Poland

Legal and tax aspects of
investing in real estate
public notice. Notice on contract performs
the aim of providing proper implementation
of the rule of equal treatment in the very
beginning of the procedure. The obligation
of publishing a notice also provides nonconfidentiality
and transparency of the
applied public contract systems.
In general, open tendering is a simple
procedure, meaning that entities familiarize
themselves with the information in
the notice and in SETC and, if they are
interested in submitting tenders in such
procedure, they submit a tender which shall
then be evaluated by ranking.
Under limited tendering procedure, entities
interested in being awarded a public
contract submit requests for participating in
the tender and the awarding party decides
which bidders may submit their proposals.
Other public procurement procedures
such as competitive dialogue, negotiated
procedure with publication, negotiated
procedure without publication, single
source procurement, request for quotations
or electronic auction can only be applied
under specific circumstances stipulated in
the binding law.
A similar course of action should be
applied to the above main types of the
public procurement procedure. Each of
them is comprised of pre-qualification,
submission of proposals and selection
of the winning tenderer phases. In the
pre-qualification phase the awarding party
sets out the requirements / criteria to
be met by the tenderers. Based on the
specific requirements / criteria, tenderers
draft their proposals and submit them to
the awarding party. In the proposal each
tenderer demonstrates its compliance
with tender requirements by referring
to its competencies, such as experience,
knowledge and financial capacity to
perform the contracted work. After
reviewing all submitted proposals the
awarding party selects the best tenderer
with whom the public contract is to be
signed.
However, this is not necessarily the end of
the public procurement process as there
is a possibility of appealing against the
decision of the awarding party. In practice,
the appeal procedure is quite commonly
used by the tenderers who lost a public
contract, which often results in delays in
the completion of the investment project
concerned.
2.5.2. Tax implications
Tax treatment of the construction
costs
Costs related to construction process and
accrued prior to putting the assets into
use form the initial value of the real estate
and are recognised as tax deductible cost
through depreciation write-offs or upon
sale.
Costs related to future operation /
exploitation of the assets should be
recognized for tax purposes based on
general rules.
VAT and the construction process
During the construction process, the most
important tax is VAT. The standard rate
of VAT in Poland is 23%. A reduced VAT
rate of 8% applies to the construction of
108 | Poland. The real state of real estate