Poland

Legal and tax aspects of
investing in real estate
diligence is therefore conducted to allow
the acquirer to assess and minimize this
risk.
Generally, the period of limitation for tax
liabilities is 5 tax years following the year
in which the tax is payable. In practice this
means that from the perspective of 2016
there is still a tax risk in relation specifically
to a target’s corporate income tax payments
for 2010–2016, and to other tax liabilities,
in general, for 2011–2016.
Tax issues analyzed
The scope of a tax due diligence review
depends on the structure of the planned
transaction.
In the case of an asset deal, the scope of
due diligence depends on the subject of
the transaction and the extent to which the
acquirer may be liable for the seller’s tax
liabilities.
In the case of a share deal, as the acquirer
faces the full impact of any tax liabilities
assumed, full due diligence is usually
conducted.
The tax due diligence in case of a share deal
usually covers the following areas:
• review of tax returns for periods
previously filed and review of tax
calculations for periods that are not yet
filed with the tax authorities;
• review of the results of past tax audits
to detect tax risks for periods that
are still open for tax audits by the tax
authorities;
• review of any obtained tax rulings;
• review of any losses carried forward,
tax credits and special tax privileges to
identify related tax risks for unaudited
periods and to assess whether such
tax benefits will be available post
transaction;
• review of withholding tax procedures
and exemptions available;
• review of significant historical
reorganizations and one-off
transactions and their impact on the tax
accounts;
• review of intercompany transactions
and present transfer pricing policy in the
company;
as well as an examination of areas typical
for a real estate company, such as:
• the existing debt financing structure
(e.g. debt push down schemes), thin
capitalization and other pending
restrictions on the tax deductibility of
interest payments on the debt;
• any large differences between book
and tax basis of assets, analysis of the
deferred tax calculations, in particular
identification of any deferred tax
liability, e.g. from accrued foreign
exchange gains;
• rules for capital expenditure recognition
and the impact of foreign exchange
differences on the initial value of fixed
assets for tax depreciation purposes;
• policies for the tax depreciation of
assets, including a review of cost
segregation schemes;
• cash incentives offered to lessees such
as a rent free period or step-up rent and
their impact on the tax accounts;
• treatment of the investment costs
Poland. The real state of real estate | 129