The Financial Shield of the Polish Development Fund 1.0 for Small and Medium-Sized Enterprises – new regulations

On 13 April 2021, the Polish Development Fund amended the currently applicable Rules and Regulations for applying for participation in the government program “Financial Shield of the Polish Development Fund for Small and Medium-Sized Enterprises”. The amended version of the Rules came into force on April 28, 2021.

The changes introduced mainly concern the rules of settlement and redemption of the subsidy granted under Shield 1.0.

The most important of them are presented below:

The subsidy will be settled exclusively via the electronic banking system of the bank selected. The Beneficiary is obliged to submit a Settlement Statement, i.e. a document indicating all the necessary information and declarations required by the regulations. Then, the Polish Development Fund will make available, through electronic banking, a preliminary subsidy clearance form. It will include data to which the Polish Development Fund has access (from the Social Insurance Institution, the National Tax Administration and the Ministry of Finance). This data should be verified and, if necessary, clarified with the relevant office.

The received form should then be supplemented with missing information, which is crucial for the proper indication of the redemption amount.

The form so completed will allow the generation of a draft statement. It should then be verified and approved using the bank’s authorization tools.

After submitting the declaration, the Polish Development Fund will verify it and issue one of the three decisions:

• decision on the amount to be repaid – the beneficiary receives information on what amount should be repaid and what amount is subject to write-off. The amount will be divided into 24 instalments according to the repayment schedule provided by the bank. Attention: if the beneficiary wishes to make an early repayment or overpayment, he must inform the bank at least one month in advance. Otherwise the overpayment will be ineffective.
• Decision on the amount of subsidy to be returned in full – the Polish Development Fund will take such a decision if the beneficiary has violated the terms of the regulations regarding the right to receive the subsidy. The amount of the subsidy – in full – will be refundable within 14 days of the decision. Attention: The Polish Development Fund did not specify sanctions for identifying such irregularities for the beneficiaries.
• Decision on the inability to determine the amount to be refunded – the Polish Development Fund is unable to determine the amount to be refunded. Reasons will then be indicated and an explanatory procedure will be initiated, lasting up to 6 months.

The subsidy clearance statement is submitted no earlier than on the first day of the first 12 months after the subsidy payment date and no later than 10 working days after the first 12 months after the subsidy payment date.

The decision of the Polish Development Fund will be issued within 15 working days, counting from the last day of the deadline for subsidy clearance. In justified cases, this deadline may be extended.

The existing conditions of the write-off have not changed, they have only been made more precise:

• the beneficiary will be obliged to return the whole subsidy if he did not conduct any business activity for 12 months from the day the subsidy was granted;
• as a rule, the beneficiary is obliged to return 25% of the subsidy. The remaining 75% is subject to additional conditions;
• the beneficiary will be obliged to reimburse 25% if it fails to maintain employment at the required level: a part of the subsidy must be reimbursed if micro, small and medium-sized enterprises maintain, for a period of 12 full calendar months from the end of the calendar month preceding the date of conclusion of the Financial Subsidy Agreement, average employment in 2019, calculated as the average of the number of employees as of 31 December 2019 and 30 June 2019, at a level:
  1. greater than 100% – at an additional 0% of the amount of the Financial Subsidy; and
  2. between 50% and 100% – in the amount of an additional 0% to 25% of the Financial Subsidy amount, in proportion to the scale of the workforce reduction.
  3. less than 50% – an additional 25% of the amount of the Financial Subsidy;
• the beneficiary will be obliged to return 25% of the subsidy if it did not demonstrate a sufficient level of cumulative cash loss: a part of the subsidy will have to be returned in the amount of additionally up to 25% of the amount of the Financial Subsidy less the cumulative cash loss on sales reported by micro, small and medium-sized enterprises in the period of 12 months starting from the first month in which the micro, small and medium-sized enterprises reported a loss after 1 February 2020 or from the month in which the decision of the Polish Development Fund to grant a Financial Subsidy was taken, defined depending on the form of activity in the following way:
  1. for micro, small and medium enterprises keeping books of accounts – it is the loss on sales reflected in the profit and loss account excluding depreciation costs;
  2. for micro, small and medium-sized enterprises, accounting on the basis of a revenue and expenditure ledger – equal to the amount of the reported loss; and
  3. for micro, small and medium enterprises, which are accounted for on the basis of a tax card or on a lump-sum basis – the loss on sales shall be calculated as the cumulative decrease in sales revenue compared to revenue in the corresponding period of the previous year.

  The remaining 25% of the subsidy is non-refundable.

For beneficiaries operating under a specific code of the Polish Classification of Activities, it is possible to redeem 100% of the subsidy received. The list of codes can be found in the regulations. Please note: activity under these Polish Classification of Activities codes must be actually carried out. The code must appear in the registers as of 31.12.2019.

In addition, the beneficiary must meet the following conditions together:

1. operate the business for 12 months from the date of grant – continuously;
2. demonstrate at least a 30% decrease in turnover during the selected period:
   • in the period from April 1, 2020 to December 31, 2020 compared to the period from April 1, 2019 to December 31, 2019 or
   • during the period from October 1, 2020 to December 31, 2020 as compared to the period from October 1, 2019 to December 31, 2019.
3. was not in hardship as of December 31, 2019.

The maximum redemption amount is up to PLN 3.5 million.

The Ministry of Finance has not taken a position on this issue. If it is not decided that these amounts are tax exempt, then the redemption amount will be taxable.

You are welcome to contact getsix® specialists. We offer substantive support in the process of qualifying for the Polish Development Fund Financial Shield and assistance in completing formalities in accounting for subsidies from the Polish Development Fund.

If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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