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    Memorandum of ZPP on the plans to build a nuclear power plant in Poland

    Posted on by Weronika Marzec

    Warsaw, 19 September 2022 

     

    Memorandum of ZPP on the plans to build a nuclear power plant in Poland

     

    Familiarise yourself with the memorandum of the ZPP on the development of the Polish nuclear power industry. Get to know:

    • the opinion of Polish people on the construction of a nuclear power plant,
    • the latest plans of the government in that matter,
    • whether it is only the administration that has an idea for nuclear energy,
    • whether our neighbours are building nuclear power plants or they are closing them down,
    • when and how much electricity will the plant generate,
    • whether the plant means expenditure or is it independence and benefits?

    An investor for the first large-capacity nuclear power plant in Poland is to be selected in the coming weeks. Projects involving the creation of smaller modular units are also being developed. The social perception of the nuclear power plant, in Poland and abroad, is improving. The neighboring countries also make significant use of nuclear sources of energy. In the opinion of the Union of Entrepreneurs and Employers, despite the great costs and relatively long investment process Poland will need nuclear sources of energy in the future.

    The support for nuclear power in Poland is steadily increasing. Based on the CBOS study conducted in 2006, the percentage of people against nuclear energy was as high as 56%. [1] Over more than 15 years, the sentiment has changed and, according to the Ministry of Climate and Environment, public support for the construction of a nuclear power plant in Poland was 62.5% in November 2020. [2] Moreover, already during the ongoing energy crisis and military actions in Ukraine, according to a study published on 3 August this year (source: ARC Market and Opinion), as many as 64% of the respondents were in favour of speeding up works related to the construction of large nuclear power plants. [3]

    12 August 1971 can be considered as the beginning of nuclear energy in Poland, as on that day, the government decided to build a power plant. More than half a century later, in December 2021,  the company Polskie Elektrownie Jądrowe indicated the seaside municipality of Choczewo as the site for the construction of the first Polish nuclear power plant.  The construction works are planned to start in 2026, and the first unit of the power plant, with a capacity of approximately 1-1.6 GW, is to be commissioned after six years. The remaining six units, with a total installed capacity of approximately 9 GW, are expected to be commissioned every two or three years. [4]

    Since 1971, a lot has changed in the field of safety and efficiency of nuclear units. There are also new technical concepts for scaling up a nuclear installation. Parallel to the government’s project to build a high-capacity nuclear power plant, the largest Polish companies are interested in launching the so-called Small Modular Reactors,  as they are considered to be more ”efficient”, both in terms of investment implementation period and management of such reactors. The capacity of modular nuclear reactors, that consist of several individual reactors, can be adapted to local needs and network conditions. Additionally, that type of power plants, due to the variety of technologies being developed, may find a wide range of applications in the future, depending on the needs of investors – starting from the generation of electricity, through the production of heat for technological purposes in large industrial plants, to their use in network heating.

    Construction of nuclear power plants as the opportunity for the Polish economy.

    The Polish Economic Institute (PIE) estimated that the construction of two nuclear power plants in Poland will cost PLN 184 billion. In its report “The economic aspects of nuclear investments in Poland – the impact on business, labour market and local communities“, the PIE argues that in 20 years, nuclear power will secure electricity supply in Poland at the level of 26 to 38% of the demand. [5]

    The PIE analysts estimate that the involvement of Polish companies in the construction of the nuclear power plant, in a realistic scenario, may turn out to be from 50 to 70%, which is also mentioned by potential investors from the USA, France and South Korea.

    The value of works performed by Polish companies is expected to be approximately PLN 130 billion, which should create from 26.4 thousand to  39.6 thousand new jobs. Those will be jobs not only in the field of construction but also related to the operation of the nuclear power plants over the 50-year operating cycle of the reactors.

    The contractor for the Polish nuclear power plant is going to be selected soon

    The latest positions of government representatives indicate that the final decision regarding the national nuclear programme is going to be made soon. The project to build a nuclear power plant in Poland is expected to be adopted by the government within the coming weeks (the schedule assumes the third quarter of this year).

    So far, the willingness to sell the technology and build infrastructure has been expressed by:

    France – in October 2021, the country presented an offer  from the EDF Group which indicated two to three locations for the construction of nuclear power plants in Poland
    , with a declared total installed capacity of 6.6 to 9.9 GW,

    South Korea – in April 2022,  the Polish government was presented an offer from the Korea Hydro & Nuclear Power (KHNP) concern that assummed the construction of 6 reactors with a total capacity of 8.4 GW,

    United States – Westinghouse Electric Company and Bechtel were the last to present a proposal to the government for the construction of nuclear power plants (however, the details of the offer have not been disclosed by the time of the publication).

    All the above-mentioned companies have extensive experience in the construction of nuclear reactors and the technologies proposed to Poland are successfully used worldwide:

    • four Westinghouse AP1000 units are operating in China and two other, located in the United States, are in the final stages of construction. China plan to build another four such units.
    • two Korean APR1400 units are currently in use in South Korea and one is used by the United Arab Emirates. A total of seven other units are currently under construction in those countries.
    • the French EPR (European Pressurized Reactor)  is a type of reactor that has been operating for several years in Taishan in China. The following power plants will be completed soon: Olkiluoto in Finland, a unit in Flamanville in France and Hinkley Point in the U.K.

    In recent weeks, Prime Minister Mateusz Morawiecki discussed the issue of Polish nuclear power plant with the Vice President of the United States, Kamala Harris, the South Korean President, Yoon Suk-yeol, and the President of France, Emmanuel Macron. After a telephone conversation with the Vice President of the United States, the Prime Minister stressed that the government was analysing the possibilities in detail, both in terms of the construction of a large nuclear power plant and the development of the so-called  small modular reactors.

    Earlier, on 30 August 2022,  Mateusz Morawiecki talked over the phone with the President of South Korea, Yoon Suk-yeol. The Chancellery of the Prime Minister announced that economic and military cooperation, energy security measures, including in the area of nuclear energy, were discussed, among other things.

    Prime Minister Morawiecki pointed out that partnership with the Republic of Korea was an important element of national foreign policy. In recent months, Poland has closed a number of major deals with Korean partners. The Polish Armed Forces will be equipped with Korean combat aircraft and self-propelled artillery.

    On 30 June 2022, the Minister of Climate and Environment, Anna Moskwa, concluded an agreement with the Minister of Trade, Industry and Energy of the Republic of Korea on energy cooperation in the field of, inter alia, peaceful use of nuclear energy, energy efficiency, hydrogen technologies, renewable energy, carbon capture and sequestration (CCS), carbon capture and utilisation (CCU), electromobility and smart grids.

    The day before his conversation with the President of South Korea, Mateusz Morawiecki, during his visit to Paris, discussed cooperation in the nuclear energy sector with the President of France, Emmanuel Macron.

    Such frequent direct talks between Prime Minister Morawiecki and the three representatives of the governments, who are negotiating the large contract, indicate that the ”winner of the battle” for the construction of a Polish nuclear power plant is going to be announced soon.

    Obviously, the choice of such a strategic partner is not only a financial calculation but also a political and strategic issue. Each of the competitors is linked to Poland by economic ties, taking into account the EU structures, NATO or the arms industry. [6]

    Strategic companies are not waiting for the government’s decision and are taking the initiative  with regard to small modular reactors (SMR).

    A parallel path to nuclear energy in Poland may be Small Modular Reactors (SMR), which are smaller than the traditional large nuclear complexes. Such reactors are characterised by lower costs and shorter investment time, compared to the  large nuclear power plants. Individual elements are manufactured by the supplier of technology, as well as by using the so-called  “local content” – that is, companies located in the country where the investment is carried out. The components manufactured in this way are delivered, in the form of larger units, directly to the construction site. The use of modern safety systems, including passive ones, and simplifying the design of those units at the same time, allow for even safer operation and minimise the consequences of shutdown of a reactor, which may be associated with the lack of power supply to large groups of recipients. Thanks to the above-mentioned characteristics, the reactors can be built closer to human settlements, which makes it possible to use them – in addition to generating electricity – to produce heat for district heating systems and process heat for the needs of industrial recipients. Smaller size and modularity of the units, which enables easier expansion of the power plant by adding extra units, gives greater flexibility in terms of adapting the size of the entire park to the electricity and process heat demand of the investors. Moreover, the construction of many smaller units in different parts of the country may help to maintain a distributed energy generation system in Poland in the future.

