Significant changes for real estate business investing in Poland will come into force as of 2021.
For the first time, the definition of a real estate company is about to be introduced. A real company is:
- entity obliged under accounting regulations to prepare a balance sheet, in which (i) on the first day of a given tax year FMV of real estate properties located in Poland or rights to such properties amounted at least to 50% of FMV of total assets of the company and (ii) FMV of these real estate properties exceeds PLN 10M; or
- entity obliged under accounting regulations to prepare a balance sheet, in which (i) on the last day of the preceding tax year the balance value of real estate properties located in Poland or rights to such properties amounted at least to 50% of the balance value of total assets of the company and (ii) the balance value of these real estate properties exceeds PLN 10M and (iii) in the last tax year tax revenues from the lease, sublease, leasing or agreements on transfer of ownership of real estate properties or shares in RE company amounted at least to 60% of total revenues.
It has been directly indicated that one of the Polish sources of income is income from transfer of shares in a RE company. Moreover, tax compliance on these transactions will be transferred from shareholders of a real estate company to the company itself. RE company the shares of which are sold is obliged to pay tax advance to the tax office at 19% rate to 20th day of the following month if (i) the seller is a Polish tax non-resident and (ii) the subject of the transaction is shares giving the right to at least 5% votes / 5% share in profits of the RE company.
12 month period would be analysed to determine whether the thresholds were exceeded under specific anti-abusive regulation introduced in order to prevent from an artificial division of transactions.;
RE company being a Polish tax non-resident (having neither seat nor management in Poland) is obliged to set-up a fiscal representative in Poland. Non-compliance is penalized with a fine up to PLN 1M. Written agreement on fiscal representation should be concluded. Fiscal representative bears solidarity liability along with the RE company for the tax settlements reconciled by the fiscal representative.
RE company, as well as shareholders having at least 5% votes or shares in profits of the RE company, are obliged to inform the tax authorities, within 3 months after the end of the tax year of the RE company, about shareholders of the RE company and the shareholding structure for the last day of the tax year of the RE company.
Moreover, information included in CIT returns of RE companies will be publicized on a specific government website as of 2021.
Should you wish to discuss the above, please contact our experts:
Head of Tax, Board Member
Tax Manager, Attorney-at-law