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POLAND
IN THE EUROPEAN UNION
Report 2022
EDITED BY ADAM A. AMBROZIAK
WARSAW 2022
Reviewers
Małgorzata Dziembała
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Order 72/VI/22
TABLE OF CONTENTS
Executive Summary 7
Elżbieta Kawecka-Wyrzykowska
Proposal for the EU Carbon BorderAdjustment Mechanism
asanInstrument of the European Green Deal: Possible Implications
forPoland 11
Introduction 11
1. The Commission’s proposal FIT for 55 –abrief assessment 12
2. The CBAM proposal 16
3. Theoretical justification of the CBAM 19
4. How will the CBAM work inpractice? 20
5. Compatibility with GATT/WTO rules 23
6. Possible effects of the CBAM on third countries and on the EU Member States 26
7. Possible implications of the CBAM from Poland’s perspective 31
Conclusions 33
AdamA.Ambroziak
Poland’s State Aid Policy During theCOVID-19 Outbreak 39
Introduction 39
1. Temporary Framework and COVID-19 state aid schemes inPoland 42
2. COVID-19 state aid inQ2 2020– Q2 2021 57
3. COVID-19 State aid incomparison togeneral State Aid inQ22018– Q2 2019 65
Conclusions 68
ANNEX. State aid inPoland 2004–2019 72
Michał Schwabe
Economy That Works for People: IsPoland on Track to Achieve
theEconomy-Related Sustainable Development Goals by 2030? 79
Introduction 79
1. The concept of sustainable development and its implementation inthe European
Union 81
2. Poland’s overall performance related toachieving sustainable development goals 83
3. Poland’s performance inthe Economy that works for people priority 85
4. Poland’s journey towards the circular economy 93
Conclusions 97
1
2
3
TABLE OF CONTENTS
Jerzy Menkes
Legal Framework of Poland’s Relations with Its Neighbours and the Polish
Neighbourhood Policy – Selected Issues 103
Introduction 103
1. Prologue 104
2. Neighbourliness– general issues 105
3. Money is noteverything, but… there is nothing without money 118
4. Epilogue 122
Conclusions 133
Magdalena Suska
Poland and Other EU Members’ Trade Relations with Asian Economies 139
Introduction 139
1. Significance of Asia inthe European Union’s international trade 141
2. Role of global value chains for Asia and the European Union 146
3. Poland’s trade relations with Asian economies 152
Conclusions 158
Łukasz Dawid Dąbrowski
Polish Bilateral Investment Treaties After the Lisbon Treaty 161
Introduction 161
1. Overview of the Polish Bilateral Investment Treaties 162
2. The Lisbon Treaty regarding BITs 166
3. Extra-EU BITs 168
4. Intra-EU BITs 171
Conclusions 176
4
5
6
AdamA.Ambroziak
SGH Warsaw School of Economics
Depar tment of Europ ean Integratio n and Legal Studies
Adam. A.Ambroziak@sgh.waw.pl
ORCID: 0000-0002-4618-8497
POLAND’S STATE AID POLICY DURING
THECOVID19 OUTBREAK
Introduction
The COVID-19 pandemic hit the European Union (EU) at the end of the first quar-
ter of 2020. The lack of knowledge about the disease’s ichthyology, prevention, and
treatment, meant that virtually all governments worldwide, including those of the EU
Member States, introduced numerous restrictions on the movement and close contacts
of people. In addition, bans were introduced on certain economic activities which, by
their very nature, made it most difficult to maintain social distancing (tourism, hotels,
restaurants and cafes).
As a result, the losses that entrepreneurs began to suffer were not due to their bad
business decisions, failure to adapt to the competition, or failure to foresee the effects
of changes in consumer needs and expectations. It is therefore difficult to find fault
with the business community. The market situation also failed to meet the basic prem-
ises of the market failure concept. From a theoretical point of view, it is assumed that
this market failure occurs when the market mechanism does not lead to efficient allo-
cation of resources. For many researchers, but also for the European Commission, this
continues to be a premise for accepting public interventions in the EU. However, these
premises do not include decisions to freeze economies in whole or in part in response
to COVID-19. In this case, we are dealing with two types of state intervention: the first
in the form of preventing certain entities from doing business in certain industries, and
the second in the form of payment of funds to those who incurred losses.
Therefore, COVID-19 state aid eludes the standard analysis of economic or social
premises for intervening on the market, which in literature mainly include market fail-
ures (Bator, 1958). This second type of state intervention, in the form of payments made
40 AdamA.Ambroziak
under aid schemes, results not from the need to eliminate the market failure, but from
the earlier state intervention that restricted legitimate business operations. Under such
circumstances, competition in the single European market could be seriously distorted,
as all decisions concerning business continuity and profitability in specific economic
areas would be taken by the state, not by the entrepreneur. Thus, in the EU Member
States, we would be dealing not so much with a free market economy, but with a cen-
trally planned economy such as those existing in communist times.
In the context of ongoing liberalisation processes evolving in the EU aimed at elim-
inating individual barriers in the single market, additional burdens or requirements
introduced by some Member States, as well as subsidies granted to entrepreneurs,
have become tools for improving the competitiveness of domestic companies. In order
to eliminate this approach at the EU level, the European Commission, on the basis of
the Treaty on the Functioning of the European Union (TFEU), is equipped with exclu-
sive competence in the area of competition protection. As a result, Member States are
obliged to obtain approval from the Commission before granting aid, which was also
the case during the COVID-19 pandemic. By working out guidelines or even adopting
(Commission) regulations, the Commission offers administrative support to the Mem-
ber States in the drafting of national aid schemes.
Even before the pandemic, the TFEU enabled the Member States to notify either
‘aid to make good the damage caused by natural disasters or exceptional occurrences’
(art. 107.2.b TFEU), ‘aid to (…) remedy a serious disturbance in the economy of a Member
State’ (art. 107.3.b), or ‘aid to facilitate the development of certain economic activities
(…), where such aid does not adversely affect trading conditions to an extent contrary
to the common interest’ (art. 107.3.c) to the European Commission.
At the outset of the pandemic in March 2020, the Commission developed a Tempo-
rary Framework for state aid measures to support the economy during the COVID-19
pandemic (European Commission, 2020r). This Temporary Framework was subsequently
amended several times to clarify, but more importantly, to introduce new forms of per-
missible state aid. This allowed Member States, including Poland, to develop their own
aid schemes on the basis of the Temporary Framework, which, however, did not violate
the treaty prohibition of state aid.
Meanwhile, the drafting of aid schemes and obtaining approval from the Commission
means only that these schemes comply with the prerequisites and legal requirements
rather than the real needs of entrepreneurs. Therefore, the first objective of this study
is to verify the intensity of sectoral distribution of COVID-19 state aid (both from the
point of view of size and sector of economic activity) in groups of enterprises that were
most affected by the negative effects of freezing the economy. It should be stressed that
during the pandemic, in addition to COVID-19 state aid, i.e. aid provided in connection
Poland’s State Aid Policy During theCOVID-19 Outbreak 41
with lockdowns, Member States, including Poland, continued their policy of public inter-
vention under the existing legislation, granting general state aid. Given the fact that
the COVID-19 state aid was granted under a legal framework that significantly liberal-
ised financial state intervention, the second objective of the study is to verify whether
COVID-19 state aid changed the structure of distribution of general state aid in Poland.
To achieve the first objective, we analysed the value of COVID-19 state aid granted
in comparison to the performance of companies within each section of the PKD (Polish
Classification of Activities) in terms of Gross Value Added (GVA), Average Paid Employ-
ment (APE) and the Number of Companies. For the sake of the second objective, we car
-
ried out a comparative analysis of the structure of overall state aid in Poland (excluding
COVID-19 state aid) and aid granted in previous reference periods (i.e. Q2 2018 – Q2 2019).
From a sample of all companies surveyed in Poland, only section ‘A’ (agriculture
and fisheries) was eliminated, as aid schemes for this section were notified separately.
Also, the conditions of permissible aid were slightly different here than in other sec-
tions. However, the data on COVID-19 state aid did not include the aid granted on the
basis of separate aid schemes to PLL LOT, as well as regional airports, as specific enti-
ties related to air transport. On the other hand, data on general state aid did not include
support for Idea Bank SA BFG, representing the banking sector as an extraordinary case
that occurred in the period covered by the study.1
Aid schemes in connection with COVID-19 have been notified to the European Com-
mission since March 2020. By accepting the schemes drafted on the basis of the Tempo-
rary Framework, the Commission allowed provision of aid within the timeframe specified
therein. This timeframe was dictated by the duration of the Temporary Framework. When
subsequent amendments were made, including on the basis of the sixth amendment,
it was extended until June 2022. In response, Member States, including Poland, usually
requested an extension of the validity periods of their aid schemes, especially since not all
funds were used in the first year of the COVID-19 pandemic. As a result, the schemes
that had been notified to the European Commission in 2020 were also in force in 2021.
Hence, the statistical analysis of granted COVID-19 state aid covers the period of the
second, third and fourth quarters of 2020 and the first two quarters of 2021 (due to lim-
ited availability of data for later periods). Thus, any analysis of granted COVID- 19 state
aid covers the five-quarter period Q2 2020 – Q2 2021. To ensure comparability, both the
available data on Gross Value Added, Average Paid Employment and the Number of Com-
panies, as well as those on general state aid granted in previous years in Poland, were
1 Due to the nancial distress suffered by the Idea Bank S. A., Bankowy Fundusz Gwarancyjny (Bank Guar-
antee Fund) launched its mandatory restructuring. The Bank was taken over by the Bank Pekao S. A. on
3 January 2021. The procedure resulted in the agreement that guaranteed the coverage of Idea Bank’s losses
to the amount of EUR 2.7 bn.
42 AdamA.Ambroziak
recalculated for those five quarters. In the last case, the control period was Q2 2020 –
Q2 2021, while the reference periods were Q2 2018 – Q2 2019, Q2 2016 – Q2 2017,
Q2 2014 – Q2 2015, Q2 2012 – Q2 2013, Q2 2010 – Q2 2012, and Q2 2008 – Q2 2010.
The first part of the study is an analysis of aid schemes notified to the European
Commission in connection with the COVID-19 pandemic and measures taken to reduce
the negative effects of the freezing of economies. This is followed by statistical analy-
sis of the COVID-19 state aid granted in the surveyed period Q2 2020 – Q2 2021, taking
into account the sector – of economic activity represented by aid beneficiaries and their
respective size. Further, potential change in the structure and possibly intensity of gen-
eral state aid (excluding COVID-19 state aid) during the COVID-19 pandemic in Poland
is identified. The conclusions are presented at the end.2
1. Temporary Framework and COVID-19 state aid schemes inPoland
In its first communication on the COVID-19 pandemic of March 2020, the Euro-
pean Commission encouraged Member States to use instruments that would not consti-
tute state aid (European Commission, 2020d). The aim was that each EU Member State
would use those economic policy instruments that would distort competition to the least
possible extent. Notably, especially during periods of crisis, when the existing princi-
ples of state intervention in the economy are relaxed, the level playing field in such an
integrated area as the EU internal market is seriously undermined together with public
finances which, as a rule, are subject to restraints designed to ensure sustainability of
the economic and monetary union (EMU).
However, it soon turned out that this formula would not work in the case of a crisis
manifesting itself in the loss of liquidity by entire industries and sectors of the econ-
omy. Then the Commission adopted a separate document referred to as the Temporary
Framework for State aid measures to support the economy in the current COVID-19 outbreak
(European Commission, 2020 r, for more see: Rosiak and Przybyszewska, 2020, Kopeć,
2021, Kubera 2021). This document initially provided for the possibility of granting the
following types of state aid until the end of December 2020:
§Aid in the form of direct grants, repayable advances or tax advantages not exceed-
ing EUR 800, 000 per undertaking to address its urgent liquidity needs (3.1 accord-
ing to the Temporary Framework).