    KGHM Polska Miedź SA and PKN Orlen S.A.  support the SMR technology.  KGHM is the second largest consumer of electricity in Poland. The company’s annual demand is 3 TWh, which translates into an electricity bill of PLN 1 billion. The whole Orlen Group of Companies, which includes refineries in Płock and Gdańsk and the Anwil chemical company in Włocławek, is also a large consumer of electricity. Therefore, it is not surprising that both companies consider nuclear power as a way to make huge savings.

    Based on the contracts already signed,  the company’s copper power plant will be powered by six SMR VOYGR reactors with a capacity of 462 MW, from the American company NuScale. Orlen will also use the American technology – BWRX-300, from GE Hitachi Nuclear Energy. [7] The first reactors for KGHM and PKN Orlen are to be commissioned by 2029.

    Back to nuclear energy on the old continent

    Due to the prospect of energy shortages in the winter season, the Europeans consider nuclear energy again. The way in which the demand for energy changes the perception may be demonstrated by the fact of reconsidering nuclear energy by the largest economies, as well as the positive change in the attitude of the citizens of the European Union. Nuclear technology, which until recently was in retreat, is now experiencing its renaissance and its benefits are noticeable against the background of, for example, reactivated coal-fired power plants.

    Germany will keep two of its remaining three nuclear power plants, due to the turnaround in its energy policy, and will temporarily extend their operation beyond the assumed shutdown date, i.e.  31 December 2022 – announced Robert Habeck, the Minister of Economy of our western neighbour. [8] This move, expected in the EU, resulting from the failure of Russia to fulfil the contracts for the supply of energy carriers, means a shift in the policy of abandoning nuclear energy in favour of renewable energy (Energiewende), which has been developed for two decades. [9]

    Prior to the energy crisis, in Germany, there was enormous public support for phasing out nuclear energy; however, according to the recent poll conducted by Forsa Institut, three-quarters of Germans support postponing the shutdown of nuclear power plants.

    Over the decades, Germany’s western neighbours have become accustomed to using nuclear energy. Fissile material is currently used to generate 70% of electricity in France. Another reactor is under construction on the Seine, and six more are planned to be built. In 2019, the French government postponed the implementation of the plan, by 10 years, the original goal of which was to reduce the share of nuclear energy to 50% by 2025. At some point, France was the largest exporter of electricity in Europe and supplied a significant quantity of electricity to the U.K. and Italy. Currently, the neighbouring countries are closely observing the situation in France, which is facing an internal energy crisis due to the restrictions on the operation of reactors and it is likely to import more energy than export it this year. The situation is considered very serious by the French government and, at the end of July this year,  the National Assembly approved the nationalisation of the nuclear power company EDF.  [10]

    In the former Eastern Bloc countries, which are now included in the EU structures, several nuclear power plants operate, which meet 15 to 50% of the electricity demand of the economies. In turn, Belgium and the Netherlands, which also use nuclear power plants, abandoned their plans to shut down nuclear reactors after Russia’s attack on Ukraine. In Sweden, six nuclear power plants meet 40% of the country’s electricity needs, while Finland is to launch the sixth reactor by the end of the year. At that time, 60% of the country’s electricity will come from nuclear sources. In Spain, seven nuclear power plants cover 22.2% of the country’s electricity demand. In the EU as a whole, 26% of electricity currently comes from nuclear power plants. [11]

    What will we gain by using nuclear energy?

    Rationally, the unstable prices of gas, coal and other fuels should direct us towards alternative sources of energy that guarantee independence and security. Currently, the structure of the energy mix in Poland is based on coal, which, despite its deposits in Poland, is largely imported for Polish power plants from outside the Community. On many occasions, when referring to Poland’s path towards energy independence, we have stressed the inevitability of achieving climate targets; i.e., the reduction of CO2, particulate matter and other factors that contribute to global warming.  The prices of CO2 emission allowances in the EU make the generation of energy from coal less profitable for energy companies, and the purchase of energy is associated with increasingly higher costs for energy-intensive businesses. It is not a ground-breaking statement that a nuclear power station, the construction of which has been planned in Poland for years, will be a fully-fledged alternative to coal and could also help to stabilise the system in the development of renewable energy sources.

    According to Statistics Poland data, in 2021, as much as 11% of all expenditure incurred by households was on energy. [12] The years 2022-2023, are associated with a further nominal increase in bills. Most of the expenditure is heating costs in the autumn and winter season. Only the energy transition and diversification of the sources of electricity generation, implemented with great determination, give the prospect of eliminating the spectrum of energy poverty, which involves the poorest households to the greatest extent.

    Based on the analysis conducted by WHO – contrary to popular beliefs – nuclear power is the safest source of energy, which is also confirmed by other scientific studies, including those carried out  for Statista in 2020.[13]

    We appreciate that the government recognises the need for an urgent response and it is changing the regulations on the implementation of nuclear investments through fast-track legislation. On 16 August 2022, the Council of Ministers adopted a draft act amending the act on the preparation and implementation of investments in nuclear power facilities and associated investments and certain other acts, submitted by the Minister of Climate and Environment. The first reading of the draft took place on 14 September 2022,  during the meeting of the parliamentary committee for energy, climate and state assets (ESK). The document places great emphasis on the assessment of the environmental impact of power plants; however, the whole process of the construction of a power plant is expected to be faster due to formal simplifications. The investor will be able to contact the administrative bodies to obtain the necessary information in connection with the performance of tasks related to nuclear power facilities and associated investments. Moreover, once the commissioning permit is granted, it will be possible to temporarily operate a nuclear facility. [14] Looking to the future and considering the development plans of KGHM Polska Miedź S.A.  and PKN Orlen S.A. for modular reactor technologies, while creating the regulations for investment in nuclear facilities the need to adapt Polish law to the construction of smaller units, which may be built near, e.g., large industrial parks, should also be taken into account.

    After decades of discussing alternative energy sources, Poland is still in ”the carboniferous period”. The Union of Entrepreneurs and Employers has emphasised many times that the development of distributed energy and nuclear energy in Poland should be accelerated as much as possible. At the time of the energy crisis in Europe, this acceleration should be absolute. For this to be possible, the introduction of a number of deregulated solutions is necesaary, which we systematically try to emphasise. Also, in our opinion, a public information campaign on this subject is required, which is why, among other things, we are the initiator of such projects as the “Energy for Europe” conference, which will be held in Brussels on 27 October 27 this year: https://zpp.net.pl/events/event/konferencja-energia-dla-europy-jednym-glosem-o-przyszlosci-europejskiej-energetyki/ The conference is one of many undertakings that fit into the long-term policy of ZPP of promoting low and zero carbon energy sources in Poland.

    ***

    [1] https://www.cbos.pl/SPISKOM.POL/2006/K_108_06.PDF

    [2] https://www.gov.pl/web/polski-atom/poparcie-spoleczne-dla-budowy-elektrowni-jadrowej-w-polsce—badania-z-listopada-2020-r-625-polakow-popiera-budowe-elektrowni-jadrowych-w-polsce

    [3] Source: ARC Rynek i opinia, 3 August 2022. https://www.wirtualnemedia.pl/artykul/wiekszosc-polakow-popiera-budowe-krajowej-elektrowni-atomowej

    [4] https://spidersweb.pl/2022/08/elektrownia-jadrowa-w-polsce-historia.html

    [5] https://energia.rp.pl/atom/art36882581-energetyka-jadrowa-w-polsce

    [6] https://www.wnp.pl/energetyka/wybor-atomowego-partnera-polski-jest-coraz-blizej,619112.html

    [7] https://wszystkoconajwazniejsze.pl/pepites/jak-bedzie-dzialal-maly-reaktor-jadrowy-smr-kghm/

    [8] https://www.wsj.com/articles/germany-to-delay-closure-of-two-nuclear-power-plants-as-energy-crisis-bites-11662400161

    [9] https://businessinsider.com.pl/gospodarka/elektrownie-atomowe-w-niemczech-moga-dzialac-dluzej-niz-planowano/8j5q0l1

    [10] https://www.dw.com/pl/francja-elektrownie-atomowe-na-granicy-przegrzania/a-62816418

    [11] https://biznes.interia.pl/gospodarka/news-energia-jadrowa-w-ue-niemcy-sie-kloca-inni-stawiaja-na-atom,nId,6201434

    [12] Sytuacja gospodarstw domowych w 2021 r. w świetle wyników badania budżetów gospodarstw domowych (The situation of households in 2021, on the basis of the results of the household budget study), Statistics Poland, 2021.

