in 2009, 5.75% in 2010 and 6.2% in 2011. Companies not complying with the new regulations were subject to a fine depending on the value of their supplied fuels to the market or used by themselves.
The total aid between 2007 and 2011 is projected to amount to EUR 2433.2 million (PLN 10'212.79 million).
The Commission pointed out that "all three measures (rebates in excise tax, in fuel charge and in company income tax) are granted from State resources as they will directly reduce the tax resources otherwise paid to the Government. All three measures are destined to alleviate the costs in a specific sector, namely that of the production of biofuels. By partly alleviating the tax debtors from the cost they normally would have to bear, the measure favours certain undertakings and the production of certain goods. Since biofuels serve as a substitute for fossil diesel and petrol, this advantage may distort competition in the internal market in the EU. The measure is also likely to affect trade between Member States in this sector." (para. 35, letter from the EC to Poland, Brussels 18.9.2009)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.