2 There is also an Annex to the results of studies titled ‘Poland towards a new approach to state aid policy
after accession to the European Union’ presented in the previous report ‘Poland in the European Union.
Report 2021’. It is an annual supplement to the results of analyses based on the recent data presented by
the European Commission in Scoreboard 2020.
Poland’s State Aid Policy During theCOVID-19 Outbreak 43
§Aid in the form of guarantees on loans to ensure banks keep providing loans to the
customers who need them (3.2);
§Aid in the form of subsidised interest rates for loans (3.3);
§Aid in the form of guarantees and loans channelled through credit institutions or
other financial institutions to assist companies in covering immediate working cap-
ital and investment needs (3.4);
§Aid for short-term export credit insurance with some additional flexibility on how
to demonstrate that certain countries are not-marketable risks (3.5).
Due to the changing circumstances and demand in the Member States, the document
was amended several times. The first amendment was made even in early April 2020,
when, in addition to extending the forms of support, the following five permissible aid
categories were added to the existing list (European Commission, 2020a):
§Aid for COVID-19-relevant research and development (3.6).
§
Investment aid for testing and upscaling infrastructures (3.7). In both cases, the idea
was to stir up the interest of businesses in research activities up to first industrial
deployment prior to mass production. Aid was intended to cover medicinal products
(including vaccines) and treatments, medical devices, hospital and medical equipment
(including ventilators and protective clothing and equipment as well as diagnostic
tools), disinfectants, and data collection/processing tools for data useful in fight-
ing the proliferation of the virus.
§Investment aid for the production of COVID-19-relevant products (3.8). Aid was
designed to mobilise the Member States to collaborate and support entrepreneurs
representing different Member States engaged in the development of infrastructure
related to the combating of COVID-19.
§Aid in form of deferrals of tax and/or of social security contributions (3.9). This cat-
egory targeted all companies struggling to maintain liquidity and, at the same time
obliged to pay all mandatory contributions and charges (including social security).
The intended effect was to reduce the rate of lay-offs.
§Aid in form of wage subsidies for employees to avoid lay-offs during the COVID- 19
outbreak (3.10).
As entrepreneurs were reducing their equity capital, due to which they also lim-
ited their ability to borrow from the markets, the next amendment to the Temporary
Framework in May 2020 provided for two additional aid categories (European Commis-
sion, 2020b):
§
Aid in form of recapitalisation, to be applied only when no other aid measures
could be used. Such aid, which consists in the acquisition of a company by the state
through recapitalisation, should be provided only if the objective of preventing
social hardship and market failure due to potential substantial job losses, market
44 AdamA.Ambroziak
exit of an innovative firm, or loss of a business of systemic or strategic importance,
would be achieved (3.11).
§
Aid in form of subordinated debt granted on preferential terms. This concerned
debt instruments subordinated to ordinary senior creditors in the case of insol-
vency proceedings (3.12).
In October 2020, the European Commission decided to extend the temporary arrange-
ments until June 2021, with the exception of recapitalisation measures, which were
extended until 30 September 2021. (European Commission, 2020f). In addition, a new
permissible form of aid was added in connection with the COVID-19 pandemic: sup-
port for uncovered fixed costs of companies. This was aid designed to contribute to the
fixed costs of beneficiaries that are not covered by the income generated. In addition,
the already existing permissible category of aid for the exit of the state from recapi-
talisation of companies in which the state was a shareholder (i.e. before the recapitali-
sation) was modified. Moreover, in the absence of sufficient private sector capacity to
provide insurance cover, the temporary removal of all countries from the list of ‘mar-
ketable risk’ countries from the Communication on short-term export-credit insurance
was extended until 30 June 2021 (European Commission, 2020c, 2020e).
Ten months after the adoption of the Temporary Framework, in the absence of any
clear indication of an end to COVID-19 restrictions, the Commission decided to extend
it further until 31 December 2021 (including the removal of the list of ‘marketable risk’
countries), with the exception of recapitalisation measures, which could be granted
until 30 September 2021 (European Commission, 2020e).
Changes were also made to increase the existing aid ceilings. The Commission,
at the request of Member States, further relaxed aid rules with regard to the simplest
aid in the form of direct grants, repayable advances or tax advantages by raising the
threshold from EUR 800 thousand to EUR 1.8 million per enterprise. It is worth not-
ing at this point that this support could be combined with de minimis aid, which means
that a company could receive up to EUR 2 million. This ceiling also became the maxi-
mum aid received by an enterprise in connection with the introduction of the possibil-
ity to transform the applied repayable instruments in the form of guarantees, loans, or
repayable advances into grants, for instance. In addition, the ceiling on coverage by the
state of a portion of the fixed costs in the case of enterprises particularly affected by the
coronavirus crisis was raised from EUR 3 million to EUR 10 million. Such ceilings, on the
one hand, make it possible to significantly support undertakings experiencing problems
resulting from COVID-19, but on the other hand, they may constitute a serious source
of distortion of competition on the market. Nevertheless, the European Commission,
after almost eighteen months of the Temporary Framework being in force, is in favour
of extending it until June 2022.
Poland’s State Aid Policy During theCOVID-19 Outbreak 45
The Temporary Framework referred to above provided the foundation for aid schemes
drafted by Poland. At the end of March 2020, i.e. only two weeks after the announce-
ment of the COVID-19 pandemic in Europe, Poland notified the first aid scheme, which
was a series of the Crisis Shields. In the surveyed period Q2 2020 – Q2 2021, the Euro-
pean Commission approved 26 state aid schemes submitted by Poland in response to
COVID- 19, which provided for 60 financial instruments offered to entrepreneurs (Table 1).
Many more decisions were issued by the Commission, as some of them concerned either
modification of the existing schemes by increasing the amount, clarification of con-
ditions and criteria for the identification of beneficiaries, or extension of the validity
period due to extension of the Temporary Framework for the following months of 2021.
Polish COVID-19 state aid schemes provided primarily for the granting of state aid
under paragraph 3.1 of the Temporary Framework. This was due to the fact that this
very provision was the fastest way to ensure that aid was granted to companies without
meeting any criteria (apart from proving the damage in connection with COVID-19).
Along with these aid categories, aid schemes were also created offering support in the
form of tax and social contribution deferrals (point 3.9 of the Temporary Framework),
as well as wage subsidies (3.10). These were driven by the wish to put in place mecha-
nisms that would support employment. In both cases, the goal was to help entrepreneurs
maintain jobs and stop them from laying off workers due to COVID-19-related losses.
Thus, these instruments were used to directly subsidise or refund the cost of employ-
ment to employers and, at the same time, they reduced the scale of lay-offs and poten-
tial increases in the unemployment rate (European Commission, 2020h). When it comes
to tax deferrals, a legal basis for the tax administration was introduced to i) postpone
the deadline of a tax payment or divide tax payment into instalments, and ii) postpone
(or divide the tax payment into instalments) the payment of tax arrears or of interest
(for late payment or lack of return) (European Commission, 2020l).
These aid schemes were supplemented by support offered in the form of repayable
advances for micro companies, as well as repayable advances for SMEs that would cover
a portion of the uncovered fixed costs of those undertakings for which the COVID-19
outbreak resulted in the suspension or reduction of their business activity (European
Commission, 2020o).
Aid schemes designed to provide guarantees on loans (3.2) and subsidised interest
rates for loans (3.3) were clearly much less numerous and had smaller budgets. Subsidised
interest rates for loans were primarily financed from the EU funds or were addressed
to large undertakings (European Commission, 2020g, 2020j).
46 AdamA.Ambroziak
Table 1. COVID-19 state aid schemes adopted by the European Commission inQ2 2020-Q2 2021 r. based on the Temporary Framework
No. Date of the
decision Title of the decision Budget
(inths EUR) 3.1 3.2 3.3 3.6 3.7 3.8 3.9 3.10 3.11 3.12
1 3.04.2020 SA.56876 (2020/N)– Poland. COVID-19: Liquidity guarantee fund 4 800 000 X
2 8.04.2020 SA.56896 (2020/N)– Poland. COVID-19: anti-crisis measures inthe form of loans and
guarantees financed from EU funds 1 020 000 X X
27.10.2020 SA.58848 (2020/N) – COVID-19: Amendment of SA.56896 (2020/N)– anti-crisis
measures inthe form of loans and guarantees financed from EU funds
3 10.04.2020 SA.56979 (2020/N)– Poland. COVID-19: Interest rate subsidy scheme 115 000 X
4 22.04.2020 SA.57065 (2020/N)– Poland. COVID-19: anti-crisis measures inthe form of loans and
guarantees financed from the re-use of resources returned from 2007–2013 financial
instruments 110 000
X X
27.10.2020 SA.58849 (2020/N)– Amendment of SA.57065 (2020/N)– anti-crisis measures inthe
form of loans and guarantees financed from the re-use of resources returned from
2007–2013 financial instruments X X
5 23.04.2020 SA.56922 (2020/N)– Poland. Polish anti-crisis measures– direct grants, repayable
advances, tax and payments advantages, tax deferrals and wage subsidies schemes
related toCOVID-19 15 184 600
X X X
3.09.2020 SA.58481 (2020/N) – Amendment of the scheme SA.56922 (2020/N) concerning
Polish anti-crisis measures– direct grants, repayable advances, tax and payments
advantages, tax deferrals and wage subsidies schemes related toCOVID-19 X
6 13.05.2020 SA.57282 (2020/N)– Amendment to the scheme SA.56922 (2020/N)– Polish anti-
crisis measures– direct grants, repayable advances, tax and payment advantages,
tax deferrals and wage subsidies schemes related toCOVID-19 17 510 X
7 24.04.2020 SA.57015 (2020/N)– Poland. State aid inthe form of grants or repayable assistance
under operational programmes for 2014–2020 tosupport the Polish economy
inconnection with the occurence of the COVID-19 pandemic outbreak 800 000 X
8 27.04.2020 SA.56996 (2020/N)– Poland. COVID-19: repayable advance scheme for micro, small
and medium-sized enterprises
16 600 000
X
17.12.2020 SA.59758 (2020/N)– Poland. Amendment toSA.56996 (2020/N) as prolonged by
SA.59715– COVID-19: repayable advance scheme for micro, small and medium-sized
enterprises X
Poland’s State Aid Policy During theCOVID-19 Outbreak 47
No. Date of the
decision Title of the decision Budget
(inths EUR) 3.1 3.2 3.3 3.6 3.7 3.8 3.9 3.10 3.11 3.12
9 11.05.2020
SA.57191 (2020/N)– Poland. State aid inthe simplified repayable form from financial
engineering instrument resources subject tore-use and from financial instruments
under operational programmes for 2014–2020 perspective tosupport the Polish
economy inconnection with the COVID-19 pandemic outbreak
470 000 X
10 25.05.2020 SA.57306 (2020/N)– Poland. COVID-19: Financial shield for large enterprises:
Liquidity loans 2 200 000
X
1.03.2021 SA.59872 (2020/N)– Poland. COVID-19: Second amendment of SA.57306 (2020/N)
Financial shield for large enterprises: Liquidity loans X
11 11.06.2020 SA.57055 (2020/N)– The Polish anti-crisis measures– COVID-19– equity instruments 1 650 000 X
12 18.06.2020
SA.57519 (2020/N)– Poland. R&D aid for COVID-19 relevant research and
development, investment aid for the construction and upgrade of relevant testing
and upscaling infrastructures, and investment aid for investments into production
facilities for the production of COVID-19 relevant products
449 000 X X X
13 23.07.2020 SA.57452 (2020/N)– Poland. COVID-19: Guarantees on Factoring 2 600 000 X
14 28.07.2020 SA.57726 (2020/N)– Poland. COVID-19: State aid inthe form of reduction of
the annual fee for perpetual usufruct and relief inrent, lease and usufruct fees
tosupport entrepreneurs affected by the COVID-19 pandemic outbreak 122 800
X
11.12.2020 SA.59915 (2020/N)– Amendment toSA.57726: State aid inthe form of reduction
from the annual fee for perpetual usufruct for 2021 or conversion fee for 2021.