    [13] Brook, Barry W., Alonso, Agustin i Meneley, Daniel A. Why nuclear energy is sustainable and has to be part

    of the energy mix. Sustainable Materials and Technologies. 1-2, pp. 8-16, 2014.

    [14] https://www.experto24.pl/aktualnosci/42117-nowe-przepisy-o-energetyce-jadrowej.html#.YxrrrHZBy3A

     

    See: 19 September 2022 The memorandum of ZPP on the plans to build a nuclear power plant in Poland

    Position of the Union of Entrepreneurs and Employers (ZPP) on the revision of the Union Customs Code

    Posted on by Weronika Marzec

    Warsaw, 23 September 2022 

    Position of the Union of Entrepreneurs and Employers (ZPP) on the revision of the Union Customs Code


    The Union of Entrepreneurs and Employers (ZPP) welcomes the initiative of the European Commission to make customs regulations better adapted to the challenges of digital transformation and the pro-climate agenda of the European Union. The presented initiative contains several key areas to be revised in order to strengthen the current legal framework, such as e-commerce operations, risk management, data analytics capacity and the protection of the single market against non-EU compliant imports from third countries.

    UCC regulations may be hard to put into practice for small and medium-sized enterprises. Therefore, it should be kept in mind that the proposed changes do not worsen the situation of SMEs, which, especially in the e-commerce sector, are young entities and find it more challenging to adapt to legal changes.

    The Union Customs Code revision is one of several pieces of legislation that will majorly impact importing products to the single market, including those sold and purchased through e-commerce. Speaking of which, the Market Surveillance Regulation entered into force in July 2022, and currently, the European Commission is working on revising the General Product Safety Directive. The above legislative changes will significantly affect both traditional and online trading. In order to ensure further e-commerce development, it is necessary to properly assess the effects of the regulation and its impact on the trading conditions in the European Union. In addition, it is needed to ensure sufficient time for entities actively involved in trade to familiarize themselves with the proposed changes and ensure proper and equal enforcement of the adopted provisions.

    Based on the expertise and experience of companies associated in the ZPP, we have developed recommendations for the European legislator to revise the Union Customs Code that best meets the needs of all trade participants and stakeholders. The paragraphs below describe the most important thematic issues.

    Cooperation between customs authorities

    The biggest challenge for the European Union is establishing efficient cooperation between customs and non-customs authorities. To effectively implement and enforce the new regulations, there is a need to tighten the joint action between the Member States’ customs services and the tax authorities collecting VAT. The future could lead to creating a unified customs process that could take place through a single official communication channel with the public administration.

    Creating a single framework for customs clearance would be beneficial for the single market and would make international trade safer. For this reason, we consider it equitable to use data already possessed by the public authorities and foster mutual exchange between relevant administrative units. Such simplification of procedures would benefit honest merchants, whose regular and compliant business operations would be easier to conduct. It would also be easier for customs authorities to reduce the workload due to more straightforward procedures.

    We recommend simplifying the process for both public authorities and entrepreneurs by effectively using the collected data that has already been made available to public authorities. At the same time, this will ensure an adequate level playing field and market protection against dishonest entities that may threaten consumers and entrepreneurs who conduct business honestly.

    Entities that trade fairly within the single market create positive added value for the European Union. Therefore, they should not be burdened with additional obligations hindering their activities. The threat that should be counteracted by the UCC revision is the entities introducing products to the block, disregarding the fulfilment of tax obligations. Additionally, the products introduced by these entities may be dangerous to end consumers as they may not meet European safety standards.

    The reform of the e-commerce package carried out in 2021 introduced a number of improvements in the functioning of customs procedures. An important tool contributing to this is the Import One Stop Shop (IOSS), which introduced a central reporting and collection mechanism for import parcels worth up to EUR 150.

    Given the above, we consider it appropriate to improve the efficiency of customs clearance by using the data already held by the office, efficient data transfer and adopting better procedures that will effectively implement cooperation between the customs services of the Member States and fiscal authorities. We recommend considering the possibility of verifying data that are collected by customs as “data of comparable quality”. The ultimate desired effect will be the unification of procedures for honest traders and increased detection of irregularities for dishonest market actors.

    Trusted traders as beneficiaries of simpler rules

    To increase the performance of the EU Customs Union, the legislator should consider supporting well-established businesses proven to be compliant with regulations and shift the focus of the customs authorities to fraud and other risk areas.

    For small and medium-sized enterprises, compliance with UCC may present challenges and require hardship to respect customs conditions to retain secure and honest trade for their clients. Paring the requirements down should consider the position of diligent merchants.

    UCC improvements need to concentrate on forming cohesive, performant processes and instruments for authorities as well as awareness of outcomes on business. Currently, the most distinguished challenge for the European Union is the collaboration between customs and non-customs authorities across the Member States. Improving cooperation between those as well as further development of mechanisms (i.e. Import One Stop Shop) will benefit all parties.

    The beneficiaries of these changes shall not only be Authorized Economic Operators. Performant, simplified processes of centralized clearance and capability for reconciliation of the entries in Import One Stop Shop for legitimate business owners, as well as small and medium enterprises, self-clearance in a similar way as VAT reporting and settlement, would smoothen the trade processes and reduce actions required from customs authorities at the border.

    The approach to data exchange

    To further back customs enforcement, we need to extend the quality and quantity of currently available data. Providing a single-window system that will ease customs processes, improve risk management, and improve data input, reusing it for authorities, vendors, and consumers is a good strategy. This is the key to effectively tackle down challenges brought to the light by modern e-commerce.

    Nevertheless, convergent and standardized interfaces between new and existing systems shall be established to avoid redundant reporting. Platforms are already reporting VAT data for third-party sales conducted on their marketplaces via the IOSS. Moreover, Payment Service Providers will share data via the Central Electronic System of Payment Information, beginning in 2024. Data sharing, data exchange between systems, and shares of data provided by the other actors in the supply chain will surely improve the detection of fraud, non-financial risks, and undervaluation.

    Of course, enforcement measures and appropriate liability must exist along with the beforementioned data exchange improvements. It is worth noting that despite taking steps regarding the exchange of customs data, not all carriers are accountable for customs declarations in regard to Article 23.3 of the UPU Convention.

    Furthermore, the European Commission shall watch for privacy and data security issues regarding sensitive information and whether the exchange is done in secure environments unavailable to malicious third parties. Special attention shall be paid to the exchange of information on shipping labels, tax references or IOSS registration numbers.

    Caution should be paid during the regulation of responsibility for the data shared in those systems. Marketplaces, for example, depend on data provided by the merchants as-is and may not have measures to verify the accuracy of most of the indicators.

    Development of the e-commerce market and challenges related to the effective collection of VAT and customs duties

    The experience gained by the participants of the IOSS reporting mechanism allows for the formulation of several proposals for improvements that may make it easier for entities to report the emergence of such obligations and pay the tax amount to meet the tax obligation. Moreover, the recommended changes will allow for more effective tax collection.

    Strengthening the functioning of the IOSS by removing the inconsistencies between national customs authorities and the discrepancies between customs and VAT legislation will remove the current legal uncertainty about the procedures in use.

