On 1 January 2021 the amended provisions of the Polish CIT Act and the Polish PIT Act concerning real estate companies came into force.
Under the newly created definition, a real estate company means an entity, other than an individual, required to prepare a balance sheet under the accounting regulations in which:
- in the case of a newly established entity - on the first day of the tax year, at least 50% of the market value of assets, directly or indirectly, was the market value of real estate located in Poland or rights to such real estate, exceeding PLN 10,000,000;
- in the case of entities continuing their business activity - on the last day of the preceding year at least 50% of the balance sheet value of the assets, directly or indirectly, was the balance sheet value of real estate located in Poland or rights to such real estate, and the balance sheet value of this real estate exceeded PLN 10,000,000 and if revenue from lease, sublease, rental, subtenancy, leasing and other contracts of similar nature or from transfer of ownership of real estate (or rights to such real estate) and shares in other real estate companies, constituted at least 60% of the total tax revenue or revenues recognized in the net financial result.
The new regulations introduce an obligation to appoint a tax representative in case of real estate companies not having their seat or management board in Poland. In case of failure to meet this obligation, the real estate company will be subject to a fine of up to PLN 1 million (around EUR 230,000). However, the above regulations will not apply to real estate companies subject to income tax on their entire income in an EU or EEA member state, regardless of where the income is earned.
Furthermore, real estate companies will be obliged to provide the Head of the National Tax Administration with information on entities holding shares directly or indirectly in that entity by the end of the third month after the end of the real estate company's tax year.
The amended regulations also impose on a real estate company the obligations of the tax remitter in case of disposal of shares in that company, if the following conditions are met:
- the transferor will be an entity not having its seat or management board in the territory of the Republic of Poland and
- the subject of the transaction will be shares (stocks) giving at least 5% of the voting rights in the company or all rights and obligations giving at least 5% of the right to share in the profit of a company which is not a legal person.
In case the real estate company does not have adequate information to calculate the tax base, the tax advance payment should be set at 19% of the market value of the sold shares (stocks).
Additionally, real estate companies are required to file a report on payment dates in commercial transactions for the previous year. For real estate companies, the first report will be prepared for 2021 and filed by January 31, 2022.
If you are interested in the above matter, please contact our Tax Advisory Department.