15 28.09.2020 SA.58102 (2020/N)– COVID-19– Poland. COVID-19 support totour operators and
other undertakings active intourism and culture 784 770
X
2.06.2021 SA.62231 (2021/NN)– Poland. COVID-19– Amendments ofSA.58102 and aid inthe
form of limited amounts of aid (Section 3.1 TF)
16 29.10.2020 SA.58185 (2020/N)– Poland. COVID-19: Polish anti-crisis measures– State aid
granted by the State Forests 13 000 X
17 13.11.2020 SA.57172 (2020/N)– Poland. COVID-19: Anti-crisis measure– tax deferrals 264 000 X
18 14.12.2020 SA.58238 (2020/N)– Pan-European Guarantee Fund inresponse toCOVID-19 -
15.12.2020 SA.59715 (2020/N)– Poland. COVID-19: Modifications toSA.56876, SA.56922,
SA.56979, SA.56996, SA.57015, SA.57054, SA.57055, SA.57191, SA.57306, SA.57452,
SA.57519 and SA.57726 -
48 AdamA.Ambroziak
No. Date of the
decision Title of the decision Budget
(inths EUR) 3.1 3.2 3.3 3.6 3.7 3.8 3.9 3.10 3.11 3.12
20 23.12.2020 SA.59763 (2020/N)– Poland. COVID-19: The Financial Shield for SME 2.0
2 900 000
X X
12.01.2021 SA.60940 (2021/N)– Poland. COVID-19: Modification of SA.59763 (2020/N): The
Financial Shield for SME 2.0
21 20.01.2021 SA.60376 (2020/N)– Poland. Support toundertakings affected by restrictions
applied toindustries whose activities may contribute tothe spread of the COVID-19
pandemic 1 900 000 X
22 9.02.2021 SA.61173 (2021/N)– Poland. Subsidy schemes tonon-governmental organisations,
other entities engaged inpublic benefit work and religious entities affected by the
COVID-19 94 600 X
23 11.03.2021 SA.61825 (2021/N)– Poland. Subsidy schemes toindustries affected by the COVID-19 1 088 000 X
21.06.2021 SA.62885 (2021/N)– Poland. Amendment of theaid scheme SA.61825 ‘Subsidy
schemes toindustries affected by the COVID-19’ 4 089 100 X
24 16.03.2021 SA.62078 (2021/N)– Poland. Prolongation of SA.56876, SA.56896, SA.56922,
SA.56996, SA.57015, SA.57054, SA.57055, SA.57065, SA.57172, SA.57191, SA.57452,
SA.57519, SA.59763 and SA.60376 -
25 6.05.2021 SA.62472 (2021/N)– Poland. COVID-19: Leasing guarantees combined with the Pan-
European Guarantee Fund inresponse toCOVID-19 300 000 X
26 24.06.2021 SA.62603 (2021/N)– Poland. COVID-19: Support tobus operators 139 700 X
Source: Own calculations based on OCCP data.
Poland’s State Aid Policy During theCOVID-19 Outbreak 49
In addition to the Temporary Framework briefly outlined above, the Commission,
given the link between the COVID-19 pandemic and the consequences for entrepre-
neurs, considered Article 107.2b TFEU, which concerns aid to make good the damage
caused by exceptional occurrences, to be appropriate for assessing support to enter-
prises in industries particularly affected by the epidemic. The second legal basis for
the European Commission in assessing measures notified under the Treaty was Arti-
cle 107.3.b, which allows ‘aid to facilitate the development of certain economic activ-
ities (…), where such aid does not adversely affect trading conditions to an extent
contrary to the common interest’. In both cases, the European Commission accepted
that the COVID-19 pandemic could be considered an exceptional occurrence because
of its exceptional and unforeseeable nature and its significant impact on not one, but
many areas of the economy. Moreover, it found that the beneficiaries of the support
were entrepreneurs who had liquidity problems resulting from the market situation
and needed urgent assistance.
At the same time, the Commission stressed that the aid in question must compen-
sate for damage directly caused by the restrictions on economic activity imposed by
Member State governments. Such aid should not be intended to preserve or restore the
viability, liquidity or solvency of an institution or entity. These conditions and limita-
tions are far from clear. Therefore, the Commission stated that individual aid schemes
would be assessed on a case-by-case basis, based on the jurisprudence of the Court of
Justice of the European Union and considering previous decisions that take into account
criteria such as: unpredictability or difficulty in prediction, significant scale and eco-
nomic impact, and extraordinariness.
Table 2. COVID-19 state aid schemes adopted by the European Commission
inQ2 2020– Q22021 based on art. 107.3.b of the TFEU
No. Date of the
decision Title of the decision Budget
of the
measure
Legal basis
under the
TFEU
1 29.05.2020 SA.57054 (2020/N)– Poland. COVID-19: The Polish anti-crisis
measures– aid for damage compensation and toimprove the
liquidity of undertakings affected by the COVID-19 outbreak 1 600 000 Art.107.2.b
2 1.06.2021 SA.59800 (2021/N)– Poland. COVID-19: Receivables insurance 800 000 107.3.b
3 17.06.2021
SA.62752 (2021/N)– Poland. COVID-19– The Polish anti-crisis
measures– aid for damage compensation and toimprove the
liquidity of undertakings affected by the COVID-19 outbreak 2.0,
and amendments toschemes SA.57054 and SA.57306
1 650 000 107.3.b
Source: Own calculations based on OCCP data.
As mentioned above, the main objective of coronavirus-related aid instruments
offered in Poland in the examined period from the beginning of Q2 2020 until the end
50 AdamA.Ambroziak
of Q2 2021 was to address the problem of maintaining financial liquidity of undertak-
ings in connection with the restrictions and, ultimately, the freezing of certain areas
of economic activity. The closure of one area of the economy, through a domino effect,
caused problems for sub-suppliers, recipients, business counterparties, and ultimately
consumers. This resulted from different channels through which the introduced restric-
tions influenced the economy. Firstly, difficulties were expected as a result of broken
supply chains both from outside the EU and within the single market. While the Com-
mission took measures to limit the negative consequences of the restrictions, e.g. at
the internal borders of the EU, this did not apply to individual decisions made by entre-
preneurs and obstacles in international trade (Ambroziak, 2021a). Secondly, consumer
demand changed dramatically. On the one hand, many industries were directly affected
by the freezing of their activities and inability to offer products, especially services, as
they were unable to ensure physical distance (e.g. tour operators, events, fitness, restau-
rants). On the other hand, the pandemic situation in individual Member States forced
the sudden development of other services, such as transport or e-commerce and cour-
ier services (delivery of goods to individual consumers). Thirdly, uncertainty about the
future stopped investment among both businesses and consumers.
Consequently, following the requirements specified in the Temporary Framework
(European Commission, 2020r), aid schemes adopted in Poland in 2020 initially targeted
all entrepreneurs who reported losses related to the freezing or restriction of certain busi-
ness activities in connection with COVID-19. Therefore, the aim was to identify entre-
preneurs and industries the most affected by the restrictions, regardless of the industries
they represented. This is why at the beginning of the pandemic, these aid schemes were
definitely more of a horizontal rather than an industry-specific nature, with the excep-
tion of the support scheme for cultural institutions and agencies, including artists (Euro-
pean Commission, 2020p) as well as for tour operators and other undertakings active
in tourism and culture, including: land transport, tourist agents, tour pilots and tour
guides, artists performing at events, activities supporting the organization of events,
renting and leasing of other machines and devices, and other entertainment business
activity, as well as organization of fairs, exhibitions and congresses, hotels and similar
forms of accommodation, other entertainment business activity, and renting and leas-
ing of other machines and devices (European Commission, 2020n).
In the next calendar year of the COVID-19 pandemic, Poland drafted and imple-
mented more aid schemes targeting specific industries, including:
§The Financial Shield for SME 2.0, which covered for instance retail trade, tourist
agencies, catering, accommodation, and photographic, physiotherapy, and fitness
services, as well as entertainment parks, cinemas and museums, and also, printing
and advertising services, retail sale of flowers, plants, seeds, fertilisers, pets and
Poland’s State Aid Policy During theCOVID-19 Outbreak 51
pet food in specialised stores, as well as advertising agencies (European Commis-
sion, 2020o, 2020p);
§COVID-19 support to tour operators and other undertakings active in tourism and
culture (European Commission, 2020q);
§
Support to undertakings affected by restrictions applied to industries whose activities
may contribute to the spread of the COVID-19 pandemic such as catering, fitness,
fairs, stage, film, entertainment and recreation, photography, and physiotherapy
(European Commission, 2021a);
§
Subsidy schemes for industries affected by COVID-19 were opened to sectors of the
tourism industry, in particular hotels, camping sites, tour agents and tour operators,
retail sale, taxi operations, hotels, restaurants, education, and the paramedical, sport
and entertainment sector (European Commission, 2021b, 2021c);
§Support to bus operators (European Commission, 2021d).
Also, schemes were prepared which excluded specific industries, such as credit insti-
tutions, activities in commercial property and real estate developers, certain transport
services, and transport infrastructure (European Commission, 2021e).
The COVID-19 state aid schemes notified to the European Commission can be divided
into three groups from the point of view of the forms of state aid, and two groups tak-
ing into account their relation to the budget. The first three groups include grants and
subsidies, soft loans, guarantees and warrants. In the second case, we can distinguish
instruments transferring financial resources from public budgets (central and local)
to entrepreneurs and tools reducing or completely eliminating public financial obliga-
tions of companies towards the aforementioned budgets (Figure 1) (Ambroziak, 2021a).
Polish aid schemes used the existing channels of the distribution of funds and intro-
duced new ones at different levels: from central to regional and local authorities (Table 3).
In the first calendar year of the pandemic, the government offered support instruments
created on the basis of European funds, both those from the previous financial per-
spective and the one for 2014–2020 (European Commission, 2020j, 2020k). This meant
that, in reality, certain interventions were only shifted from pro-development measures
co-financed with European funds, which were reflected in the respective operational
programmes, to anti-crisis measures. In this case, the main sources of support, apart
from Bank Gospodarstwa Krajowego, the Polish Agency for Enterprise Development,
and other institutions implementing European funds, were financial intermediaries,
including state and commercial banks. Mechanisms were therefore used which made it
possible to use channels familiar to both aid donors and entrepreneurs for distributing
public funds to the economy. They did not require drafting new procedures and creat-
ing structures to finance companies. These measures included both guarantees and so-
called liquidity loans, which could be redeemed at a later stage if the criteria, concerning
52 AdamA.Ambroziak
above all job retention, were met. In the latter case, although this concerns repayable
instruments, in most cases the ultimate effect was as a minimum the transfer of funds
to entrepreneurs for at least the duration of the scheme.