    We believe efficient data reconciliation between customs and tax authorities (VAT) will allow for mutual verification of data already held by public administration entities. A practical example of the lack of such cooperation is the inability of customs authorities in several key countries unloading imported goods to recognize IOSS numbers in H1 customs declarations. Such an inconvenience leads to the necessity of double VAT taxation, despite the fact that they qualify for the procedure under the IOSS.

    We recognize the Member States’ actions within the VAT Committee that agreed on a temporary solution for the return of double-paid VAT under the IOSS procedure. However, this is a temporary solution and does not address the problem’s root cause, incompatibility with the customs IT system.

    Another aspect that requires improvement is the lack of security for IOSS numbers. Currently, it is impossible to verify entities registered in the system by the tax authority and merchants. It is only possible to check whether the given IOSS number is valid without the possibility of specifying the entity using the given number.

    In addition, the system supporting the IOSS procedure does not have a comprehensive link between the vendor ID and the shipment transaction level. That means the misuse of IOSS numbers can be either accidental or deliberate because the tax payment at the border is then charged to the entity registering the IOSS number and not the one shipping the parcel. The IOSS registrant becomes burdened with the need to reconcile the differences between IOSS declarations and EU customs data. This is a deliberate action to mislead the tax authorities. In such a situation, the IOSS registrant is charged and must prove the unauthorized use of the code. The treasury loses VAT revenue.

    In view of the above, we listed several recommendations introducing changes to the functioning of the IOSS system to make it complementary to the EU customs policy.

    Firstly, a permanent mechanism should be implemented to prevent double taxation of shipments. The temporary solution introduced should be considered positive. However, to maintain the system’s coherent operation, comprehensive solutions are necessary.

    Secondly, national customs administrations should be strengthened so that they can verify all shipments eligible for IOSS, including those covered by the H1 customs declaration.  It will remove the need for multi-channel sellers to maintain a dual import regime for low-value shipments. Additionally, this will also benefit the administration as it will not have to manage a double system for low-value imports.

    Thirdly, the protection and security of IOSS-based verification should be strengthened. The system shall ensure the safety and protection of IOSS registrants from the potential consequences of tax extortion. In our opinion, this will ensure a level playing field by preventing misuse of IOSS numbers.

    Fourthly, it is necessary to resolve the existing discrepancies between VAT and customs regulations. An example of such a solution is the IOSS VAT scope and the new customs competent office rule under article 221 (4) the UCC / IA leading to non-IOSS eligible shipment <150 EUR, such as B2B and excisable products, requiring immediate clearance in the final delivery country leading to capability issues with brokers and customs logistics partners.

    Fifthly, we think the most optimal solution is to transfer responsibility for non-financial risks to importers. The importers in the supply chain generally have the best knowledge of the product purchased.

    The party with the best access to customs data shall be selected to calculate customs fees if the legislator considers the expansion of the aggregator’s responsibility. Mostly, Business-To-Consumer sales take place under the DDU/DAP Incoterms’ well-established rules, so the customs clearance responsibility is on the final customer. From our view, in the process of DDP sale, the merchant shall be responsible for custom duties since they have insights regarding the country of the import as well as the customs clearance process.

     

    See: 22.09.2022 Position of the Union of Entrepreneurs and Employers (ZPP) on the revision of the Union Customs Code

    ZPP co-signed industry joint letter on the upcoming revision of the EU liability framework

    Posted on by Weronika Marzec


    Dear Commissioner Breton,
    Dear Commissioner Reynders,


    Our associations represent a broad coalition of startups, SMEs, and technology companies. We are writing to you in the context of the revision of the existing Directive on the liability for defective products (PLD) and the proposal for a directive to adapt liability rules to Artificial Intelligence (AI Liability Directive). We support the underlying objective to ensure a high level of legal certainty for companies and trust for consumers. We therefore request that the European Commission strive to ensure that the PLD and the AI Liability Directive are balanced and proportionate for all stakeholders, in conjunction with the applicable existing and future legislation. As such we take the liberty to make a few preliminary recommendations:

    1. The definition of products should remain fit for purpose

    The existing PLD is technology-neutral and already applies to all unsafe products, including those with embedded software. The current PLD is complemented by national tort and contract laws. Damages due to defects that occurred after a product has been put into circulation are
    therefore already covered by national legislation. The definition of ‘product’ doesn’t need to be expanded to include intangible products (e.g.
    digital content and standalone software). Instead, the definition should remain technology-neutral and future-proof. Applying strict liability would be disproportionate and ill-suited to the properties of software. This includes that standalone software and software errors cannot physically act upon any person or physical property and would therefore not cause personal injury or property damage, that bugs are an inherent feature of software development, and that there is no fixed state when software is “put into circulation” given that software evolves and improves over time. Moreover, software updates are commonly used to extend the lives of digital products and address any software errors. Extending strict liability to software updates could disincentive software development and maintenance. This would also conflict with EU efforts to encourage sustainability in the circular economy.

    2. The scope of damages should not include immaterial damages

    Extending the range of damages to non-material damages (e.g. privacy infringements or psychological harm) would significantly increase legal uncertainty over other pieces of legislation that already cover non-material damages (e.g. GDPR). Providing a separate and
    potentially overlapping basis for compensation would cause confusion, and could eventually lead to forum shopping and double claims for a single harm. Applying strict liability would put a disproportionate burden on providers as non-material damages are less predictable and more complex to quantify than material damages. This could have a chilling effect on innovation, and/or materially increase the price of software for end-users, and could potentially hinder the uptake of useful advanced software applications, including AI, by the market.

    3. No need to reverse the burden of proof on all AI applications and software

    We are not aware of evidence that shows that the burden of proof of the current PLD places consumers at a disadvantage. Reducing or reversing the burden of proof is a tool that should only be considered for very specific cases, motivated by the profile of harm and take into
    account the degree of opacity of a particular product. The regulatory response to new technologies should not be generalizing the worst-case scenarios or specific situations. A one-size-fits-all rule for all AI applications would become an excessive burden on AI developers and users, significantly hamper innovation and affect the rollout and take-up of AI technologies in the EU.

    4. Strict liability for online marketplaces is not appropriate

    Consistent with recent legislative initiatives such as the Digital Services Act and the proposed General Product Safety Regulation, we encourage policymakers to only regulate intermediating online marketplaces in a way that recognises their nature and does not undermine the operation of particular business models as this could have a negative impact on innovation and consumer choice in the EU. It is also worth noting that companies which operate an online marketplace as a hybrid business model (e.g. combining manufacturing and intermediating between traders and consumers) already fall within the scope of the current PLD on these activities.

    Filling the liability gap identified in the consultation process from third-country manufacturers can be done more appropriately through other means, e.g. putting the liability onto the authorised representative of a manufacturer or the responsible person for products placed on
    the European market.

    As the European Commission drafts its proposals to review this framework, we would like to emphasise our availability and willingness to work towards a workable and balanced approach. We thank you for your consideration and remain at your disposal to provide additional
    information.

    Signatories (in alphabetical order):

    ACT – The App Association
    Computer & Communications Industry Association (CCIA Europe)
    Confederation of Industry of the Czech Republic
    Developers Alliance
    DOT Europe
    Infobalt
    Information Technology Industry Council (ITI)
    SAPIE (Slovak Alliance for Innovation Economy)
    Związek Przedsiębiorców i Pracodawców / Union of Entrepreneurs and Employers (ZPP)

     

    See: Joint Industry Letter on the PLD and AI Directive

    ZPP’s commentary on desirable joint actions of European countries related to the energy threat

    Posted on by Weronika Marzec

    Warsaw, 26 July 2022 

     

    ZPP’s commentary on desirable joint actions of European countries related to the energy threat

     

    The war in Ukraine has formed an entirely new geopolitical situation, and therefore the primary task of all European decision-makers is to ensure sustainable energy independence for the countries of the Old Continent, based on the assumption of a temporary inability to import energy resources.

