Sale of property: Tax on capital gains
The tax rate of the sale of real property by individuals has changed on January 1st 2007 for transactions made after that date.
The tax rate applicable to sales occurring before January 1st 2007 was set at 10% of the value of the sale. This tax was a one lump sum and not added to income from other sources.
Disposals of property made on or after January 1st 2007, are taxed at a rate of 19% calculated on capital gains.
The new Polish legislation provides an opportunity to deduct the losses made in connection with the sale of buildings on the gains of the same nature and for the period of 5 years following a divestiture.
After 1 January 2007, the number of cases of exemptions has been reduced in relation to the properties sold. The following cases remain exempt:
– Transfer of principal place of residence of the actual owner, which in Poland requires some formal procedures. The Tax Administration within 14 days of the sale should also be informed with a statement that the sale is tax exempt,
– The disposals made at least five years after the acquisition or construction of the building (with several exceptions relating to the duration and terms of calculation of the time). Since both of the above issues are formal please contact us for procedures.
Sale of property: registration fees
The rate of accrual basis in case of sale is 2% of market value of the property.
Annual fees under perpetual usufruct
Since a new VAT Act, which came into force on May 1st 2004, these fees are imposed on with the VAT rate of 23% (this rate was 22% until December 31, 2010).
Please note that the annual fees under perpetual usufruct established before 1 May 2004 are not VAT (As decided by a decision dated January 8th, 2007 by the Supreme Administrative Court NSA).
Office rental, furnished or not, is subject to VAT. This, considered compatible with the 6th Directive, may ultimately prove to be unfavorable to businesses excluded from the scope of this tax (e.g. banks).