5. COMPETITION POLICY

1. Treaty establishing the European Community, Title VI, Chapter 1, Rules on Competition.

(a) Notwithstanding Articles 87 and 88 of the EC Treaty, Poland may apply corporate tax exemptions granted before 1 January 2001 on the basis of the Law on Special Economic Zones of 1994, under the following conditions:

(i) for small enterprises, as defined in accordance with the Community definition [2] of such enterprises and in conformity with Commission practice, up to and including 31 December 2011;

for medium-sized enterprises, as defined in accordance with the Community definition [3] of such enterprises and in conformity with Commission practice, up to and including 31 December 2010;

In the event of a merger, acquisition or any similar event which involves the beneficiary of a tax exemption granted under the aforementioned legislation, the exemption from corporate tax shall be discontinued.

(ii) for other undertakings, provided the following limitations on the aid amounts granted under the aforementioned legislation are respected:

(aa) State aid for regional investments:

- the aid shall not exceed a maximum of 75 % of the eligible investment costs if the undertaking obtained its Special Economic Zone (hereinafter referred to as SEZ) permit before 1 January 2000. If the undertaking obtained its SEZ permit during the year 2000, the total aid shall not exceed a maximum of 50 % of the eligible investment costs,

- if the undertaking is active in the motor vehicle sector [4], the total aid shall not exceed a maximum of 30 % of the eligible investment costs,

- the period for calculating the aid to be included under the abovementioned ceilings of 75 % and 50 % (30 % in the case of motor vehicle sector) shall start on 1 January 2001; all aid claimed and received on the basis of profits that precede this date shall be excluded from the calculation,

- there shall be no requirement to reimburse the aid if at the date of accession the undertaking already exceeded the applicable ceilings,

- for the purpose of calculating the total aid, account shall be taken of all aid granted to the beneficiary in relation to eligible costs, including aid granted under other schemes and irrespective of whether the aid is granted by local, regional, national or Community sources,

- eligible costs shall be defined on the basis of the Guidelines on national regional aid [5],

- the eligible costs that may be taken into account are those incurred under the SEZ permit or under a programme that was formally decided by the company by 31 December 2002. Such costs can be taken into account only to the extent that they are actually incurred between the entry into force of the scheme under the Law on Special Economic Zones of 1994 and 31 December 2006;

(bb) State aid for training, research and development and environmental investment:

- the aid shall not exceed the relevant aid intensity ceilings applicable to such aid objectives pursuant to Articles 87 and 88 of the EC Treaty or as otherwise provided for in this Act,

- the period for calculating the aid to be included under the applicable ceilings shall start on 1 January 2001; all aid claimed and received on the basis of profits that precede this date shall be excluded from the calculation,

- for the purpose of calculating the total aid, account shall be taken of all aid granted to the beneficiary in relation to eligible costs, including aid granted under other schemes and irrespective of whether the aid is granted by local, regional, national or Community sources,

- eligible costs shall be defined on the basis of the Community rules applicable to the aid objective concerned,

- there shall be no requirement to reimburse the aid if at the date of accession the undertaking already exceeded the applicable ceilings,

- the eligible costs that may be taken into account are those incurred under the SEZ permit or under a programme that was formally decided by the company by 31 December 2002. Such costs can be taken into account only to the extent that they are actually incurred between the entry into force of the scheme under the Law on Special Economic Zones of 1994 and 31 December 2006;

(b) The transitional arrangements set out in (a) above shall only come into effect if Poland has modified the Law on Special Economic Zones introducing the above modifications to the benefits of both small and medium-sized enterprises and large undertakings granted under the Law of 1994 on Special Economic Zones up until 31 December 2000, and has brought all existing individual benefits in line with the above arrangements by accession. Any aid granted under the Law on Special Economic Zones of 1994 which is not brought into compliance with the conditions set out in (a) above by the date of accession shall be considered as new aid pursuant to the existing aid mechanism laid down in Annex IV, Chapter 3 on Competition Policy to this Act.

(c) Poland shall supply to the Commission:

- two months after the date of accession, information on the fulfilment of the conditions set out in (a) above,

- by the end of February 2007, information on the eligible investment costs effectively incurred by the beneficiaries under the aforementioned legislation, and on the total aid amounts received by the beneficiaries, and

- half-yearly reports on monitoring of aid given to the beneficiaries in the motor vehicle sector.