    Further complications of the international situation should be taken into account, including, for example, provoking further conflicts that prevent or impede the import of energy resources, in an unpredictable time frame. Today, a war in any part of the world involving a NATO member will be a global event with consequences that are difficult to foresee.

    Having regard to the above, the energy, transport and storage systems of European countries should also take into account such a crisis situation. We should have a precise plan to enable the economies of individual European countries to quickly switch to operation under conditions of resource independence, which, in turn, would probably involve temporary restrictions on the free consumption of energy resources.

    In view of the above, we believe that a body should be established that would create solutions related exclusively to ensuring energy and resource security, common for all Member States of the European Union.

    This body should prepare a programme to ensure total energy independence of EU countries, including from imports of energy resources. This document should consist of, inter alia:

    1. Balance of existing resources, including but not limited to oil, gas, coal, biomass, renewables, nuclear, etc.
    2. Balance of potential resources – cots of exploration, prospecting and extraction of conventional sources; potential availability dates of conventional and other sources (RES, nuclear).
    3. Programme for the development of individual energy sources in Europe, spread over a timeline.
    4. European programme for the development of transmission networks, national programmes for the development of high, medium and low voltage networks.
    5. Distribution of tasks related to ensuring total energy independence between individual European countries.
    6. Financing system for the programme of European energy independence.
    7. System of military protection of energy sources and transmission lines of European countries.

    The development of such a programme and its systematic introduction into the economic cycle of the EU, together with an active programme of joint purchases of resources from non-European countries, would not only allow the optimisation of prices but also ensure the stability of supply.

    All activities related to the creation of a common energy market should be accelerated – for example, establishing a fund for the modernisation of transmission networks and the establishment of cross-border interconnections.

    The scenario described above should be a programme axis for the development of a new European energy security system.

    The basis for the energy security of a State is the proper development of energy networks. Nowadays, Poland has limited cross-border transmission capacity, and this is a key element of common European energy policy. In the coming years, Polish exporters to European markets may also face the need to purchase green energy, which, in turn, would require Poland to join the European Guarantee of Origin scheme (AIB).

    The modernisation and development of low and medium voltage networks will determine the form of development of distributed energy, i.e. the foundation of the contemporary energy security of each country.

    The European Commission has recently presented another report on the implementation of the Energy Union project that proposed, among other things, new targets for cross-border interconnections between EU countries.

    So far, the country that is the furthest from achieving the targets set by the EC is Poland which has the least developed infrastructure in this respect. In presenting the report on the implementation status of the Energy Union, the representatives of the Brussels administration stressed the need to develop cross-border interconnections between individual EU countries, setting a target of at least 15% share of cross-border interconnections in the energy systems of individual EU countries.

    The Commission plans to promote strengthening energy links between individual EU countries by financially supporting the cross-border interconnections which were compiled in a list of so-called Projects of Common Interest (PCS). It is estimated that the share of cross-border interconnections in the Polish electricity system is only 4%. This is the lowest level in the entire European Union. 

    Only intensive development of cross-border interconnections can guarantee our participation in the pan-European security system. Having a fully liquid energy and gas market in Europe would naturally also result in the harmonisation of the prices of these utilities across the Community. For consumers, the current energy crisis entails periodic intense increases in energy and gas prices; however, in the long term, Poland’s presence in the common market definitely brings more benefits for our country than any variant of energy isolation.

     

    See: 26.07.2022 ZPP’s commentary on desirable joint actions of European countries related to the energy threat

     

    The Union of Entrepreneurs and Employers (ZPP) has launched the Belarus Business Center

    Posted on by Weronika Marzec

    Warsaw, 27 July 2022

     

    The Union of Entrepreneurs and Employers (ZPP) has launched the Belarus Business Center

     

    The Union of Entrepreneurs and Employers (ZPP) has launched the Belarus Business Center project today. The main goals of the Center are to support Belarusian companies in relocating to Poland and support existing Belarusian businesses in Poland.

    In light of the intense geopolitical unpredictability and the reputational and business risks, many Belarusian start-up founders, companies’ CEOs, and shareholders have decided to diversify their businesses geographically, open new legal entities abroad and relocate staff there. Poland is offering a competitive taxation level, labor, and office costs as well as a predictable business environment and legislation. Another pro of Poland is a huge Belarusian community, which means that relocated staff will feel most comfortable here and won’t quit their job after relocation.

    Back in October 2020, ZPP organized Contact Point for Investors from Belarus, and now it has grown into the ecosystem with a network of consultants, 2 full-time employees, and Open Space for Belarusian companies in the center of Warsaw. 

    ZPP’s Belarus Business Center is ready to help Belarusian companies with their questions on taxes, legal aspects, office rental, labor market, and other important things in the process of relocation.

    In Business Center Belarusian companies will be able to:

    • Consultations on tax issues, legal aspects, office rent, labor market and other important issues in the relocation process;
    • Coworking, which can be used by founders of companies in Belarus and in Poland, management of medium and large firms, founders and key employees of start-ups;
    • Events such as seminars, webinars, and trainings on legal aspects, accounting, marketing, communications, finance, etc.

    All of the listed services will be provided free of charge.

    The project is supported by PYXERA Global.

    The Union of Entrepreneurs and Employers, known in Poland as ZPP, is the fastest growing and one of the most active employers’ organizations in Poland. Established in 2010, associates 16 regional and 23 industry organizations. ZPP is an apolitical NGO advocating for the free market, fair competition, legal stability and transparency as well as common sense, regardless of political affiliation or outlook.

    Contact details:

    Aliaksandra, Konsultant ds. projektów

    (+48) 515 282 884   

    belarus@zpp.net.pl

    Dmitry, Project Consultant

    (+48) 507 466 921  

    belarus@zpp.net.pl

     

    ***

     

    Союз предпринимателей и работодателей (ZPP) сегодня запустил проект Belarus Business Center. Основные цели центра – поддержка белорусских компаний при релокации в Польшу и поддержка действующего белорусского бизнеса в Польше.

    В свете острой геополитической непредсказуемости, репутационных и бизнес-рисков многие белорусские основатели стартапов, руководители и собственники компаний приняли решение о географической диверсификации своего бизнеса, открытии новых юридических лиц за рубежом и переводе туда сотрудников. Польша предлагает конкурентоспособный уровень налогообложения, затрат на рабочую силу и офис, а также предсказуемую бизнес-среду и законодательство. Еще один плюс Польши – это большая белорусская диаспора, а это значит, что релоцированные сотрудники будут чувствовать себя здесь максимально комфортно и не уволятся после переезда.

    Еще в октябре 2020 года ZPP организовал контактный пункт для инвесторов из Беларуси, а сейчас он развился в полноценную экосистему с сетью консультантов, 2 штатными сотрудниками и Open Space для белорусских компаний в центре Варшавы.

    В Belarus Business Center компаниям готовы помочь по вопросам налогов, правовых аспектов, аренды офисы, рынка труда и другим важным вопросам в процессе релокации.

    В бизнес-центре белорусские компании смогут:

    • Консультации по вопросам налогов, правовых аспектов, аренды офисы, рынка труда и другим важным вопросам в процессе релокации;
    • Коворкинг, который может быть использован основателями компаний в Беларуси и за рубежом, менеджментом средних и крупных предприятий, основателеми и ключевыми сотрудники стартапов;
    • Мероприятия, такие как семинары, вебинары и тренинги по юридическим аспектам, бухгалтерскому учету, маркетингу, коммуникациям, финансированию и т.д.

    Все перечисленные услуги предоставляются бесплатно.

    Проект реализуется при поддержке PYXERA Global.

    Союз предпринимателей и работодателей, известный в Польше как ZPP, является самой быстрорастущей и одной из самых активных организаций работодателей в Польше. Созданный в 2010 году, союз объединяет 14 региональных и 22 отраслевые организации. ZPP — это аполитичная неправительственная организация, выступающая за принципы свободного рынка, честную конкуренцию, правовую стабильность и прозрачность, а также здравый смысл, независимо от политической принадлежности или взглядов.

