- Accounting for tax expenses over time by the developer
- Electric vehicle charging station and real estate tax
- The tax authority believes that a family foundation will not benefit from CIT exemption when selling real estate
- SAC held that real estate companies that do not depreciate property on the balance sheet can continue to depreciate it for tax purposes
Accounting for tax expenses over time by the developer
In an individual ruling dated February 3, 2025 (mark: 0114-KDIP2-1.4010.761.2024.1.PK), the Director of the National Tax Information (hereinafter: “DNTI”) determined which tax costs a developer may recognize as direct costs and which as indirect costs.
The applicant was a real estate development company, which wanted to confirm in an individual ruling whether it qualifies well the incurred costs of a development project. The company incurred a number of costs in connection with its operations, which raised questions about which costs should be classified as indirect deductible costs and which as direct. This is important for their correct accounting over time.
DNTI in the ruling indicated that direct costs should be considered:
- the costs of establishing and maintaining an escrow account for the development project under way
- the costs of constructing technical and road infrastructure on the property on which the project is implemented (e.g., an internal access road to the premises)
- the cost of constructing the water and sewage, gas and electricity systems, as well as the construction of the heat connection, connection to the electricity grid
- the cost of developing the area around the building (green areas, playgrounds)
- costs of development agreements, preliminary agreements, agreements for sale of premises, parking spaces and appurtenant premises, including excerpts of the notarial deed issued at the conclusion of development agreements.
And the DNTI recognized as indirect deductible costs:
- costs of occupying a road lane for construction purposes in connection with a development project
- marketing and media advertising costs relating solely to the development project, such as marketing service consulting, display of marketing materials on billboards, and advertising campaigns
- sales management costs calculated as a commission from the sale of units, associated areas and parking spaces.
DNTI emphasized that this allocation of costs is due to the fact that some costs, although undoubtedly related to the revenues generated, do not have a tangible connection to specific revenues.
The tax authority’s position should be considered reasonable and justified. If in doubt, it is worth applying for an individual ruling to obtain protection in your individual case.
Electric vehicle charging station and real estate tax
In a final judgment dated January 29, 2025 (ref. I SA/Sz 472/24), the Voivodship Administrative Court (hereinafter: “VAC”) in Szczecin ruled that an electric vehicle charging station is not subject to property tax except for the foundation.
The applicant was a company that applied for an individual ruling on real estate tax. It intends to expand its business in the future by operating electric vehicle charging stations. In its opinion, only the foundation or a similar surface in such a station should be considered as a structure within the meaning of the Act on Local Taxes and Fees. The tax authority did not share the applicant’s position, pointing out that the electric vehicle charging stations referred to in the application are subject to real estate tax, as they fall within the concept of a building structure within the meaning of Article 3(9) of the Bouilding Law (hereinafter: “B.L.”) and Article 2(27) of the Act on Electromobility and Alternative Fuels (hereinafter: “E.A.F.”). The authority pointed out that charging stations for electric vehicles should be classified as freestanding structures in accordance with Article 2(27) of the E.A.F. In the opinion of the municipal tax authority, such a facility qualifies as a structure.
The company filed a complaint against the individual ruling, and the VAC in Szczecin in its judgment of January 29, 2025 (ref. I SA/Sz 472/24) overruled it. The court, in the justification of the judgment, pointed out, electric vehicle charging stations are not listed in the text of Article 3(3) of the B.L. Thus, important for determining the status of vehicle charging stations is the interpretation of the phrase: “associated with a construction object, ensuring the possibility of using the object in accordance with its purpose”. Only technical facilities characterized in Article 3(9) of the B.L. or in other provisions of the law or in an annex to it are considered to be a construction. The VAC pointed out that when defining a structure as an object of real estate taxation, it is forbidden to refer to other non-tax laws, e.g. the E.A.F. The VAC in Szczecin stated that a vehicle charging station does not constitute a construction device, and consequently cannot be considered a structure. Such a facility will therefore not be subject to real estate tax (excluding any foundation or similar area).
It is worth remembering that the case took place under regulations on real estate tax prior to the amendment to the law, which came into effect on January 1, 2025. However, the amended law did not provide for changes in the taxation of facilities such as electric vehicle charging stations.
The tax authority believes that a family foundation will not benefit from CIT exemption when selling real estate.
In an individual ruling dated January 17, 2025 (mark: 0111-KDIB1-2.4010.700.2024.1.DK), the Director of the National Tax Information (hereinafter: “DNTI”) held that a family foundation will not benefit from CIT exemption if it sells real estate 10 years after its acquisition.
