Tax Alert – working on amendments to the laws related to the so-called commercial property tax

The Senate has completed works on the act amending regulations related to income tax on revenues resulting from the title to a fixed asset – the so-called commercial property tax. If during the next session of the Sejm the act will be outvoted including the corrections of the Senate, the project will be referred to the President of the Republic of Poland to be signed.

The existing law related to the so-called commercial property income tax is limited only to revenues related to retail sales and service centres classified as a shopping centre or an office building. Its implementation was to enable taxation of business entities deriving benefits from commercial properties that do not pay any income tax on this account because of the applied extended optimization mechanisms. Thus, the number of business entities being subject to the so-called commercial property tax was relatively small.

Alteration being currently dealt with by the Parliament assumes material changes as regards the object and the subject of income tax on revenues resulting from the title of a fixed asset. The current draft of the act consists in every property (fixed assets) of a taxpayer being subject to tax if they meet the following conditions:

  • fixed asset is owned or co-owned by the taxpayer;
  • fixed assets is wholly or partially used on the basis of a rental, lease or any other similar contract;
  • fixed assets is located in the territory of the Republic of Poland.

The taxable basis will include the sum of revenues from individual buildings, reduced by the amount of PLN 10,000,000, whereas the revenue is defined by the existing draft of the act as „the initial taxable value of a fixed asset established as on the first day of each month resulting from the register, and in the month in which the fixed asset was entered in the register – the initial value established as of the date of entering the asset in the register”. 

According to the daft of the act, taxpayers will be obliged to calculate the revenue tax related to buildings for each month and pay it to the tax office until 20th day of the month following the month for which tax is paid. The tax rate will be 0.035%.Taxpayers will be allowed to deduct the amount of such tax paid for a given month from the advance tax payment (monthly or quarterly). At the same time that act enables taxpayers not to pay the revenue tax related to buildings if it is lower than the amount of the advance tax payment for given month.

The amount of paid revenue tax related to buildings and not deducted in a tax year can be deducted in tax return from the calculated tax. The draft of the act also regulates attempts to avoid the revenue tax related to buildings put into use on the basis of the rental, lease or other similar contract, when for instance the taxpayer without justified economic grounds transfers ownership or co-ownership of the building wholly or partly or puts the building into use on the basis of a leasing agreement only to avoid the aforementioned tax. 

Pursuant to draft of the act, new regulations concerning the so-called building tax will become effective as of 1 January 2019

Please bear in mind that the act has not been adopted yet and its individual provisions may change in the course of works of the Sejm. However, due to the scale of changes in the scope of the so-called income tax related to buildings and new potential obligations towards tax authorities you should analyse some of your business decisions concerning your fixed assets in order to avoid unnecessary tax burdens in the future. Current knowledge may also help in the process of making business decisions in the future.   

We are open to further discussions as regards current legislation works in the scope of tax law and their potential impact on your activity. If you have any questions or doubts, do not hesitate to contact us.

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MG 15 Magdalena Szwarc Tax Manager, Tax Advisor Tel.: +48 (71) 36 99 567Information