Figure 1. COVID-19 state aid granted inPoland between Q2 2020– Q2 2021 by form
Payment write off;
48.48%
Subsidies;
47.33%
Exemption from
payments; 3.73%
Reduced payment;
0.18%
Tax exemptions;
0.15%
Others; 0.13%
Returnable
advances; 87.18%
Conditional loan
write-off; 11.66%
Preferential
loans; 1.14%
Others; 0.02%
0
5 000 000
10 000 000
15 000 000
20
000000
25
000000
Grants Soft loans Guarantees
Grants
Soft loans
Source: Own calculations based on OCCP data.
The instruments of the Polish Development Fund that had been allocated to small
and medium enterprises even by the end of April 2020 (European Commission, 2020i)
are particularly noteworthy. Financing for this group of undertakings was based on inter-
est-free financial advances (which, if certain conditions are met, can be seen as subsi-
dies) available from selected commercial and cooperative banks. This measure aimed
to adjust the amount of financial support to the scale of potential loss of income due
to a decrease in revenues caused by COVID-19. A separate scheme was prepared for
large enterprises (European Commission, 2020m). In this case, the aid scheme provided
for aid in the form of a loan granted at subsidised interest rates and was limited to four
years. In addition, the arrangement was provided as non-repayable financing, which was
intended to cover a maximum significant part of the damage suffered by the company
as a result of COVID-19 (for more see Ambroziak, 2021b). In this case, the funds came
Poland’s State Aid Policy During theCOVID-19 Outbreak 53
from a bond issue, the total value of which could reach PLN 100 billion (EUR 22.7 billion).
On the basis of the agreement on the implementation of the government programmes
‘Financial Shield of the Polish Development Fund for small and medium-sized com-
panies’, adopted by the Resolution of the Council of Ministers No. 50/2020 of 27 April
2020, and the ‘Financial Shield of the Polish Development Fund for large companies’,
adopted by the Resolution of the Council of Ministers No. 51/2020 of 27 April 2020, the
PFR offers support to undertakings affected by the COVID-19 pandemic, broken down as
follows: EUR 5.7 billion each to go to micro and large enterprises, and over EUR 11.4 bil-
lion to small and medium-sized enterprises (PFR, 2021).
Another group of aid schemes offered various types of allowances, including exemp-
tions from the obligation to pay contributions, as well as additional ‘work suspension’
benefits offered by the Social Insurance Institution in subsequent lockdowns in con-
nection with COVID-19 (especially at the end of 2020). Voivodeship and poviat (county)
labour offices also became an important donor of support, offering, above all, subsidies
to cover current costs of running a business for micro- and small enterprises from the
Labour Fund and to protect jobs from the Guaranteed Employee Benefits Fund. In this
way, attempts were made to limit lay-offs of workers and prevent an increase in the
unemployment rate in Poland.
Separate benefits were offered by the State Fund for Rehabilitation of Disabled
People (Polish abbr. PFRON), in accordance with its competences (with regard to sub-
sidies to salaries and wages of disabled employees and workers for employers in eco-
nomic distress and refunds of costs of adapting workstations to the needs of employees
with disabilities, employment of assistants to employees with disabilities, and train-
ing of employees with disabilities). In this case, these instruments are still offered by
PFRON, which means that in reality only the objectives and criteria were reformulated,
taking into account the crisis faced by entrepreneurs, and no new funds were gener-
ated to tackle the pandemic.
The wide range of tools at the disposal of regional and local authorities (voivode-
ship governors, starosts, mayors, heads of villages and municipal councils) is particu-
larly noteworthy. They were mainly available in the first year of the pandemic – 2020,
and envisaged the possibility of both granting subsidies and offering relief from liabili-
ties to entrepreneurs. In the first case, it was mainly a question of subsidising some of
the costs of (a) running a business for entrepreneurs who were natural persons with-
out employees, (b) employees’ salaries and social security contributions for SMEs, and
(c) employees’ salaries and social security contributions for NGOs and public benefit
organisations. Another important instrument of support for entrepreneurs was the
exemption from real estate tax offered by local government units, as well as the reduc-
tion of fees for long-term lease, and the non-collection of rent and lease and of user
54 AdamA.Ambroziak
fees. Apart from the tools reducing revenues to the local budgets, a certain type of cred-
iting of entrepreneurs by local authorities was also envisaged through the allowances
in liabilities towards them, which meant deferral and division into instalments of the
aforementioned payments (real estate tax, rent and lease fees or civil law liabilities).
It is worth noting at this point the lack of any compensation mechanism on the part of
the central budget for local government units, which in many cases clearly limited their
possibilities to offer support at the regional and local level.
Table 3. COVID-19 state aid granted inPoland inQ2 2020–Q2 2021 by type
State aid
category Amount of
aid Share
(in%) Measures (subsidies or grants) provided for inCOVID-19 state
aid schemes
Share in
agiven
category
(in%)
Payment
write-off
(contribution,
payment,
debt)
3 092 208.8 48.48 Allowances inpayments of the rent/long-term lease/use
(JST), allowances incivil law liabilities (JST), exemption from
unpaid social security contributions toZUS (ZUS)
100.00
Subsidies 3 018 982.7 47.33 Subsidising aportion of running costs of abusiness for
sole proprietorships which do nothave employees (JST),
subsidising aportion of employees’ remuneration and social
security contributions for SMEs, NGOs, and of public benefit
organisations (JST), monthly subsidies todisabled employees’
remuneration toentrepreneurs ineconomic distress (PFRON)
49.94
Subsidies under operating programmes for 2014–2020
(Financial intermediaries) 16.60
Benefits for ‘work suspension’ (economic work stoppage)
(ZUS), Subsidies tocover the current running costs of
abusiness for micro- and small entrepreneurs from the
Labour Fund (PUP), benefits for job retention schemes
(subsidy) from the FGŚP (WUP)
11.73
Subsidies tocover the current running costs of abusiness
for micro- and small entrepreneurs from the Labour Fund
(sectoral) (WiPUP), benefits for job retention schemes
(subsidy) from the FGŚP (sectoral) (WiPUP), one-off extra
benefit for ‘work suspension’ and exemption from social
security contributions for 2020 (ZUS)
10.11
‘Work suspension’ benefit repeated once or twice and
exemption from the obligation topay social security
contributions (ZUS), subsidy tocover the current running
costs of abusiness for micro- and small entrepreneurs from
the Labour Fund, subsidy granted for job retention schemes
from the FGŚP (PUP and WUP)
7.89
Subsidies toinstitutions of culture (MKiDN) 2.68
Exemption from property tax (JST) 0.64
Aid for R&D activities related tothe COVID-19 pandemic,
investment aid for infrastructure used intesting and
preparations for mass production of products that serve the
containment of the COVID-19 pandemic and investment aid
for the production of products tofight the COVID-19 pandemic
granted under operational programmes for 2014–2020
(Institutions implementing EU funds)
0.41
Poland’s State Aid Policy During theCOVID-19 Outbreak 55
State aid
category Amount of
aid Share
(in%) Measures (subsidies or grants) provided for inCOVID-19 state
aid schemes
Share in
agiven
category
(in%)
Exemptions
from payment 237 891.4 3.73 ‘Work suspension’ benefit and exemption from the obligation
topay social security contributions (ZUS) 99.45
Exemption from the obligation topay unpaid social security
contributions (ZUS) 0.55
One-off exemption from the obligation topay social security
contributions (ZUS) 0.01
Reduced
payments 11 709.1 0.18 Reduced payments for long-term lease, suspension of
the collection of rent and long-lease payments, as well as
payments for use, reduced transformation fee for 2021 (JTS,
AMW, KOWR)
91.20
Reduced payments for long-term lease, suspension of the
collection of rent and long-lease rent, as well as payments for
use (JST), reduced rate for long-term lease (JST)
8.80
Tax
exemptions 9 804.2 0.15 Additional benefits for ‘work suspension’ (economic work
stoppage) and exemption from the obligation topay social
security contributions, health insurance contributions,
contributions tothe Labour Funds, Solidarity Fund,
Guaranteed Employee Benefits Fund or Bridging Pensions
Fund (ZUS)
100.00
Other,
including: 8 297.1 0.13
~ write-off (contributions, payments,
debt) Cancellation, inwhole or inpart, of the following debt: (1) statutory
interest; (2) compensation for recovery costs, and (3) contractual
penalties (LP)
~ interest rate subsidies for bank
loans (directly toentrepreneurs) Interest rate subsidies (Banks)
~ refunds Refunding costs of adapting aworkplace tothe needs of disabled
employees for entrepreneurs ineconomic distress (PFRON), refunding
costs of hiring employees who assist disabled employees for employers
ineconomic distress (PFRON), refunding costs toZCHP (entities
which employ disabled employees and workers) ineconomic distress
(PFRON), refunding costs of training disabled employees toemployers
ineconomic distress (PFRON)
~ rent waivers Waived rent and long-lease rent, as well as waived rents for use,
allowances inpayments for rent/long-lease/use (JST)
~ write-off of interest-rates for
overdue payments (contributions,
payments, debt)
Allowances incivil law liabilities (JST)
~ tax deductions Allowances infees for rent/lease/use (JST)
~ reductions or allowances resulting
inreduced tax base or tax due Allowances infees for rent/lease/ use (JST)
~ tax waiver Waived real estate tax (JST)
~ write-off of interest rate for unpaid
tax Write-off of unpaid tax together with interest for real estate tax
56 AdamA.Ambroziak
State aid
category Amount Share
(in%) Measures (subsidies or grants) provided for inCOVID-19 state
aid schemes
Share in
agiven
category
(in%)
Returnable
advances 14 981 647.9 87.18 Financial Shield for micro-, small and medium-sized
enterprises (PFR) 100
Conditional
loan write-off 2 004 114.3 11.66 Redeemable loans tocover the running costs of abusiness for
micro-entrepreneurs (JST) 99.84
Aid inthe form of aloan tocover the running costs of
abusiness for NGOs and public benefit organisations and
subsidies for employee remuneration for public ecclesiastical
juridical persons (PUP)
0.16
Preferential
loans 196 141.4 1.14 Liquidity loans (Shield for large enterprises) (PFR) 39.33
State aid inthe form of loans financed from the EU funds
(Financial intermediaries) 38.43
Preferential loans (Shield for large enterprises) (PFR), write-
offs of preferential loans (Shield for large enterprises) (PFR) 9.13
State aid granted inthe form of loans financed from financial
engineering instruments that can be reused with aview
tosupporting the Polish economy (Financial intermediaries)
8.10
Loans totour operators (Shield for tourism industry)– the
‘first measure’ 5.00
Repayable assistance under operational programmes for the
period 2014–2020 (Financial intermediaries) 0.01
State aid granted inthe form of guarantees financed from
financial engineering instruments that can be reused
tosupport the Polish economy (Financial intermediaries)
0.01
Other,
including: 3 646.30 0.02
~deferral of tax payment Deferrals of tax payment granted based on the Tax Ordinance Act (JST),
Extension of real estate tax deadline (for instalment payments) (JST)
~ unpaid taxes plus interest rates paid
by instalments Allowing unpaid taxes plus interest rates on overdue payment tobe paid
by instalments (JST)
~ deferrals of payment of unpaid
taxes with interest rates Tax instalment deferral granted based on the Tax Ordinance Act (JST);
Real estate tax deferrals (JST)
~ tax paid by instalments Allowing tax tobe paid by instalments based on the Tax Ordinance Act
(JST)
~ deferral of payment (contribution,
remittance) Allowances incivil law liabilities (JST), allowances infees for rent/lease/
use (JST)
~ payment by instalments
(contribution, remittance) Extension of deadline for the payment of real estate tax instalments
(JST), allowances incivil law liabilities (JST), allowances infees for rent/
lease/use (JST)
~ deferrals of payment of overdue
liabilities (contribution, payment,
fine) or payments (contribution,
payment, fine) with interest
Allowances infees for rent/lease/use (JST)
~ overdue charges (contributions,
payments, penalties) with interest
paid by instalments
Tax instalment deferrals and payment by instalments granted based on
the Tax Ordinance Act (JST)
cont. Table 1
Poland’s State Aid Policy During theCOVID-19 Outbreak 57
Aid category Amount
ofaid Guarantees provided for inCOVID-19 state aid schemes
Share in
agiven
category
(in%)
Guarantee 391 337.3 Aid inthe form of loan guarantees (BGK) 91.45
36 594.9 Polish anti-crisis measures– COVID-19– Factoring guarantees (BGK) 8.55
Abbreviations explained:
BGK – Bank Gospodarstwa Krajowego (Bank of National Economy)
FE implementing institutions – Institutions implementing the European funds
JST – local government units
MKiDN – Ministry of Culture and National Heritage
PFR – Polish Development Fund
PFRON – State Fund for Rehabilitation of Disabled People
PUP – County Labour Ofces
WiPUP – Regional and County Labour Ofces
ZUS – Social Insurance Institution
KOWR – National Support Centre for Agriculture
AMW – Military Property Agency
Source: Own calculations based on data from the Ofce of Competition and Consumer Protection.