    Контактная информация:

    Александра, консультант проекта

    (+48) 515 282 884  

    belarus@zpp.net.pl

    Дмитрий, консультант проекта

    (+48) 507 466 921  

    belarus@zpp.net.pl

    Opinion of the Chief Energy Expert of the Union of Entrepreneurs and Employers (ZPP): The prospects for the development of wind farms and photovoltaic sources in light of the laws currently under way

    Posted on by Weronika Marzec

    Warsaw, 12 July 2022 

     

    Opinion of the Chief Energy Expert of the Union of Entrepreneurs and Employers (ZPP): The prospects for the development of wind farms and photovoltaic sources in light of the laws currently under way

     

    In spite of the holiday period, legislative work on investment issues in the area of renewable energy sources remains intensive. This is, of course, understandable, as our energy industry finds itself in an extremely difficult position, due to both the geopolitical situation, which is new for our country, and the legislative backlog in the field of energy from previous years.

    On 4 July 2022, the Council of Ministers adopted a draft amendment to the Act on Investment in Wind Power Plants and certain other Acts (UD 207). The draft will now be directed to parliamentary work. This is an amendment to the so-called “10 H” law, introduced in 2016 and essentially preventing the development of onshore wind farm investments. By passing such a controversial law, work on new wind farm projects was made practically impossible, fortunately leaving the possibility to invest in those projects that already had building permits. The deceleration in investment has occurred just now, when essentially all buildable structures have been constructed on the basis of building permits issued before 2016.

    In the meantime, onshore wind power has become the cheapest source of electricity, which becomes particularly relevant in the current situation related to the war in Ukraine. Work on the shape of the amendment took quite a long time and was initially carried out in the Ministry of Development, but it was only after the Ministry of Climate and Environment took over the work that the procedure for the document gained momentum and specific provisions, restoring investment opportunities, saw the light of day. The restoration of investment opportunities for onshore wind energy is very good news, not only for investors, but also for the Polish economy in general.

    The green energy supply deficit is growing and wind farms are the most promising renewable energy technology for investment. However, let us be aware that the provisions of the amendment will not immediately result in an abrupt increase in expenditure. There will remain for some time a distrust of the sustainability of the state’s energy policy in the area of renewables. As a result of the virtual ban on investment in onshore wind energy in 2016, many investors suffered tangible losses, which reverberated negatively for the industry as a whole in Poland, and it must take time to restore confidence in the legal framework guaranteed by the State.

    The law has been refined by the Ministry of Climate and Environment and approved by the Council of Ministers. This is very good news for the Polish economy in general, and the Ministry of Climate and Environment should be commended for its determination in this matter. However, as someone who has been investing in onshore wind farms for twelve years and has some experience of the investment process for this type of energy source, I am concerned whether a rapid increase in investment can be expected in the light of the provisions of this amendment. Probably not, as the level of complications concerning the arrangements related to obtaining a building permit and the uncertainty as to the fate of the project after the arrangements have been made, related to possible public opposition, will discourage some investors from starting new projects. The amendment will certainly make it possible to complete those projects that have a significant degree of progress, for example, having obtained an environmental decision in the past, which remains in force. This is far too little. The requirements of the Polish economy are about 10 GW of new onshore wind projects, from now until 2028.

    An additional factor limiting investment will be the upcoming election period, which will affect the restraint of the institutions set up to issue decisions. Meanwhile, the legislation leaves a considerable gap in interpretation and the possibility of stalling the issuing of decisions.

    In conclusion, the passing of the amendment to the 10 H Act is very positive news proving that our authorities are returning to a green deal policy, giving a wider room for negotiation with the European Commission as to the pace and dimension of Poland’s energy transition. It also reopens investment opportunities for both private investors and state-owned companies in onshore wind energy. However, in my opinion, the regulations will need further liberalisation and fine-tuning if we want these investments to reach the desired scale for the economy.

    When discussing the role of wind power in the Polish energy balance, it is also worth assessing the potential of offshore wind power in the overall supply of green energy for the Polish economy. According to the Polish authorities’ assumptions, at least 6 GW of offshore wind power should be built in the next decade, and further plans even talk about 10 – 12 GW of installed capacity by 2040. Even the former involves a very tight, albeit manageable, implementation schedule. However – subject to close cooperation between legislators, the regulator and investors. We do not see any particular momentum in this area, and we desperately need the energy from such investments. These are fairly stable and affordable sources of energy. With the commitment of the above-mentioned parties, the economy could receive the first megawatt hours from offshore wind as early as 2025, to be followed by a significant upward trend in the subsequent years. Recently, the issue of the European Commission’s notified maximum price for offshore wind energy has come up in industry discussions, which is putting an increasingly heavy burden on investors in the face of changing investment conditions (war, inflation, disrupted supply chains, rising raw material costs, changing reference interest rates, increasing global activation within offshore wind). Especially as regulatory solutions are emerging that potentially put additional strain on project budgets and may lengthen project timelines. An example is the idea of certification of the onshore section of an offshore wind farm infrastructure, which de facto duplicates existing regulations and procedures already present in the area of quality assurance and grid safety. Offshore wind power is an extremely important part of the overall Polish economy due to the creation of a new sector and thousands of jobs, which will increase the potential production capacity of Polish industry. Any legislative barriers should be removed immediately in this sector.

    Onshore and offshore wind power should be complemented by solar investment, as their joint operation results in a more stable energy supply for consumers. Large-scale solar plants are low-complexity investments, with minimal environmental impact, and as desirable as possible in terms of our energy balance. Everything possible should be done to facilitate the rapid development of these investments. These are also socially anticipated projects that do not raise such concerns as wind investments.

    Meanwhile, the draft amendments to the Act on Spatial Planning include proposals to make investment in photovoltaic sources more difficult. This is because the draft stipulates the obligation to locate solar sources with a capacity of more than 1 MW on the basis of an MPZP (Local Development Plan). This is a change that blocks the further development of such renewable sources and is highly detrimental to the Polish economy. The effects of such an obligation could be similar to those caused by the 10 H Act in wind investments. Organisations affiliated to the Coordinating Council for the Development of Photovoltaics, under the Ministry of Climate and Environment, protested against such restrictions and put forward a different proposal – promoting the development of solar sources. The need to draw up a Local Development Plan would arise for investments whose area would exceed 10 ha, which translates – with the use of modern photovoltaic panels – into a farm with a capacity in the range of 12 to 15 MW. And such a farm would already constitute a significant supplier of green energy. A hybrid power plant consisting of a 15 MW solar farm, a 25 – 30 MW wind power plant and stabilised by a 7 – 10 MW gas block is an optimally designed source of low-cost energy. It can be said to be a model example of distributed energy in Polish conditions. The price of energy from such a source should not exceed PLN 300 – 350 per MWh of energy, which suggests the use of such a source for heating. Let us bear in mind that today’s electricity prices in contracts for 2023 have already exceeded PLN 1500 per MWh. The Coordinating Council’s proposal has been supported by some of the state-owned companies, which are proposing even broader facilitation of investments. Companies have post-mining and post-industrial sites on which renewable installations can be built quickly and cheaply, subject to legislative facilitation. Both proposals should be supported as they can significantly facilitate investment in photovoltaic sources which, working together with onshore wind farms, increase the country’s energy security while guaranteeing a sustainable and reasonable level of energy prices. And this, in turn, enables the development of CHP based on green sources. The problems associated with the modernisation of heating industry are currently posing a huge challenge in the energy transition process.

     

    Włodzimierz Ehrenhalt,
    Chief Energy Expert

     

    See: 12.07.2022 Opinion of the Chief Energy Expert of the Union of Entrepreneurs and Employers (ZPP): The prospects for the development of wind farms and photovoltaic sources in light of the laws currently under way

     

    ZPP’s commentary on the conclusions reached at the Lugano conference

    Posted on by Weronika Marzec

    Warsaw, 11 July 2022

     

    ZPP’s commentary on the conclusions reached at the Lugano conference

     

    On 4-5 July 2022, an international conference on the reconstruction of Ukraine was held in Lugano, Switzerland. More than 40 countries and international organisations such as the European Investment Bank and the Organisation for Economic Co-operation and Development (OECD) participated. In total, almost 1,000 delegates attended the conference. Although the war instigated by the Russian Federation is still ongoing, and the timing of the end of the fighting and its outcome is currently impossible to predict, arrangements are already being made as to how Western states can participate in the reconstruction of the state of our eastern neighbours.

