Foreign companies reinvesting more profits in Poland - report

International investors are placing more than half of their profits in Polish companies, according to a report by Grant Thornton, an audit and research company.

Foreign companies reinvested in the development of their Polish branches over PLN 44 billion (EUR 9.5 billion) or 52 percent of earned income last year, the highest amount since 2003, the report published on Thursday showed.

Authors of the report wrote that several years ago, the reinvestment rate was usually around 25-40 percent. In their opinion, this may indicate that Poland, with its growth and expansion of the internal market is gradually approaching the status of a developed economy, enabling investors to have attractive rates of return (RoR).

The report also showed that foreign businesses were less willing to pay out and transfer the income generated in Poland to other countries. In 2020, it amounted to the equivalent of PLN 32.5 billion (EUR 6.98 billion) or 39 percent of profits, "the lowest nominal value in five years and the lowest percentage since at least 2003, that is, over the entire history of the study," the report read.

In terms of nominal value, German companies, by far, reinvested the majority of its profits. In 2020, they retained PLN 8.9 billion (EUR 1.91 billion) in their Polish branches, and as much as PLN 48.6 billion (EUR 10.4 billion) in the last five years. In comparison, in 2020, FDI in Poland reached PLN 54 billion (EUR 11.6 billion), which means that one-sixth of all foreign capital invested in Poland came from reinvestment by companies with German capital.

The study also noted differences in the approach to reinvestment according to sectors, which showed that foreign trade companies left the most profits in Poland. In 2020, they reinvested PLN 9.2 billion (EUR 1.98 billion), and PLN 39 billion (EUR 8.4 billion) over the last five years.