2. COVID-19 state aid inQ2 2020– Q2 2021
In accordance with regulations adopted under the Temporary Framework, as well as
Polish aid schemes, beneficiaries of this aid were required to demonstrate a causal link
between the lockdown of their respective economies and losses they suffered. Hence
these losses had to be reflected in negative changes to Gross Value Added, the size of
Average Paid Employment, and the Number of Companies over the examined period
Q2 2020 – Q2 2021. Thus, the amount of granted COVID-19 state aid was compared to
the dynamics of changes in the three above-mentioned indicators taking Q1 2018 or
Q1 2019 as a base reference period. However, if necessary for the purpose of the analy-
sis, other reference periods will also be used. As already indicated, certain industries
may have suffered losses as a result of lockdown and shut down of selected economic
activities, however others may have benefited, as demand for some products increased.
For this reason, the comparative analysis mentioned above does not focus exclusively
on aggregate data for the entire economy, but uses data for individual PKD 2007 (Pol-
ish Classification of Activities) sections.
The total value of COVID-19 state aid, i.e. aid granted exclusively in connection with
the pandemic, granted over the examined period between Q2 2020 and Q2 2021, reached
almost EUR 24 bn. The biggest beneficiaries of COVID-19 state aid in Poland in that
period were the following sections: wholesale and retail trade (25.1%), manufacturing
(16.8%) and construction (12.9%). Also on the list were industries such as: accommo-
dation and food service activities (10.3%) and transport and storage (8.8%) (Figure 2).
58 AdamA.Ambroziak
Figure 2. Sectoral distribution of COVID-19 state aid inQ2 2020– Q2 2021 / Q2 2020– Q2 2021
C-Manufacturing;
16.8%
D-Electricity, Gas, Steam
And Air Conditioning Supply;
0.1%
M-Professional, Scientific
And Technical Activities; 5.5%
J-Information
And Communication; 2.1%
N-Administrative And Support
Service Activities; 3.2%
B-Mining And Quarrying;
0.5%
E-Water Supply; Sewerage,
Waste Management And
Remediation Activities; 0.5%
R-Arts, Entertainment
And Recreation; 2.2%
G-Wholesale And Retail Trade;
Repair Of Motor Vehicles
And Motorcycles;
25.1%
O-Public Administration And Defence;
Compulsory Social Security;
0.1%
F-Construction; 12.9%
Q-Human Health And Social
Work Activities; 3.2%
L-Real Estate Activities; 1.0%
I-Accommodation And Food
Service Activities; 10.3%
H-Transportation
And Storage; 8.8%
P-Education; 2.4%
S-Other Service Activities;
4.3%
K-Financial And Insurance
Activities; 1.1%
Source: Own calculation based on OCCP data.
In order to grasp the relative distribution pattern of COVID-19 state aid, the share of
individual sectors of economic activities in aid granted over the entire examined period
Q2 2020 – Q2 2021 was compared to their share in the creation of the Gross Value Added
in Q1 2019. To ensure relative adequacy of data, it would be ideal to take Q1 2020, how-
ever, this quarter would include more than a dozen days of the first restrictions imposed
in Poland mainly on the HORECA sector. Hence, an analogous period of the preceding
year was selected. Quotients obtained as a result of such comparison assumed values
above or below 1. Whenever the quotient was higher than 1, aid intensity was consid-
ered overvalued, while below 1 it was interpreted as undervalued.
The highest overvalued COVID-19 state aid intensity in Poland between Q2 2020 –
Q2 2021 (compared to Q1 2018) was reported for Accommodation and Food Service
Activities (9.1%), Arts, Entertainment and Recreation (6.95%), and other service activ-
ities (3.2%) (Figure 3). Importantly, these industries were the first to be covered by
decisions on the freezing of the economy; they also felt the effects of restrictions for
the longest time and most often were subjected to restrictions and exemptions in sub-
sequent waves of the pandemic. Overvalued intensity of COVID-19 state aid was also
identified for sectors such as construction (2.47%), transportation and storage (1.41%)
Poland’s State Aid Policy During theCOVID-19 Outbreak 59
and wholesale and retail trade (1.29%). These are industries whose activities were either
limited or subject to self-restrictions due to government decisions to freeze them or
restrictions resulting from activities of other countries (e.g., border closures), which
would lead to disruption for example of supply chains.
Figure 3. Share inCOVID-19 state aid and GDP inPoland inQ2 2020– Q2 2021 (in%)
B 0.21
D 0.03
E 0.51
F 2.47
G 1.29
H 1.41
I 9.1
J 0.6
K 0.25
L 0.19 M 0.92
N 1.02
O 0.02 P 0.43
Q 0.77
R 6.95
S 3.2
0
2
4
6
8
10
12
14
16
18
20
0 5 10 15 20 25
Share in Gross Value Added in 1Q 2019
Share in COVID-19 State Aid in 2Q 2020 – 2Q 2021
Source: Own calculations based on OCCP and Statistics Poland data.
In principle, COVID-19 state aid was available in Poland over the entire examined
period, however, it was of varying intensity. More than two thirds (69.1%) of aid resources
had been transferred to entrepreneurs in the first quarter of the pandemic (Q2 2020),
while in the subsequent quarters of the examined period the share ranged between 4.1%
and 12% of total COVID-19 state aid in the period in question. This means that in fact
during the first wave of the pandemic, due to lack of knowledge about how to fight the
virus, resulting in frequent changes to decisions on imposed restrictions, the scale of
support was huge. To capture aid intensity, the value of aid was related to Gross Value
Added3 generated by the discussed industries in Q1 2019. Thus, estimated COVID-19
state aid intensity in Q2 2020 reached 15.7%, while in the previous years total general
3
Gross value added accounts for the portion of output manufactured in industry that remains after deduct-
ing the value of intermediate consumption.
60 AdamA.Ambroziak
state aid intensity in relation to GDP ranged between 0.78 and 1.16. In the next quar-
ter, it dropped to 2.7% to reach only 0.9% in Q2 2021 (Table 4).
At the peak of COVID-19 state aid before the end of the first half of 2020, Gross
Value Added (GVA) decreased by almost 7% compared to the previous quarter, but it
remained slightly higher than in the analogous period of the previous year. This con-
firms serious negative economic effects of restrictions and bans on economic activity.
However, in subsequent quarters (Q3 2020 – Q2 2021) the path of changes to GVA ran
above the value of changes reported in the reference period two years earlier (Q3 2018 –
Q2 2019). A meaningful drop was observed for Average Paid Employment4 (by 2.2%
in relation to the previous quarter), although also in this case the number was higher
than the reference value adopted in early 2018. The number of active companies evolved
slightly differently. Restrictions imposed on business could be expected to lead to sig-
nificant drops in the total business population as the number of closures should exceed
the number of start-ups. However, this was not the case, as in Q2 2020 the number of
companies increased by 0.9% compared to the previous quarter and by 5% in relation
to the number of businesses registered in the base quarter Q1 2018.
Obviously, these trends follow from indicators registered in individual sectors.
Therefore, we can distinguish several groups of them in terms of their behaviour pat-
tern in the discussed period (Figure 4). Firstly, the largest drops in GVA (by 75.6%) com-
bined with a drop in average employment (by 9.4%) in Q2 2020 compared to Q1 2018
were recorded in accommodation and food service activities. At the same time, in order
to mitigate these negative phenomena, businesses in this industry received, relatively,
the most aid in the first quarter of the pandemic in relation to GVA: 74.5% in relation
to GVA generated in Q1 2020, which accounted for 291.4% of GVA created in Q2 2020. In
subsequent quarters, despite another significant intervention in the form of COVID-19
state aid in Q1 2021 at 383% of GVA, the value of GVA created was well below the refer-
ence values of two years before (Q2 2018 – Q2 2019). This support seems so insufficient
that at the same time in Q1 2021 there was another, after Q2 2020, quite deep reduction
in employment at the level of 15.8% compared to the previous quarter.
Arts, entertainment and recreation activities is another sector that reported a particu-
larly high intensity of aid accompanied by a significant decrease in GVA by 16.3% in the
first quarter of the pandemic compared to the previous quarter. The average intensity
of 35.8% in relation to GVA over the entire period under review was most influenced by
the very high intensity in Q1 2021 at 193.6% and 47.4% in Q2 2020. In this case, since
the beginning of the pandemic, the value added has been clearly below the data for the
4 The average paid employment rate for the analysed period (e.g. month, quarter, year), based on the employ-
ment rate in the books. The average paid employment in the surveyed period takes into account full- and
part-time employees recalculated as the number of full-time employees.
Poland’s State Aid Policy During theCOVID-19 Outbreak 61
reference period Q2 2018 – Q2 2019, with much smaller increases during the summer,
when restrictions were relaxed.
Leaving other services aside, the next sector in terms of COVID-19 state aid inten-
sity during the examined period Q2 2020 – Q2 2021 was construction services (7.3% of
GVA). Construction companies experienced the peak of the intervention in the first two
quarters of the pandemic, when, respectively, 27.8% and 5.4% of the GVA generated at
that time were recorded. Due to this support, GVA reported in subsequent quarters was
only slightly below the path set for the reference period two years before. In contrast,
however, the Average Paid Employment indicator behaved differently and, despite some
increases in the quarters when businesses in this industry received COVID-19 state aid,
it steadily declined to eventually drop to the level close to that of two years before.
The other two PKD sections that responded similarly to both COVID-19 state aid
and the freezing of the economy were wholesale and retail trade and transportation and
storage. The overall COVID-related aid intensities for these sectors in the period under
review, at 6.0% and 5.4% respectively, were primarily influenced by the funds distrib-
uted in the first quarter of the pandemic (intensities at 27.0% and 20.5% respectively in
Q2 2020). In both cases, Gross Value Added plunged in the first quarter of the pandemic
(by 16.3% and 11.4% compared to the previous quarter), but GVA oscillated around the
values in the reference period Q2 2018 – Q2 2019 during the rest of the examined period.
Businesses in these industries reacted slightly differently with regard to employment:
there was a similar reduction by 2.5% in Q2 2020 compared to the previous quarter and
a very slow path back to pre-pandemic levels.
