Poland

Legal and tax aspects of
investing in real estate
• profits from the exploitation of real
estate should be taxed at the lowest rate
possible;
• after–tax profits should be easily
distributed;
• Polish withholding tax should be
reduced as much as possible;
• revenues from the future sale of real
estate or the shares of a company
should be taxed at the lowest rate
possible or should be exempt from
taxation;
• all strategies for the deferral of the tax
payment date should be explored.
Addressing these points will help to design
and implement a tailor–made structure.
Additionally, bearing in mind the general
anti avoidance regulation that is considered
to be introduced to the Polish tax
regulations and introduced as of 1 January
2015 CFC (“Controlled Foreign Company”)
rules, the cross border investments should
be each time carefully examined and
properly structured also from the business
perspective to ensure their effectiveness
from the tax point of view.
CFC Rules
The recently implemented (from January
2015) CIT regulations regarding CFC define
CFC as:
1. a foreign company seated in a tax
heaven (as officially blacklisted by the
Polish Ministry of Finance) or
2. a foreign company having its seat or
place of management in the country
other than mentioned in point 1), with
which:
a) Poland has not concluded an
international agreement, in
particular double tax treaty,
or
b) EU has not concluded an
international agreement
• being a basis for requesting tax
information from tax authorities
of that country, or
3. a foreign company which jointly fulfills
the following conditions:
a) the Polish taxpayer has a direct
or indirect shareholding (for an
uninterrupted period of at least
30 days) of at least 25% shares or
25% voting rights or a 25% stake in
profits of the CFC;
b) at least 50% of annual revenues
of the CFC consist of a passive
income, i.e.:
• dividends and other income from
sharing profits of legal persons
• disposal of shares, receivables
• interest or benefits from all types
of loans, securities or guarantees
• copyrights or intellectual
property rights – including
disposal of those rights
• disposal or exercise of rights
from derivatives;
c) at least one of the sources of
passive income (listed in point b)
is not subject to tax, is tax exempt
or is subject to tax at a lower rate
by at least 25% than the Polish
statutory CIT rate (now 19%) in the
CFCs country of residence (unless
Poland. The real state of real estate | 99