A new tax relief - up to 50% deduction for investors in VC funds and business angels
Investors in venture capital funds and business angels will be able to deduct as much as 50% of the total amount of investment from their tax base. The new tax relief for individuals supporting innovative Polish companies as presented within the new “Polish Deal” has been prepared by the Ministry of Finance in cooperation with PFR Ventures.
Tax relief for the Venture Capital sector, as planned by the Ministry of Finance, constitutes an element of the “Polish Deal” program. Announced today, the solution is meant to support those investors who allocate their capital in Venture Capital funds (LPs/Limited Partners) or invest as the so-called business angels. The idea has been drawn up in cooperation with PFR Ventures - which manages funds of funds, as they could share their experiences in investing into over 50 Venture Capital funds.
The new form of tax relief allows for a deduction of up to 50% of the value of investment from the tax base. This means that for every single PLN invested in Polish innovative companies through a VC fund the investor (Limited Partner) gains the right to a PLN0.50 deduction from their tax base. The total limit for the deduction is PLN250K per tax year. The solution is based on similar tax incentives as observed in France, Germany, or the United Kingdom.
PFR Ventures doesn’t just finance the VC sector. We also actively encourage legal and fiscal solutions, which simplify investment and make it more profitable. The new form of tax relief is an additional incentive for those investors who are interested in allocating their capital in Venture Capital funds and indirectly in innovative companies.
– says Aleksander Mokrzycki, Vice-President of PFR Ventures.
| Example #1: Investment of a PFR Starter portfolio fund | |
| Amount of investment | PLN 4M |
| Participation of private investors | 20% |
| Number of natural persons becoming LPs | 10 |
| Amount invested by 1 LP | PLN 80k |
| Tax relief | 50% |
| Deduction from the tax base resulting from the tax relief | PLN 40k |
| Income tax rate | 32% |
| Amount saved with the tax relief | PLN 12.8k |
| Example #2: Investment of a PFR Biznest portfolio fund | |
| Amount of investment | PLN 4M |
| Participation of Business Angels | 50% |
| Number of Business Angels | 10 |
| Amount invested by 1 Business Angel | PLN 200k |
| Tax relief | 50% |
| Deduction from the tax base resulting from the tax relief | PLN 100k |
| Income tax rate | 32% |
| Kwota oszczędności dzięki uldze podatkowej | PLN 32k |
Assumption: LP/Business Angels achieve income above PLN 250k per annum, which puts them into the second tax bracket of 32%
Further, plans include broadening the scope of the existing relief to VC funds operating as Alternative Investment Companies. Detailed information will be released soon.