In addition to the construction sector, which has been ambiguously affected by the
COVID-19 restrictions, special attention should be paid to manufacturing. This industry
recorded aid intensity of 20.7% in the first quarter of the pandemic (2.7% in the next),
but it should be stressed that at the same time GVA fell by 27.1% compared to the previ-
ous quarter. The increase in Gross Value Added in subsequent quarters continued until
2021, when it began to decline again. The Average Paid Employment indicator behaved
slightly differently, declining by 0.9% in Q2 2020 compared to Q1 2018 and then con-
tinuing to rise, although still failing to reach pre-pandemic levels in Q2 2021. At this
point, attention should be paid to similar trends in the financial and insurance activi-
ties, as well as real estate activities sectors, which resulted in a significant reduction of
employment, especially in 2021.
Each of the discussed sections reported a significant and continuous increase of
the number of surveyed entrepreneurs. This means that the number of new enterprises
exceeded those closing down. During the crisis, the opposite tendency could have been
expected, however, apparently both the financial shield in the form of COVID-19 state aid,
and prospects for growth, could have encouraged the development of entrepreneurship,
62 AdamA.Ambroziak
and thus the opening of new companies. This is significant in that the number of firms
in each of the quarters of the examined period Q2 2020 – Q2 2021 grew above the growth
path of the reference period Q2 2018 – Q2 2019.
Table 4. COVID-19 state aid intensity inQ2 2020– Q2 2021 (COVID-19 state aid as apercentage
ofGVA)
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q2 2020-Q2 2021
B-S 16.3 2.6 0.9 2.2 0.9 4.3
I 291.4 9.0 11.9 383.0 68.5 85.0
R47. 4 20.6 17.8 193.6 18.6 35.8
S59.9 14.0 3.6 22.6 18.6 25.8
F 27.8 5.4 0.7 0.7 0.3 7. 3
G27. 0 3.2 0.6 1.6 0.6 6.0
H 20.5 2.6 4.4 2.3 0.7 5.4
N 11.2 2.9 1.4 4.0 1.0 4.3
C20.7 2.7 0.4 0.4 0.2 3.7
M 12.1 2.6 0.6 1.2 0.3 3.4
Q10.7 2.0 0.3 1.1 0.5 2.8
P6.6 1.8 0.2 1.7 1.1 2.1
J7.3 1.4 0.2 0.5 0.3 1.9
E5.6 1.8 0.1 0.1 0.1 1.3
B2.0 0.5 1.6 0.0 2.0 1.2
K 4.3 0.9 0.1 0.1 0.1 1.1
L2.6 0.5 0.1 0.1 0.0 0.7
D0.8 0.2 0.1 0.0 0.1 0.2
O0.3 0.2 0.0 0.0 0.0 0.1
Source: Own calculations based on OCCP data.
Poland’s State Aid Policy During theCOVID-19 Outbreak 63
Figure 4. Change inthe total value of COVID-19 state aid and Gross Value Added, Average Paid Employment, and the Number of Companies
inPoland inQ1 2020– Q2 2021 as compared toQ1 2018– Q2 2019
0.00
0.50
1.00
1.50
0
5000
10 000
15 000
20 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sectors B-S
COVID-19 State Aid (in mln EUR)
Gross Value Added (2018=1, 1Q20-2Q21)
Gross Value Added (2018=1, 1Q18-2Q19)
Sectors B-S
COVID-19 State Aid (in EUR)
Average Paid Employed (2018=1, 1Q20-2Q21)
Average Paid Employed (2018=1, 1Q18-2Q19)
0.98
1.00
1.02
1.04
0
5000
10000
15000
20000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
COVID-19 State Aid (in mln EUR, 1Q20-2Q21)
Number of companies (in thousands, 1Q20-2Q21)
Number of companies (in thousands, 1Q18-2Q19)
0.95
1.00
1.05
1.10
0
5000
10 000
15 000
20 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sectors B-U
0.00
0.50
1.00
1.50
2.00
0
500
1000
1500
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Sector I
0.80
0.90
1.00
1.10
1.20
0
500
1000
1500
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector I
0.90
1.00
1.10
1.20
0
500 000
1 000 000
1 500 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector I
0.00
2.00
4.00
6.00
0
50
100
150
200
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Sector R
Sector R-U
0.90
0.95
1.00
1.05
0
500
1000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
0.90
0.95
1.00
1.05
1.10
1.15
0
50
100
150
200
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector R
64 AdamA.Ambroziak
0.00
1.00
2.00
3.00
0
1000
2000
3000
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Sector F
0.95
1.00
1.05
1.10
0
1000
2000
3000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector F
0.00
0.50
1.00
1.50
0
1 000 000
2 000 000
3 000 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector F
0.80
0.90
1.00
1.10
0
2000
4000
6000
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Sector G
0.98
1.00
1.02
1.04
0
2000
4000
6000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector G
0.90
0.95
1.00
1.05
0
2 000 000
4 000 000
6 000 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector G
0.00
1.00
2.00
0
500
1000
1500
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Sector H
0.95
1.00
1.05
1.10
0
500
1000
1500
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector H
0.95
1.00
1.05
1.10
0
500 000
1 000 000
1 500 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector H
0.00
0.50
1.00
1.50
2.00
0
1000
2000
3000
4000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector C
0.96
0.98
1.00
1.02
1.04
0
2000
4000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector C
0.94
0.96
0.98
1.00
1.02
1.04
0
1 000 000
2 000 000
3 000 000
4 000 000
1Qy1 2Qy1 3Qy1 4Qy1 1Qy1+1 2Qy1+1
Sector C
Source: own calculation based on OCCP and Statistics Poland data
Poland’s State Aid Policy During theCOVID-19 Outbreak 65
3. COVID-19 State aid incomparison togeneral State Aid
inQ22018– Q2 2019
In the discussed period of the COVID-19 pandemic, aid was granted not only on
the basis of new EU regulations such as the Temporary Framework. There were also aid
schemes previously designed for instance for the financial perspective 2014–2020 or
national programmes. However, while the value of granted COVID-19 state aid amounted
to EUR 24.1 billion, the aid granted on general terms amounted to only EUR 6.2 billion
in the examined period of Q2 2020 – Q2 2021. This illustrates the scale of public finan-
cial intervention carried out in relation to the pandemic, which was four times higher
compared to general state aid.
As opposed to general state aid schemes, micro enterprises received, relatively,
the greatest support under the COVID-19 state aid scheme (52.1%) (Figure 5). Almost
one third of crisis aid went to small businesses, and ca. 14.8% to medium-sized ones.
A clearly reversed structure was observed for general state aid, where almost 53% was
allocated to large companies, and the distribution across micro, small and medium-
sized companies was relatively equal (over a dozen percent each).
Figure 5. Value of state aid granted tocompanies by size inPoland inQ2 2020– Q2 2021
(inmlnEUR)
0
5000
10 000
15 000
20 000
25 000
COVID-19 State Aid General State Aid
Micro Small Medium Large
Source: Own calculation based on OCCP data.
In the examined period, the greatest beneficiary of the general and COVID state aid
were the wholesale and retail trade sector (20.7%), as well as manufacturing (19.9%),
although their position was influenced by COVID-19 state aid in a different way – much
66 AdamA.Ambroziak
greater in the former case (97.2%), although also significant in the latter (67.9%) (Fig-
ure 6.). They were followed by sectors such as construction (10.6%), HORECA (8.4%)
and transportation (6.0%), as well as business-related services (6.7%), where the share
of COVID-19 state aid ranged from 65.6% to 98.1%. Importantly, COVID-19 state aid,
with the exception of manufacturing and professional services, science and technical
activities, was received by entrepreneurs in industries that had not been the main ben-
eficiaries of public interventions up until that time.
Figure 6. State aid components inPoland inQ2 2020– Q2 2021 (inmlnEUR)
0
1000
2000
3000
4000
5000
6000
G C F I H M S Q N P R J K L E B D O
COVID-19 State Aid General State Aid
Source: Own calculation based on OCCP data.
Although general state aid continued to be granted under the previously existing
rules, the pandemic slightly changed the position of entrepreneurs representing individ-
ual sectors on the list of beneficiaries of public financial intervention in Poland in terms
of its intensity (except for COVID-19 state aid) (Figure 7.). A particularly high increase
in aid intensity (calculated with reference to the generated Gross Value Added) was
noted in the arts, entertainment and recreation, water supply and waste management,
as well as accommodation and food service industries. This means that entrepreneurs
in these industries, in parallel to COVID-19 state aid, benefited from other aid schemes
helping them to reduce the resulting financial losses and ensure financial liquidity (for
instance investment aid). Still relatively high aid intensity was reported in electricity,
gas, steam, and air conditioning supply, followed by mining and quarrying, adminis-
trative and support services, and information and communication, although the inten-
sity of this support in comparison with previous reference periods further decreased.
Poland’s State Aid Policy During theCOVID-19 Outbreak 67
Figure 7. General state aid intensity inseven consecutive periods prior toand during the
COVID-19 pandemic inPoland (in%)
0
2
4
6
8
10
12
14
16
18
Total R D B E N J M C I S Q O L F G P H K
04-2008 to 06-2009 04-2010 to 06-2011 04-2012 to 06-2013 04-2014 to 06-2015
04-2016 to 06-2017 04-2018 to 06-2019 04-2020 to 06-2021
Source: Own calculation based on OCCP data.
Significant, albeit long-awaited changes occurred in the structure of general state
aid by category. In the examined period of Q2 2020 – Q2 2021, the share of regional
aid – the previous leader – decreased to 20.0% (from 24.4% estimated for the reference
period Q2 2018 – Q2 2019) (Figure 8.). The previous focus on regional investment aid,
which was supposed to ensure the mere inflow of investment projects without requir-
ing them to bring in new technologies, to help mitigate climate change or successfully
face digital challenges, was assessed critically (Ambroziak, 2020; 2021c). On the other
hand, the share of aid allocated for research, development and innovation increased by
10 percentage points (compared to the previous period) reaching 24.4%, and the share
of aid for environmental protection and energy efficiency increased by 3.1 percentage
points to 23.1%. These two areas became the main categories of state aid in Poland dur-
ing the first five quarters of COVID-19 state aid.
68 AdamA.Ambroziak
Figure 8. State aid by category inseven consecutive periods prior toand during the COVID-19
pandemic inPoland (in%)
04-2008 to 09-2009 04-2010 to 09-2011 04-2012 to 09-2013 04-2014 to 09-2015
04-2016 to 09-2017 04-2018 to 09-2019 04-2020 to 09-2021
0
5
10
15
20
25
30
35
40
45
50
R&D&I
Environmental proection
and energy efficiency
Regional State Aid
Employment
Coal mining
Culture
Others
SMEs including risk capital
Sectoral development
Energy
Rescue and restructuring
Individual customers
Training
Source: Own calculation based on OCCP data.
Conclusions
The analysis of state aid granted in connection with the COVID-19 pandemic shows
that due to its sectoral distribution in relation to the share of particular industries
in the Gross Value Added, support was granted to those industries that really needed
it. This primarily concerned entrepreneurs representing such sectors as: Accommo-
dation and Food Service Activities and Arts, Entertainment and Recreation, as well as
Construction, Transportation and Storage, and Wholesale and Retail Trade. In terms
of the size of beneficiaries, micro, small and medium-sized enterprises received the
most support in descending order. In fact, some aid schemes, especially those imple-
mented in 2021, were industry-specific, while studies conducted for 2020 demonstrate
that undertakings that could have suffered the most as a result of closing specific eco-
nomic activities even at that time received, relatively, the highest support in the form
of COVID-19 state aid.
Poland’s State Aid Policy During theCOVID-19 Outbreak 69
The highest value of aid granted, and consequently a very strong aid impulse, was
recorded in Q2 2020, but in subsequent quarters a significant decline in the value of aid
was observed, which was primarily due to funds provided for in the existing programmes
being consumed. Also, in subsequent months, further aid schemes were launched with
much smaller budgets, but sometimes targeting specific industries affected by selec-
tive lockdowns.