    At the conference, the international community condemned Russian aggression against Ukraine and assured of its full support for the country’s independence and sovereignty. Seven guiding principles were also established to address the partnership between Western countries, economic cooperation and investment in the reconstruction of the country, and the internal reforms that Ukraine must carry out in the coming years. These principles include:

    1. Partnership

    The reconstruction process is led by Ukraine and is carried out in cooperation with its international partners. Reconstruction efforts must be based on a solid and continuous process of needs assessment, agreed priorities, joint planning for results, accountability for financial flows and effective coordination.

    1. Focus on reforms

    The reconstruction process must contribute to accelerating, deepening, expanding and ultimately realising Ukraine’s reform efforts along with perseverance in following the path of European development.

    1. Transparency, accountability and the rule of law

    The reconstruction process must be transparent and credible to the Ukrainian people. The rule of law must be systematically strengthened and corruption eliminated. All reconstruction funds must be spent fairly and transparently.

    1. Democratic participation by the public

    The reconstruction process must be a whole-of-society effort, rooted in the democratic participation of the Ukrainian population, including returnees from abroad, taking into account local authorities and effective decentralisation.

    1. Engagement of multiple actors

    The reconstruction process must facilitate cooperation between national and international actors, including those from the private sector, civil society, academia and local authorities.

    1. Gender equality and social inclusion

    The reconstruction process must be inclusive and ensure gender equality and respect for human rights, including economic, social and cultural rights. Reconstruction must benefit everyone, and no part of society should be left out. Social inequality must be reduced.

    1. Sustainable development

    Ukraine’s reconstruction process must be sustainable, in line with the 2030 Agenda for Sustainable Development and the Paris Agreement, integrating the social, economic and environmental dimensions, including the green transition.

    In addition to setting out the above seven principles for cooperation in the reconstruction of Ukraine, the Lugano Conference also agreed on the areas to be entrusted to individual countries for reconstruction. According to the Ukrainian proposal, Poland, together with Italy, would undertake the reconstruction of Donbass. For Polish companies, this would be an opportunity to take part in a very large venture, as the Donbas is one of the regions where the most damage has been done, while at the same time it is an extremely important area economically due to its significant amounts of strategic resources, including coal, iron and so-called “rare earth elements”. The presence of Polish companies in the region would mean expansion into a new market and opportunities for multi-million dollar contracts. However, it is important to highlight a very important issue. The Donbas is one of the main areas of interest for the Russian Federation. The internationally unrecognised (except for Russia) People’s Republics of Donetsk and Lugansk operate in the area. In addition, the current state of hostilities in Ukraine indicates that almost the entire Donbass area is controlled by the Russian Federation. Given the uncertainty that the war brings, it may not be possible in practice for Poland to take part in the reconstruction project in this part of the country, and this may mean that the Lugano provisions will have to be revised. It should also be stressed that the proposal presented in Lugano contradicts media information and communications from Polish government representatives regarding the Polish role in the reconstruction of Ukraine. In fact, worthy of note is the fact that information so far has indicated Poland’s participation in the reconstruction of Kharkiv, whereas the Ukrainian proposal indicates entrusting this task to the United States and Turkey.

    It is also worth mentioning that a large group of Ukrainian entrepreneurs representing almost every sector of the economy were present in Lugano. Participants on numerous panels highlighted the strengths that characterise the Ukrainian economy, such as one of Europe’s most modern banking systems, the high computerisation of public administration (including the existence of an equivalent of the Polish mObywatel system), a dynamic IT sector that is active even during wartime, and finally Europe’s largest agricultural production sector. Ukraine also has a significant pool of well-qualified workers ready to take up employment at any time. This is emphasised by Ukrainian business owners pointing out that the huge internal migration from the areas occupied by Russian troops has resulted in tens of thousands of people in urgent need of work in Ukraine.

    Ukrainian entrepreneurs also identified the most relevant issues regarding Ukraine’s reconstruction process:

    • introducing a zero-tolerance policy for any signs of corruption;
    • ensuring that the competition conditions for the award of contracts related to the reconstruction of the country are completely transparent and fully fair;
    • ensuring that the conditions for investment capital inflows from abroad are as simplified as possible.

    At the same time, Ukrainian business representatives have indicated that, alongside political instability and the risk of the war dragging on for a long time, the biggest challenges at present are:

    • Enormous financial needs regarding the process of rebuilding war damage and infrastructure. These needs significantly exceed the capacity of domestic business, resulting in the need for foreign funding, whether from individual countries, international institutions or private investors. This funding should receive systemic guarantees from the Ukrainian authorities and international actors.
    • The massive scale of damage to the transport infrastructure, which has caused a crisis in the logistics industry and a breakdown in the smooth flow of goods and orders within the country and for export. Participants in the panel discussions highlighted that the average time for transporting goods has increased by more than three times. It is necessary to renew and expand the transport fleet of Ukrainian companies. At the same time, foreign entrepreneurs are reluctant to fulfil orders due to concerns about security, fuel availability and, above all, queues of many days at the borders.
    • A crisis involving the mining and pollution of large areas of the country. It is estimated that ¼ of Ukraine’s land area is currently mined and covered with unexploded ordnance, with significant consequences for many years to come, not least of which is the complete exclusion of these areas from civilian use.

    Many of the participants in the panel discussions are entrepreneurs who have experienced family and business tragedies, lost their assets and the means to run their businesses. They, as well as many of their employees, stood up with guns in defence of the country. Despite the horrific experience of war, however, they emphasise that Ukraine faces a historic opportunity to rebuild and modernise the state and join the Western world. They stressed the importance of international cooperation and pointed out the responsibility that Ukrainian entrepreneurs have in the reconstruction process.

     

    See: 11.07.2022 ZPP’s commentary on the conclusions reached at the Lugano conference

    CIT is a de facto voluntary tax, it is necessary to make comprehensive changes

    Posted on by Weronika Marzec

    Warsaw, 30 June 2022 

     

    CIT is a de facto voluntary tax, it is necessary to make comprehensive changes

     

    The Union of Entrepreneurs and Employers (ZPP) has for many months been investigating the way in which large foreign corporations make CIT payments in Poland. In our previous publications, we have pointed out that the corporate income tax structure allows for far-reaching tax optimisation and favours the activities of the largest entities that are able to carry out such optimisation effectively. As a consequence, CIT has become an almost voluntary levy and many entities pay only symbolic amounts to the state budget, often much less than 1% of the revenue generated in Poland.

    This time, ZPP selected 18 of the largest and most recognisable companies with German roots and operating in our country. Using publicly available data on the website of the Ministry of Finance, we checked what revenues these companies generated, what costs they reported and how much CIT they paid in the period from 2012 to 2020, i.e. the entire period for which the data was disclosed on the MF website. In addition to data on CIT payments, the ZPP also tracked data available on the website of the Office of Competition and Consumer Protection on the amount of state aid granted also in the period from 2012 to 2020.

    Analysis of the data shows that of the 18 companies, only four paid CIT in the period under review in excess of 1% of revenue. Interestingly, none of the surveyed automotive companies paid tax above this threshold. In addition, many of the companies received many times more state aid during the nine years of operation than they paid in income tax to the state budget.

    “For multinational corporations, Poland is a tax El Dorado” says Cezary Kaźmierczak, President of ZPP, “There are, of course, many that contribute very significantly to our budget. Still, many benefit from our infrastructure and access to the Polish market, paying less income tax than some households. That is why we have been proposing for years a simple income tax that would eliminate such situations.”

