KPO – post-pandemic aid for entrepreneur

Instrument for Reconstruction and Enhancement of Immunity

The Instrument for Reconstruction and Enhanced Resilience (hereafter also referred to as: ‘the Instrument’) is a new European Union endeavour to rebuild the economy after a pandemic. It is within the framework of this Instrument that the NIP was developed. The Recovery and Resilience Instrument primarily aims to:

• promoting the economic, social and territorial cohesion of the EU by enhancing resilience and post-pandemic adaptation capacity,
• mitigating the social and economic impact of the crisis,
• supporting digital transformation.

As part of the Facility, Member States committed to investments, but also reforms, which were developed individually for each Member State.

Poland, in connection with the Instrument for Reconstruction and Increased Resilience, has developed a special document – the National Plan for Reconstruction and Increased Resilience. This document has already been approved by the European Commission. This was the first of the conditions for Poland to receive funds under the Facility.

The second condition for a Member State to receive funds and then transfer them to entrepreneurs is the submission of a payment application to the European Commission, which Poland has not submitted so far.

Parallel support systems from the European Union

Funds from the Recovery and Resilience Facility constitute a separate financial pool, which is transferred in parallel to the funds already received from the European Union under the successive perspectives 2000-2006 (in the case of Poland since 2004), 2007-2013, 2014-2020, and the current one, i.e. 2021-2027. This means that entrepreneurs can continue to count on support under funds transferred on the basis of a partnership agreement, i.e. from the European Regional Development Fund, the European Social Fund, the Cohesion Fund, but also from the newly created Instrument for Recovery and Resilience.

Key differences between the Recovery and Resilience Facility and Cohesion Policies:

• The Facility is centrally managed by the European Commission, which means that the European Commission has a greater role to play, but also greater responsibility for preparing and managing the Facility.
• The entire Instrument is subject to the principle of “do no significant harm to the environment.”
• The European Commission transfers funds to Member States on a semi-annual basis, following the submission of a relevant payment request.
• The disbursement of funds from the instrument to a Member State is linked to the implementation of reforms, known as milestones.

It should be emphasized that the above requirements concern the relationship between the Member State and the European Commission.

Funds available to Poland

Under the Cohesion Policy, Poland will receive over EUR 76 billion in the current perspective. Under the Recovery and Resilience Facility, Poland will receive over EUR 35 billion.

Legal regulations related to the NRRP

The basic regulation establishing the Instrument is Regulation (EU) 2021/241 of the European Parliament and of the Council establishing the Instrument for Recovery and Resilience.

However, there is currently no specific law or regulation in the Polish legal system that would regulate the procedure for selecting applications for support under the NRP. The document approved by the European Commission only states that the institutional system resulting from the Cohesion Policy (i.e., the Act on the principles of implementation of tasks financed from European funds in the 2021-2027 financial perspective) will be used to manage the funds from the NRIP. However, the legislator is expected to take appropriate legislative steps.

This means that entrepreneurs wishing to benefit from KPO funds do not have new, comprehensive legal regulations governing the transfer of funds, but only rely on analogous solutions resulting from Cohesion Policies.

Help for entrepreneurs

Under the KPO, special calls for applications will be organized for projects to receive support from specialized Polish institutions already involved in the management of European funds, such as ministries, local governments, ARIMR, and PARP. The transfer of public aid under the KPO will therefore take place in the same way as for funds transferred under the Cohesion Policies.

Entities eligible for support:

Under the NRP, applications for support may be submitted by citizens, entrepreneurs and enterprises, local governments, public institutions and entities outside the public administration system (e.g. social entities, associations, non-governmental organizations) who submit an application for support and meet the requirements of individual calls for proposals.

Types of projects eligible for support:

• Economic resilience and competitiveness.
• Green energy and reduction of energy intensity.
• Digital transformation.
• Efficiency, accessibility, and quality of the healthcare system.
• Green, smart mobility.
• Improvement of the quality of institutions and conditions for the implementation of the National Recovery and Resilience Plan.

Level of co-financing for projects under the KPO

Institutions may finance projects to varying degrees, up to 100% of their value. However, the recipient of the support must have funds to cover VAT, which cannot be financed under the KPO.

Procedure for selecting projects for co-financing

Each call for proposals has a special document – the Rules and Regulations – which sets out the conditions that must be met in order to receive funding. The assessment carried out by the entity organizing the call must be transparent, reliable, and impartial, and ensure that applicants have equal access to information on the conditions and method of selecting projects for funding. In addition, the entrepreneur’s application should be assessed in terms of its compliance with the project selection criteria.

When assessing applications, the authorities must act in accordance with the principle of transparency and establish clear conditions and rules for the selection of projects. Participants in such proceedings may not suffer legal consequences due to imprecise regulations.

It is also worth noting that every entity applying for support under the institutional system of the Cohesion Policy is entitled to an appeal procedure – the possibility of lodging a protest and a complaint to an administrative court. This means that participants in the competition procedure have the possibility to effectively challenge a decision refusing support, including under the NRP.

Current calls for proposals for entrepreneurs

Currently, Poland has only managed to prepare four calls for proposals for beneficiaries, which are being conducted by the Agency for Restructuring and Modernization of Agriculture. These are:

• support for farmers and fishermen for the processing or marketing of agricultural, food, fishery, or aquaculture products;
• support for micro, small and medium-sized enterprises for activities in the processing or marketing of agricultural, fishery or aquaculture products;
• replacement of roofing materials containing asbestos on buildings used for agricultural production;
• replacement of creosote-impregnated poles on hop plantations.

Most of the calls for proposals for funding under the NRRP are planned for 2023. However, the possibility of organizing further calls depends on obtaining funding, i.e., Poland submitting a payment request to the European Commission and its subsequent approval by that entity. Detailed information on planned calls can be found on the European Funds website.

In summary, it is worth remembering that the NRP is, in practice, additional funding to be used by Member States, which requires each country to prepare its own national recovery plan and submit payment requests to the European Commission. Once the payment request has been approved by the European Commission, Member States prepare calls for projects for interested entities (including entrepreneurs) who will receive financial support. At this stage, the procedure for selecting projects and verifying their correct implementation is the same as for other funds related to Cohesion Policies.

Author: Marek Kononowicz, lawyer