The change in employment shows that many industries made staff reductions. This
concerned sectors such as Manufacturing, but also Wholesale and Retail Trade, Repair
of Motor Vehicles and Motorcycles, Transportation and Storage, as well as Accommoda-
tion and Food Service Activities. Notably, similar trends were observed in the financial
and insurance activities, as well as real estate activities sectors, which resulted in sig-
nificant reductions in employment, especially in 2021.
Taking into account changes in added value with a simultaneous steady increase
in the number of enterprises, the recorded reduction in employment resulted not so much
from the crisis as from restructuring in the face of a potential crisis. On the other hand,
the constant increase in the number of enterprises may have resulted partly from the
desire to get engaged in business activities, exhibited especially by employees laid off
at the beginning of the pandemic. This was especially true for sectors that registered
a decline in APE. Another explanation may be the proliferation of entrepreneurial spirit,
i.e. the will to run a business despite adversity such as the COVID-19 pandemic. How-
ever, the revealed relationships require data to be collected over a longer period of time
and more in-depth research.
COVID-19 state aid has significantly changed the structure of aid granted in Poland –
as a rule, relatively the greatest amount of aid was received by entrepreneurs who had
previously benefited the least from state support. At the same time, the hitherto largest
beneficiaries of financial aid, with the exception of the manufacturing sector, received,
relatively, less COVID-19 state aid. This means that in the period covered by the study,
the structure of aid beneficiaries changed significantly, both in terms of their size and
the PKD sections that they represent. At the same time, the study indicates that just as
in general state aid (not including COVID-19 state aid) mainly went to large companies,
in the case of COVID-19 state aid it went to micro and small enterprises.
Moreover, the above-described changes coincided with a fairly significant change
in the structure of the allocation of general state aid in Poland. This is because even
in 2019, the then noted weak trend of decreasing importance of regional aid in favour
of aid for research, development and innovation and for environmental protection and
energy efficiency was confirmed. The latter category of aid is currently the most fre-
quently used in the EU due to the need for entrepreneurs to adapt to climate change
and transformation. Poland’s actions so far have been clearly insufficient in this respect.
70 AdamA.Ambroziak
It seems that this reorientation towards support for environmental protection and R&D
was not directly influenced by the COVID-19 pandemic. The proper designation of opera
-
tional programmes and the mechanism of allowable aid categories exempt from the duty
to notify pursuant to the GBER, and the exhaustion of EU funding for simple investment
projects in regions lagging behind, had a greater impact. On the other hand, the COVID-
19 outbreak called into question the resilience of businesses to external changes not only
internationally but also domestically. This includes, for example, the implementation
of new technologies with the support of state aid as a response to uncertainty about the
availability of workers (e.g. in the face of the pandemic), which is forcing not only auto-
mation but also robotisation. These linkages, however, require much greater research.
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ANNEX
State aid inPoland 2004–20195
1. State aid value
The overall value of state aid granted in the period of 2004–2019 grew dramati-
cally from EUR 53.3 bn to EUR 134.4 bn (Figure 1). Following a significant increase
in 2014 compared to the previous year, the dynamics slightly decreased, and in 2019,
the value of state aid in the EU increased by 3.4% compared to 2018. This occurred
mainly thanks to the UK (increase by 22.1%) and Germany (increase by 8.7%). In the
case of Poland, there was another decrease of 2.7% in the value of aid granted, although
it still remained the fifth country in terms of the size of financial interventions. This
was linked not so much to the reduction of public intervention in Poland as to the
exhaustion of European funds.
5 Annex to the results of research titled Poland towards a new approach to state aid policy after acces-
sion to the European Union published in the previous report Poland in the European Union. Report 2021
(ed. Adam A. Ambroziak), SGH House Press, Warsaw 2021. This is a state aid synopsis of analyses published
annually based on the latest data presented by the European Commission in Scoreboard 2020.
Poland’s State Aid Policy During theCOVID-19 Outbreak 73
Figure A1. State aid inthe EU Member States in2004–2019 (inmlnEUR)
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2019
DE FR UK IT PL DK SE ES BE Other countries
Source: DG COMPET, European Commission.
Figure A2. Changes inthe value of state aid inthe EU Member States in2018–2019
(percentage)
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
0
10 000
20 000
30 000
40 000
50 000
DE FR UK IT PL BE DK ES SE CZ NL HU FI AT RO EL PT IE LT HR SK SI EE LV BG MT LU CY
Value (left axis) Change 2019/2018 (right axis)
Source: DG COMPET, European Commission (EC_State_Aid_Scorebord_2021-10-07).
2. Revealed State Aid Intensity
In order to ensure the comparability of state aid across the EU Member States, the
European Commission calculated the value of support from public coffers as a percent-
age of the GDP for all the EU Member States. However, due to many limitations and
shortcomings of the index used by the European Commission, we introduced a new
74 AdamA.Ambroziak
index into the previous Report: a Relative State Aid Intensity Index (RSAI) (Table A1,
Figure 4). In the following year of the study, Malta replaced Hungary in first place in the
aid intensity ranking. Poland’s intensity decreased slightly in 2019, maintaining this
trend from 2017. A similar situation can be observed among other Central and Eastern
European countries, for which EU funds from successive financial perspectives are a par-
ticularly important source of financial support for entrepreneurs. In contrast, the level
of intensity in the large and richer Member States remains at its current level, either
quite high (Germany), slightly lower (France) or very low (Spain).
Table A1. Relative State Aid Intensity index (RSAI)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
MT 0.74 0.74 0.67 0.66 0.56 0.49 0.36 0.50 0.49 0.55 0.20 0.16 0.00 0.15 0.21 0.37
HU 0.34 0.47 0.48 0.46 0.62 0.49 0.59 0.37 0.35 0.47 0.44 0.34 0.53 0.54 0.43 0.37
LT –0.53 –0.53 –0.37 –0.41 –0.51 –0.29 –0.26 –0.08 –0.11 –0.20 –0.50 0.10 0.07 0.16 0.22 0.33
DE 0.17 0.20 0.20 0.14 0.10 0.17 0.10 0.06 –0.05 –0.03 0.26 0.30 0.31 0.27 0.29 0.30
DK 0.25 0.25 0.22 0.30 0.24 0.28 0.28 0.36 0.37 0.37 0.22 0.33 0.41 0.34 0.35 0.29
HR –0.12 –0.14 –0.02 0.21 0.25 0.36 0.26
CZ –0.19 –0.07 0.03 0.14 0.17 –0.05 0.07 0.23 0.27 0.35 0.23 0.27 0.28 0.26 0.32 0.22
EE –0.69 –0.58 –0.71 –0.73 –0.68 –0.74 –0.65 –0.38 –0.30 0.10 0.14 0.19 0.07 0.12 0.14 0.18
LV –0.18 0.13 0.11 0.62 0.03 –0.01 0.24 0.40 0.80 0.67 0.66 0.67 0.55 0.37 0.14 0.11
PL 0.37 –0.07 0.00 0.02 0.23 0.16 0.22 0.12 0.09 0.11 0.30 0.09 0.20 0.31 0.13 0.10
BE –0.27 –0.17 –0.11 0.00 –0.05 0.06 0.09 –0.01 –0.11 –0.08 –0.19 –0.14 –0.07 –0.20 0.02 0.08
FR –0.02 0.01 0.01 0.04 0.12 0.13 0.17 0.16 0.18 0.14 0.06 0.08 0.02 0.12 0.04 0.04
SE 0.27 0.34 0.33 0.36 0.29 0.21 0.22 0.26 0.23 0.26 0.11 0.05 0.08 0.10 0.10 0.01
FI –0.08 –0.04 –0.04 –0.02 –0.01 –0.02 –0.02 0.21 0.14 0.23 0.13 0.12 0.09 0.06 0.23 0.01
SI 0.04 –0.01 0.01 –0.09 –0.02 0.19 0.23 0.40 0.40 0.44 0.28 0.27 0.08 0.05 0.07 0.01
RO –0.40 –0.61 –0.54 –0.22 –0.03 0.13 0.05 0.07 –0.06 –0.23 –0.19 –0.13
SK 0.15 0.17 0.02 0.01 –0.02 –0.20 –0.20 –0.36 –0.52 –0.33 –0.25 –0.14 –0.24 –0.46 –0.26 –0.17
EL –0.20 –0.15 –0.12 –0.07 0.17 0.24 0.24 0.45 0.31 0.56 0.26 0.38 –0.16 –0.44 –0.40 –0.17
UK –0.43 –0.44 –0.45 –0.34 –0.40 –0.42 –0.34 –0.34 –0.31 –0.27 –0.30 –0.32 –0.30 –0.29 –0.35 –0.24
CY 0.43 0.46 0.03 0.11 –0.01 –0.18 –0.01 0.16 0.03 0.21 0.03 0.04 –0.03 –0.18 –0.24 –0.26
PT 0.51 0.35 0.34 0.53 0.35 0.28 0.27 0.34 0.06 –0.24 –0.16 –0.12 –0.27 –0.18 –0.25 –0.27
AT –0.09 –0.09 0.19 –0.07 –0.02 0.13 0.07 0.03 0.04 0.05 –0.23 –0.12 –0.16 –0.23 –0.26 –0.29
BG –0.64 –0.83 –0.75 –0.82 0.28 0.26 0.39 0.57 0.36 0.30 0.26 0.13 –0.32
NL –0.33 –0.27 –0.22 –0.24 –0.28 –0.29 –0.21 –0.15 –0.22 –0.24 –0.33 –0.38 –0.36 –0.40 –0.37 –0.40
IT –0.15 –0.10 –0.08 –0.18 –0.21 –0.31 –0.46 –0.45 –0.02 –0.22 –0.55 –0.57 –0.57 –0.54 –0.44 –0.41
ES 0.04 0.06 –0.09 –0.05 –0.06 –0.11 –0.12 –0.13 –0.22 –0.29 –0.38 –0.51 –0.53 –0.50 –0.40 –0.45
LU –0.53 –0.53 –0.57 –0.54 –0.55 –0.38 –0.48 –0.42 –0.50 –0.27 –0.36 –0.34 –0.39 –0.53 –0.55 –0.53
IE –0.27 –0.10 –0.04 –0.02 0.00 –0.10 0.04 –0.09 –0.23 0.00 –0.34 –0.65 –0.69 –0.67 –0.70 –0.61
Source: Own calculation based on DG COMPET data, European Commission.
Poland’s State Aid Policy During theCOVID-19 Outbreak 75
3. GBER
The currently binding rules on exemption from the obligation of state aid notifi-
cation entered into force in 2014 (European Commission, 2014), which should ensure
that state aid is granted in line with the idea of harmonious development of the EU. In
the analysed period 2014–2019, it is clear that the share of state aid granted under the
GBER Regulation has been significantly increasing in the EU Member States, although
in 2019, compared to 2018, it decreased by 2.31 percentage points (Figure A3). A simi-
lar drop was reported by Lithuania (–1.95 p.p.), Spain (–1.55), but also France (–6.75),
the Czech Republic (–5.5), Malta (–17.28), and Greece (–11.61).
Figure A3. State aid granted under GBER as apercentage of total state aid granted
in2014–2019
0
10
20
30
40
50
60
70
80
90
100
PT HU FI EE LT PL BG SE AT IT DK SI MT ES UK LV BE RO FR HR CZ SK NL LU IE EL DE CY
2014 min max 2019
Source: DG COMP, European Commission.