2. Treaty establishing the European Community, Title VI, Chapter 1, Rules on Competition.

Notwithstanding Articles 87 and 88 of the EC Treaty, Poland may grant State aid for environmental protection under the following conditions:

(a) for environmental investments aimed at adapting to standards under Council Directives 76/464/EEC [6], 82/176/EEC [7], 83/513/EEC [8], 84/156/EEC [9] and 86/280/EEC [10], until 31 December 2007, provided that the aid intensity is limited to the applicable regional aid ceiling. In the case of small and medium-sized enterprises, as defined in accordance with the Community definition [11], the intensity can be raised by 15 percentage points;

(b) for environmental investments aimed at adapting to standards under Council Directives 91/271/EEC [12] and 1999/31/EC [13], until the dates specified in Annex XII, Chapter 13 on Environment, Section C, point 2, and Section B, point 3, to this Act, provided that the aid intensity is limited to the applicable regional aid ceiling. In the case of small and medium-sized enterprises, as defined in accordance with the Community definition [14], the intensity can be raised by 15 percentage points;

(c) for environmental investments aimed at adapting to standards under Council Directive 96/61/EC [15], for existing installations and until the dates specified in Annex XII, Chapter 13 on Environment, Section D, point 1, to this Act, provided that the aid intensity is limited to 30 % of the eligible investment costs;

(d) for environmental investments aimed at adapting to standards under Directive 96/61/EC, until 31 October 2007, for existing installations not subject to the provisions laid down in Annex XII, Chapter 13 on Environment, Section D, point 1 to this Act, provided that the aid intensity is limited to 30 % of the eligible investment costs;

(e) for environmental investments aimed at adapting to standards under Directive 2001/80/EC [16], for existing installations and until the dates specified in Annex XII, Chapter 13 on Environment, Section D, point 2 to this Act, provided that the aid intensity is limited to 50 % of the eligible investment costs;

(f) the eligible costs of environmental investments shall be defined in accordance with section E.1.7. of the Community guidelines on State aid for environmental protection [17], or in accordance with subsequent rules replacing the existing Guidelines;

(g) the transitional arrangements set out in (a) to (f) above shall only come into effect if Poland grants aid in accordance with the conditions set out above.

[2] As set out in Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ L 107, 30.4.1996, p. 4).

[3] As set out in Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ L 107, 30.4.1996, p. 4).

[4] Within the meaning of Annex C of the Community Multisectoral framework on regional aid for large investment projects (OJ C 70, 19.3.2002, p. 8).

[5] OJ C 74, 10.3.1998, p. 9.

[6] Council Directive 76/464/EEC on pollution caused by certain dangerous substances discharged into the acquatic environment of the Community (OJ L 129, 18.5.1976, p. 23), as amended.

[7] Council Directive 82/176/EEC on limit values and quality objectives for mercury discharges by the chlor-alkali electrolysis industry (OJ L 81, 27.3.1982, p. 29), as amended.

[8] Council Directive 83/513/EEC on limit values and quality objectives for cadmium discharges (OJ L 291, 24.10.1983, p. 1), as amended.

[9] Council Directive 84/156/EEC on limit values and quality objectives for mercury discharges by sectors other than the chlor-alkali electrolysis industry (OJ L 99, 11.4.1984, p. 38), as amended.

[10] Council Directive 86/280/EEC on limit values and quality objectives for discharges of certain dangerous substances included in List I of the Annex to Directive 76/464/EEC (OJ L 181, 4.7.1986, p. 16), as amended.

[11] Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ L 107, 30.4.1996, p. 4).

[12] Council Directive 91/271/EEC concerning urban waste water treatment (OJ L 135, 30.5.1991, p. 40). Directive as amended by Commission Directive 98/15/EC (OJ L 67, 7.3.1998, p. 29).

[13] Council Directive 1999/31/EC on the landfill of waste (OJ L 182, 16.7.1999, p. 1).

[14] Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ L 107, 30.4.1996, p. 4).

[15] Council Directive 96/61/EC concerning integrated pollution prevention and control (OJ L 257, 10.10.1996, p. 26).

[16] Directive 2001/80/EC of the European Parliament and of the Council on the limitation of emissions of certain pollutants into the air from large combustion plants (OJ L 309, 27.11.2001, p. 3).

[17] OJ C 37, 3.2.2001, p. 3.

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