    For example, Volkswagen Motor Polska paid CIT in the amount of 0.003% (!) of the revenue it generated, while at the same time it received the highest state aid among the surveyed entities. The actual (gross) aid to this company amounted to almost 200 times its CIT, of which the company paid around PLN 1.5 million (nominally, the aid was even higher – PLN 1.5 billion, and therefore 1,000 times the tax paid in the period under review).

    Other companies associated with the Volkswagen Group also paid only symbolic CIT – Volkswagen Group Polska 0.392 per cent, Volkswagen Poznań 0.648 per cent, while Porsche Inter Auto Polska paid a tax of just one-tenth of one per cent of their revenue.

    Some of the surveyed companies also received very significant state aid. In addition to the already mentioned Volkswagen Motor Polska, another Volkswagen company, Volkswagen Poznań, received more than PLN 187 million in real state aid (PLN 644 million in nominal terms). In addition, high gross state aid was received by ZF Automotive Systems Poland (PLN 92 million) and BSH Sprzęt Gospodarstwa Domowego (over PLN 81 million).

    The data we have analysed shows that also for German companies operating in Poland, CIT is paid in most cases at a symbolic amount. Poland certainly suffers from a lack of effective and transparent tax law, in every area. The current system leads to outright bizarre cases, and the lost budget revenue resulting from the CIT gap runs into billions of PLN every year.

     

    30. 06. 2022 ZPP Report: Taxes of German companies in Poland

    Opening of the Representative Office of The Union of Entrepreneurs and Employers in Kyiv (ZPP)

    Posted on by Maja Jankowicz

    Kyiv, 08.07.2022

     

    OPENING OF THE REPRESENTATIVE OFFICE OF THE UNION OF ENTREPRENEURS AND EMPLOYERS
    IN KYIV (ZPP)

     

    The future of Europe today depends on the bravery and perseverance of Ukrainian soldiers, which, in turn, is not only a result of the aid flowing here from all over the world, but also of the resilience and success of Ukrainian business. The opening of a permanent representation office of the ZPP in Kyiv is intended to create new opportunities for active and direct cooperation between Polish and Ukrainian businesses.

    The conference accompanying the opening of the office , was accompanied by a special conference at the Diplomatic Academy at the Ukrainian Ministry of Foreign Affairs. In the opening speech Oleksandr Ban’kov, State Secretary, Ministry of Foreign Affairs of Ukraine noted:

    – Poland ranks first among Ukraine’s trade partners. We must take advantage of these opportunities together, and proceed to build cooperation that will help Polish and Ukrainian entrepreneurs to compete in third markets. The opening of an ZPP office in Ukraine will further this goal. 

    Ukraine now needs at least USD 750 billion to rebuild from the destruction, for which it needs not only financial support, but also the permanent presence of international business, European technology, capital, but also the experience of countries which, like Poland, have gone through a similar path of rebuilding from the devastation of the communist era. Poland’s Ambassador in Kyiv, Bartosz Cichocki, thanking for polish entrepreneurs’ initiative, said:

    – We will not defend this world if we do not rebuild Ukraine. We will not defend it if we do not rebuild it, and we will not rebuild it without initiatives such as this. If not now then when, if not us then who?

    Dozens of civil society organizations, hundreds of volunteers, including numerous state institutions, have been active in Ukraine since the beginning of the war, but as Cezary Kaźmierczak ZPP president pointed out:

    – Governments create the framework for cooperation, we need to fill it with links between our businesses. So that our children and grandchildren have peace once and for all and do not have to fear Russia.

    The Kyiv conference was the second conference organised by ZPP in Ukraine this week. First conference has been held in Lviv On July 6. Both events are to bring together the representatives of leading Polish, Ukrainian business associations,  authorities of both countries helped mapping all needs, opportunities, expectations and priorities of Ukraine’s reconstruction, available support from Europe.

    …..

    ZPP is the fastest growing employer organizations in Poland. Organization brings together 14 regional organizations and 22 trade organizations. As a member of  the Social Dialogue Council in Poland, ZPP uses its influence to promote free market, fair competition, legal stability and economic transparency. ZPP is represented in Brussels through its Representative Office, membership in the European Enterprise Alliance and membership in SME Connect. The union has two representatives in the European Economic and Social Committee.

    The representative office of ZPP in Ukraine will be headed by Nazar Bobitski, a former Ukrainian diplomat and public affairs professional with more than 20 years of experience. His previous positions included posts as ,   Deputy Head of  Mission of Ukraine to the European Union in Brussels for trade and economic cooperation, and a representative of Ukrainian exporters at the EU institutions.

    …..

    Contact:  Phone: +380 67 172 03 64, Email: n.bobitski@zpp.net.pl

     

    See more: 08.07.2022 OPENING OF THE REPRESENTATIVE OFFICE OF THE UNION OF ENTREPRENEURS AND EMPLOYERS IN KYIV (ZPP)

     

    EUROPE – POLAND – UKRAINE: REBUILD TOGETHER. Ukrainian and Polish authorities and entrepreneurs about future cooperation and reconstruction of Ukraine

    Posted on by Maja Jankowicz

    Lviv, 6 July 2022

     

    EUROPE – POLAND – UKRAINE: REBUILD TOGETHER. Ukrainian and Polish authorities and entrepreneurs about future cooperation and reconstruction of Ukraine

     

    The war for a free and fully sovereign Ukraine is still ongoing. Regardless of how long it will take to finally push back the aggressor, in parallel with the struggle on the front lines, we must jointly undertake a  huge effort to rebuild the country, return to the path of prosperity and rapid integration into the European Union.

    With this in mind, the first of a series of conferences in Ukraine organized by the Union of Entrepreneurs and Employers was held in Lviv on July 6. On July 8, another conference will be held in Kyiv, this time combined with the opening of the ZPP office.  Both events are to bring together the representatives of leading Polish, Ukrainian business associations, authorities of both countrieshelped mapping all needs, opportunities, expectations and priorities of Ukraine’s reconstruction, available support from Europe. 

    As noted by Cezary Kazmierczak, chairman of the Polish Union of Entrepreneurs and Employers (ZPP) –  “The only way for our countries to secure themselves against Russia is a strong military. To have a strong army – you need a strong economy to finance it.  Close Polish-Ukrainian business cooperation is one of the means to this end. Animating and developing this cooperation is one of our missions.”

    Among the guests speakers at the conference in Lviv was Andrii Moskalenko, First Deputy Mayor of Lviv  for economic development and H.E. Eliza Dzwonkiewicz, Consul General of Poland to Lviv .

    The Union of Entrepreneurs and Employers (ZPP) is a natural partner in building this extraordinary relationship at this extraordinary time for both countries. ZPP is the fastest growing employer organizations in Poland. Organization brings together 14 regional organizations and 22 trade organizations. As a member of of the Social Dialogue Council in Poland, ZPP uses its influence to promote free market, fair competition, legal stability and economic transparency. ZPP is represented in Brussels through its Representative Office, membership in the European Enterprise Alliance and membership in SME Connect. The union has two representatives in the European Economic and Social Committee.

    The conferences in Lviv and Kyiv, were also the occasion for the official opening of the ZPP representative office in Kiev. Office will provide support to Ukrainian companies that are looking for a way to enter European markets, to open their representative offices in Poland, but is also intended to facilitate Polish companies to establish permanent and direct relations with companies in Ukraine.

    The representative office of ZPP in Ukraine will be headed by Nazar Bobitski, a former Ukrainian diplomat and public affairs professional with more than 20 years of experience. His previous positions included posts as ,   Deputy Head of  Mission of Ukraine to the European Union in Brussels for trade and economic cooperation, and a representative of Ukrainian exporters at the EU institutions.

    ….

    Contact in Kyiv:  Nazar Bobitski: Phone:+380 67 172 03 64, Email: n.bobitski@zpp.net.pl

    Contact in Warsaw: Maja Charenza, Phone: + 48 510 136 429, Email: m.charenza@zpp.net.pl

     

     

    06.07.2022 EUROPE – POLAND – UKRAINE: REBUILD TOGETHER. Ukrainian and Polish authorities and entrepreneurs about future cooperation and reconstruction of Ukraine

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