4. State Aid Similarity
At the EU level, environmental and energy efficiency aid has enjoyed by far the
largest share for several years (52.32% in 2019, slightly down from 55.2% in 2018). Aid
for research, development and innovation (up from 9.2% to 10.6% in 2019), as well as
regional (8.8%) and sectoral (8.3%) aid ranked by far lower on the list (Figure A4).
This is mainly due to the launching of the climate transformation in the EU and
the need for businesses to incur significant costs to change the energy sources they
use. This is also evidenced by a rather significant increase in aid for mine closures (by
79.6% in 2019 compared to 2018), as well as a decrease in simple regional aid, sectoral
aid, and aid to support small and medium-sized enterprises.
The existing structure of state aid in Poland has been criticised rather strongly. To
map Poland’s position vis-à-vis other EU Member States in terms of state aid objectives,
76 AdamA.Ambroziak
we introduced in the previous report the State Aid Similarity Index. In 2019, Poland
recorded an increase from 56.5% to 57.7% of the EU level, however it was still among
the countries with a state aid structure the least similar to that of the EU (Spain, Croatia,
Latvia, Hungary, Malta, and Portugal). A common pattern among those countries was
a relatively low share of state aid granted for environmental projects and energy effi-
ciency in their total state aid landscape. At the other end of the ranking there were many
countries (Czechia – 86.1%, Greece – 85.8%, Finland 83.5%) that ranked extremely high
in that state aid category (Table A2). However, the problem of poor adjustment of the
Polish state aid structure was largely due to the predominance of regional investment
aid, which, due to relatively easier conditions to fulfil, was quite often used in Poland.
On the other hand, other categories of state aid were much less frequently reported.
Figure A4. Changes inshares of selected state aid categories inthe EU in2004–2018
0
10
20
30
40
50
60
Regional development
Environmental protection
includingenergy savings
Research, developement
and innovation
Training
Sectoral development
SMEs including risk
capital
Culture
Employment
Social support to
individual consumers
Heritage conservation
Rescue & Restructuring
Compensation of damages
caused bynatural disaster
Promotion of export
andinternationalisation
Closure aid
Other
Red denotes a decrease; green – an increase in the share of selected state aid categories in the EU in 2004–2018.
Source: European Commission, DG COMP.
Table A2. State Aid Similarity Index in2004–2019 (EU = 100)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
CZ 66.00 43.63 53.07 53.30 50.95 57.53 59.65 57.43 54.73 65.60 62.91 53.03 86.67 83.51 83.95 86.09
EL 51.55 57.22 58.79 54.73 51.21 55.53 32.23 26.99 22.83 33.34 29.96 22.40 36.69 32.05 65.75 85.76
FI 69.24 79.75 80.69 78.34 72.91 70.78 70.69 65.21 63.41 65.36 73.25 76.29 83.23 79.92 72.90 83.48
MT 35.66 27.37 25.55 27.52 25.79 40.93 45.64 46.10 53.24 41.60 42.75 33.62 25.22 34.59 35.11 78.92
SE 39.36 42.00 42.84 41.82 40.97 43.24 40.57 39.61 40.65 42.25 63.30 67.13 70.98 79.71 79.50 78.84
AT 57.55 62.24 60.92 53.52 54.59 58.84 52.13 56.36 54.25 55.78 69.14 66.82 76.72 74.36 77.25 78.60
Poland’s State Aid Policy During theCOVID-19 Outbreak 77
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
DE 77.66 79.27 77.39 80.07 82.53 85.79 82.89 84.24 80.19 83.40 65.82 62.90 70.02 68.04 73.31 76.99
NL 66.85 62.06 63.98 67.29 59.83 52.77 54.12 54.26 52.83 55.94 66.11 68.16 77.34 75.86 79.84 76.58
LV 43.77 45.28 44.12 38.21 56.06 39.89 51.28 49.15 22.29 20.84 32.20 29.54 28.37 30.89 46.66 75.97
IE 64.27 59.20 60.01 63.03 63.47 70.22 67.56 69.11 56.15 50.56 55.61 60.76 75.91 81.41 80.76 75.39
DK 45.61 44.06 45.03 46.59 41.25 41.21 39.25 39.88 4 7.60 48.15 52.01 69.94 74.37 68.90 75.04 71.44
SK 47. 4 0 42.18 41.62 54.40 59.52 69.39 56.91 51.63 55.49 62.64 51.49 47.26 38.79 55.55 68.83 71.18
FR 68.64 60.19 63.51 68.75 75.13 78.96 75.67 73.33 76.96 74.76 60.44 54.25 61.86 60.95 69.07 70.76
LT 37.52 55.15 66.92 58.67 41.35 59.50 51.30 48.62 47.10 46.01 54.38 61.07 48.79 57.51 62.37 70.19
LU 48.57 51.15 48.42 50.42 54.71 45.32 46.73 57.09 45.15 50.20 66.99 67. 6 3 79.00 77.53 74.00 69.87
SI 58.67 61.84 58.41 65.08 57.91 64.68 72.74 79.66 68.02 74.26 75.02 65.58 74.55 73.88 71.80 69.67
RO 34.62 31.61 29.81 48.04 63.05 65.82 61.42 47. 60 47.0 8 53.81 68.49 71.25 71.19 71.84 76.20 67. 9 3
BE 54.95 56.35 78.56 73.74 67.7 7 67.34 69.02 76.72 67. 7 5 68.87 44.06 30.35 43.01 45.41 64.94 66.48
UK 68.53 79.00 76.49 75.92 73.23 65.31 70.50 77.39 74.07 74.68 76.61 64.80 68.41 72.32 70.88 66.41
EE 41.11 55.15 52.57 55.07 52.34 39.86 55.83 56.79 58.02 64.19 82.01 73.77 72.85 7 0.74 72.04 66.30
PL 42.85 63.96 56.86 56.38 60.04 61.72 68.19 48.20 46.21 40.62 56.93 59.61 57.47 61.45 56.51 57.71
BG 12.78 7. 77 16.92 38.74 39.48 44.63 49.25 27.90 32.18 36.25 62.23 64.58 67.4 4 65.22 65.84 57.70
IT 62.33 74.36 72.66 70.99 74.38 76.49 67.80 73.61 53.55 59.81 59.60 47.33 44.67 63.44 57.09 56.40
HR 50.78 73.94 70.18 36.10 46.73 55.88
CY 35.80 36.03 36.54 35.67 32.14 31.34 28.56 37.82 39.51 50.24 64.60 63.91 72.56 63.58 61.62 54.34
ES 66.79 63.28 70.99 69.28 77.76 84.99 82.70 75.31 73.38 54.81 56.60 47.34 56.26 44.43 53.06 54.21
HU 63.17 58.30 59.12 55.16 58.97 64.33 50.92 52.24 54.24 54.72 35.86 32.58 37.37 35.64 41.70 45.14
PT 34.54 33.32 32.44 30.77 39.89 39.28 48.07 28.20 54.31 46.47 35.72 15.62 24.47 23.37 30.61 26.24
Source: Own calculation based on DG COMPET data, European Commission.
Table A3. Differences instate aid structure by objectives inPoland incomparison tothe EU-28
average in2004–2019
Regional development
Employment
Research and development
including innovation
Heritage conservation
Rescue & Restructuring
Compensation of damages
caused by natural disaster
Training
Promotion of export and
internationalisation
SMEs including risk capital
Other
Closure aid
Social support to individual
consumers
Culture
Social support to individual
consumers
Environmental protection
including energy savings
2004 –7. 4 8.0 –9.4 0.5 49.3 –0.1 –1.5 –0.5 –10.4 0.0 –0.1 0.1 –1.6 0.1 –22.1
2005 1.8 25.6 –7.2 2.1 1.0 0.0 1.1 –1.2 –2.4 –0.3 0.0 0.2 –2.3 0.2 –24.1
2006 13.1 27.2 –9.7 1.2 –1.6 0.0 2.8 –1.2 –3.2 –0.1 0.0 0.2 –2.0 0.2 –24.8
2007 3.6 31.0 –11.9 1.5 3.1 0.0 3.3 –0.7 3.4 0.0 0.0 –1.5 –2.6 –1.5 –23.0
2008 –2.9 22.4 –13.7 0.7 6.3 0.0 –0.6 –0.5 –8.6 –0.2 0.0 –1.4 –2.4 –1.4 –11.7
2009 –2.0 21.6 –14.8 0.5 –0.2 0.0 2.4 –0.4 –8.3 –0.4 0.0 –1.6 –2.3 –1.6 –8.7
78 AdamA.Ambroziak
Regional development
Employment
Research and development
including innovation
Heritage conservation
Rescue & Restructuring
Compensation of damages
caused by natural disaster
Training
Promotion of export and
internationalisation
SMEs including risk capital
Other
Closure aid
Social support to individual
consumers
Culture
Social support to individual
consumers
Environmental protection
including energy savings
2010 3.7 20.6 –14.5 0.3 0.9 0.3 0.6 –0.4 –5.8 –0.7 0.0 –3.2 1.5 –3.2 –8.6
2011 2.6 25.6 –16.0 0.3 –0.9 0.2 3.2 –0.5 –6.0 –0.3 –4.9 –5.7 –3.2 –5.7 –14.8
2012 11.7 27.3 –10.8 0.4 –2.9 0.0 1.5 –0.4 –6.0 –0.4 –2.3 –5.0 –3.7 –5.0 –22.6
2013 14.6 29.6 –11.6 0.5 –4.1 –0.4 2.0 –0.4 –5.6 –0.5 –2.5 –5.3 –4.3 –5.3 –25.3
2014 22.6 12.3 –5.3 –0.1 1.8 –0.5 –0.3 –0.2 –4.2 –0.4 –1.2 –6.1 –3.3 –6.1 –23.1
2015 9.6 18.1 –3.5 0.6 –0.7 –0.4 –0.8 –0.1 –4.8 –0.6 1.9 –5.9 –4.9 –5.9 –21.4
2016 19.8 13.1 –0.2 0.4 –0.2 –0.6 –0.5 –0.1 –4.1 –0.2 4.5 –3.8 –3.9 –3.8 –33.8
2017 18.5 8.9 8.7 0.3 –4.0 –0.5 –0.4 –0.7 –2.5 4.3 4.3 –3.3 –0.6 –3.3 –35.0
2018 17.3 13.5 6.8 0.4 –0.4 –0.6 –0.5 –0.8 –2.0 10.5 0.5 –3.7 –2.0 –3.7 –35.6
2019 20.9 11.5 9.9 0.3 –0.4 –0.4 –0.5 –0.8 –1.3 –1.5 –1.6 –3.5 –3.4 –3.5 –26.6
Source: Own calculation based on DG COMPET data, European Commission.
The previously mentioned increase in the State Aid Similarity Index reflects small
but welcome changes in the structure of state aid in Poland. In 2019, regional aid in
Poland was still the highest and significantly above the EU average, however, it is worth
noting the trends for three other categories of state aid (Table A3). The role of simple
employment aid has declined significantly in favour of a small convergence in the share
of aid for environmental protection and energy efficiency in Poland towards the EU aver-
age. At the same time, the share of aid for R&D&I slightly increased and exceeded the
figures for the EU-28 as a whole. This means that Poland has embarked upon a path of
modification of the state aid structure set by other EU Member States. The above trends
indicate a shift that Poland is making towards the structure in EU Member States as it
was in the early 21st century, when a knowledge-based economy provided foundations
for development and growth. Nowadays, the main objective is to counteract climate
change and facilitate climate transformation, for which measures are required that
already fulfil the characteristics of innovation. It would therefore be better to move
beyond this phase of R&D&I fascination towards the pursuit of current economic and
social policy objectives in the EU.