The applicant was a family foundation, which requested an individual ruling from DNTI regarding the possibility of taking advantage of the exemption provided for a family foundation set forth in Article 6(1)(25) of the Corporate Income Tax Act (hereinafter: “the CIT Act”) with respect to transactions involving the disposal of property after a period of not less than 10 years from its acquisition. In its opinion, it will be able to take advantage of this exemption because it falls within the requirement indicated by the legislator – a family foundation may carry out business activities, among others, in the disposal of property, as long as the property was not acquired solely for the purpose of further disposal. The applicant pointed out that the property will be acquired by the family foundation for investment purposes, it intends to rent it out, and the funds thus accumulated the family foundation wants to use to make further investments. The applicant also indicated that it does not rule out, after a period of 10 years, the disposal of these properties.
The DNTI, in an individual ruling dated January 17, 2025 (mark: 0111-KDIB1-2.4010.700.2024.1.DK), disagreed with the applicant’s position and held that the disposal of property is a permitted business activity of a family foundation, subject to exemption as long as the property was not acquired solely for the purpose of further disposal. The DNTI concluded that if a foundation acquires property that it assumes it will sell after some time, the applicant misses the purpose that should be served by the establishment of a family foundation, i.e. securing beneficiaries in the long term. The acquisition of real estate to be disposed of by the family foundation falls outside the scope of the permitted activities set forth in Article 5 of the Family Foundation Law and will be subject to a 25% tax rate under Article 24r paragraph 1 of the CIT Act.
Please feel free to contact Nexia Advicero’s experts who have experience in the topic of family foundations.
Supreme Administrative Court held that real estate companies that do not depreciate property on the balance sheet can continue to depreciate it for tax purposes
In a judgment of April 3, 2025 (ref. II FSK 756/23), the Supreme Administrative Court (hereinafter: “SAC”) ruled that, despite the changes introduced from 1 January 2022, real estate companies that do not depreciate real estate on the balance sheet may continue to depreciate it for tax purposes.
The case concerned a real estate company that applied for an individual ruling, requesting that the tax authority confirm whether, under the wording of Article 15(6) of the Corporate Income Tax Act (hereinafter: “the CIT Act”) in force from 1 January 2022, it is entitled to include depreciation write-offs on the initial value of fixed assets classified in group 1 of the Classification of Fixed Assets as deductible costs? The applicant pointed out that the real estate is a warehouse hall and for balance sheet purposes does not constitute a depreciable fixed asset. Referring to the constitutional principle of protection of interests in progress, she believed that she could continue the tax depreciation of the real estate already started in this way.
In an individual ruling of June 3, 2022 (mark: 0111-KDIB1-1.4010.146.2022.1.AND), the Director of the National Tax Information (hereinafter: “DNTI”) disagreed with this position of the applicant. DNTI pointed out that if a real estate company does not make depreciation deductions under the Accounting Act (hereinafter: ”Acc Act”), it will not be able to recognise deductible costs for depreciation deductions made under the CIT Act after the amendment of the legislation.
The applicant, disagreeing with the individual ruling issued, appealed against it to the Voivodship Administrative Court (hereinafter: ”VAC”) in Warsaw, which in its judgment of January 31, 2023 (ref. III SA/Wa 1788/22) shared her position and overruled the DNTI ruling. The VAC agreed that if the company started depreciation before 2022, the newly introduced limitation on tax depreciation does not apply to it. In its justification, the court pointed to the ambiguity of the new regulations in this respect and, applying the in dubio pro tributario principle prescribing that doubts about the content of the regulations cannot be resolved in favour of the taxpayer, overturned the negative DNTI ruling.
The judgment of the VAC in Warsaw was appealed to the SAC by the tax authority. In its judgment of April 3, 2025 (ref. II FSK 756/23), the SAC did not share its arguments and dismissed the cassation appeal of the DNTI. In the spoken reasons for the judgment, the cassation court pointed to the necessity of referring, when interpreting the newly introduced regulations, to transitional provisions – which the legislator had not enacted in this case. The SAC emphasised that in such a case, the values of constitutional status and the body of judgments of administrative courts should be taken into account. Taking into account the principle of protection of interests in progress limitation, it should be considered that the introduced amendments to Article 15(6) of the CIT Act apply to taxpayers making depreciation write-offs in accordance with the provisions of the Acc Act. If a real estate company does not make such depreciation deductions then the restrictions introduced in connection with the amendment of this provision from the beginning of 2022 do not apply to it. The SAC has indicated that it is possible for a real estate company to continue with the tax depreciation that has begun.
On this important topic of depreciation for real estate companies, the SAC did not share the views of the tax authorities, which are unfavourable to taxpayers. If such positions of the court are consolidated this is good news for many taxpayers. Please do not hesitate to contact Nexia Advicero’s experts, who are experienced in the topic of depreciation in real estate companies.