Corporate income tax

Corporate income tax (CIT) is charged at the standard rate of 19% and is payable by Polish resident companies and non-resident companies operating in Poland through a permanent establishment or directly owning real estate.  The tax is payable through monthly advances and is reconciled after the end of a tax year. The tax is generally reportable on a calendar year basis. However, a different tax accounting year can be used if stated in the company’s articles of association.

Capital gains

Capital gains realised on disposal of Polish real estate are subject to CIT at the standard rate irrespective of the residency of the vendor. Taxation of capital gains on sale of shares in a Polish real estate company by a foreign company may be subject to Polish CIT, subject to the relevant double tax treaty, if any.

Property tax

Property tax may be charged by local authorities on the value of property held by both resident and non resident companies up to the following maximum rates:

• Approx. €0.17 per m2 (previously €0.14 per m2) for land used for business activities; or
• Approx. €4.51 per m2 (previously €4 per m2) for buildings used for business activities; or
• 2% of the construction cost for new buildings and buildings in construction.

Property tax returns should be filed by 15 January each year, and any tax due should be settled in 12 equal monthly instalments by the 15th day of each month.

Property transfer tax

Sale of real estate is generally subject to VAT (see below). However, in certain cases (i.e. the supply of land which is not for development and VAT exempt buildings and constructions) the acquisition of real estate will be subject to a transfer tax (Civil Law Activities Tax) at 2% on the market value of the property instead of VAT.

Sale of a real estate enterprise (i.e. business as a going concern) is outside the scope of VAT and therefore subject to transfer tax, usually at an effective rate of 2% of the market value of the business’s assets.

The sale of shares in a Polish company is generally subject to transfer tax at 1% on the market value of the shares.

VAT

Sale of real estate is generally subject to VAT levied at the standard rate of 22%.  Provided that real estate is used for VATable activities, input VAT paid on the purchase may be either offset against output VAT or recovered in cash within 60 days.

Lease of real estate is generally subject to 22% VAT.


The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.

This article is from 'European Property', published annually by Freeman Business Information plc, www.efreeman.co.uk.

Return to the list of European real estate tax guides.