Poland

Legal and tax aspects of
investing in real estate
Debt taken for the debt to equity ratio
calculation is decreased by loans granted
by the borrower to the entities, loans from
which would be subject to thin capitalization
restrictions (only net debt is taken into
account).
The definition of a loan covers any form
of debt financing, including the issuance
of bonds, credits and bank and nonbank
deposits. The definition does not cover
derivatives.
The thin-capitalization rules apply to
interest on loans granted by Polish and
foreign qualified entities. They cover the
following loans:
• loans granted by an entity that holds
directly or indirectly at least 25% of the
voting rights in the borrower,
• loans granted jointly by entities that
jointly directly or indirectly hold at least
25% of the voting rights in the borrower,
• loans granted by one company to
another company if the same entity
holds directly or indirectly at least 25%
of the voting rights in both the lender
and the borrower.
For general partners in a limited joint-stock
partnership, the conditions concerning the
minimum share (voting rights) are fulfilled,
regardless of the general partner’s share.
As of 1 January 2015 the taxpayers
have also a right to opt for a new
alternative thin-capitalization calculation
method. If chosen by the taxpayer, the
abovementioned method applies to interest
paid to both related and unrelated parties.
The recognition of such interest cost for
tax purposes is limited to the amount of
the National Bank of Poland’s reference
rate plus 1.25 percentage point and the
tax value of assets within the meaning
of Accounting Act (excluding intangible
assets).
The value of interest recognized for tax
purposes cannot be higher than the value
corresponding to 50% of the profit from
operating activities (this condition does not
concern, generally speaking, banks and
financial institutions).
Interest not deducted in a given tax
year can be deducted in the following
consecutive 5 tax years. If a taxpayer
decides to use this method it should be
used for at least 3 consecutive tax years.
To be entitled to apply the above rules,
taxpayers are generally obliged to file
relevant notification with the tax authorities
not later than till the end of first month of
their new tax year.
Foreign currency financing
As the foreign currency liabilities are
reported for accounting purposes in PLN,
foreign exchange differences (gains or
losses) accrue in the accounting books
of the Polish company. Foreign exchange
differences accrue also on loan liabilities
in PLN denominated in foreign currencies.
These gains or losses are recognized for tax
purposes only when realized, i.e. when the
related liability is paid or set off. However,
audited companies can report foreign
exchange gains or losses in accordance with
accounting standards upon notifying the tax
authorities, provided that such reporting in
accordance with accounting standards will
continue for a period of at least three tax
years.
Poland. The real state of real estate | 85