From 2020, a new definition of real estate companies has been introduced. Pursuant to Article 4a(32) of the Corporate Income Tax Act, a real estate company is an entity, other than a natural person, which is obliged to prepare a balance sheet pursuant to accounting regulations, in which:
a) as at the first day of the tax year, and where the real estate company is not subject to income tax – as at the first day of the tax year, at least 50% of the market value of the assets was, directly or indirectly, the market value of properties located in the territory of the Republic of Poland or rights to such properties, and the market value of these properties exceeded PLN 10,000,000 or an equivalent amount determined according to the average exchange rate of foreign currencies published by the National Bank of Poland on the last working day preceding the first day of the tax year – in the case of start-ups,
b) on the last day of the year preceding the tax year, and if the real estate company is not a tax payer of income tax – on the last day of the year preceding the financial year, at least 50% of the balance sheet value of assets, directly or indirectly, was constituted by the balance sheet value of real estate located on the territory of the Republic of Poland or rights to such real estate, and the balance sheet value of this amount exceeded PLN 10,000,000 or an equivalent amount determined according to the average exchange rate of foreign currencies published by the National Bank of Poland, on the last business day preceding the last day of the tax year preceding the tax year or the financial year, respectively, and in the year preceding the tax year or the financial year, respectively, tax revenue and, if the real estate company is not a taxpayer of income tax – revenue recognized in the net financial result, from leasing, sublease, tenancy, subtenancy, and other contracts of a similar character or from transfer of ownership, the subject of which is real estate or rights to real estate referred to in Art. 3 (3)(4) and from interests in other real estate companies, constituted at least 60% of the total tax revenue or revenue recognized in the net financial result respectively – in case of entities other than those referred to in point a.2
According to the adopted regulations, in the event of transfer of at least 5% of shares, rights and obligations and other rights of similar nature in a real estate company by a foreign entity, the tax due will be settled and paid by the real estate company and not the transferor. The most important obligations of real estate companies include the need to establish a tax representative who will fulfil the duties of the tax remitter for those real estate companies which do not have their registered office or management board in the territory of Poland. Failure to comply with this obligation will be subject to a penalty of up to PLN 1 million. In addition, large companies which reach the threshold of PLN 50 million in revenue will be required to prepare appropriate information on the implementation of their tax strategy.
It should be pointed out that not all the obligations introduced by the act will apply to real estate companies as of this year. In the case of the obligation to report on applicable payment dates, which was required to be submitted by the end of February, the Ministry of Finance indicated that this obligation will be required for 2021. The Ministry also said that the obligation to submit a report by 31 March 2021 on (entities holding, directly or indirectly, in this real estate company shares or stocks, total rights and obligations, titles of participation or rights of similar nature, together with the number of such rights held by each of them – in the case of information provided by real estate companies, and on the number of shares (stocks), total rights and obligations, titles of participation or rights of similar nature held, directly or indirectly, in this real estate company, provided by taxpayers who are partners in real estate companies, has been postponed to the following year. These decisions represent a logical conclusion since, since real estate companies have only existed in the legal order since 2021 and the obligation to prepare the information relates to the last financial year, the deadline for filing the relevant information falls in 2022.