In January 2021, amendments to tax regulations will come into effect. One of the novelties is the concept of a “real property companies.” This also entails new obligations for entities that will be classified as a such. The purpose is to tighten up the tax system.
What is a real property company?
A real property company is an entity in which at least 50% of the market value of assets comes. Directly or indirectly, from the market value of real properties located in Poland or rights to such real properties. Additionally, the market value of these real properties exceeds PLN 10,000,000.
A real property company not being a real property tax payer may be classified as such. This takes place if the company’s revenues, as covered by the net financial result, on account of lease, sub-lease, tenancy, sub-tenancy, hire-purchase, and other agreements of similar nature or on account of transfer of ownership the object of which are real properties or rights to real properties, as well as on account of shares in other real property companies, make up at least 60% of the total revenues or result.
Consequently, the company’s status will be determined not only by the profile of its assets. But also the revenues generated by the company from a specific source.
Real property companies: consequences of changes
A number of new obligations will be imposed on real property companies. Real property companies will be obliged to pay a 19% income tax in the event of a transaction of sale. The sale may concern shares, titles, or rights.
For the obligation to materialize, at least one of the parties has to meet one of the following conditions. For instance, its registered office or place of management is not in Poland. In the case of natural persons, the place of residence is located outside of Poland. The Law introduces specific regulations establishing a new withholding tax. There are related to selling shareholding rights in companies whose real properties are located in Poland.
A real property company that does not have its registered office or place of management in Poland will be obliged to appoint a tax representative in Poland by means of executing a written agreement in this respect. The role of the representative will be to carry out the taxpayer’s obligations related to selling shares in the company. And to bear joint and several liability for tax obligations.
What is mean new regulations?
New regulations mean not only new tax obligations, but also new reporting obligations. Real property companies will have to provide the Chief of National Fiscal Administration with information. This information will concern the particular tax and financial years. They will also have to report on entities holding shares in them. The deadline in this respect will be the end of the third month following the end of the respective tax or financial year. This way, the legislator wants to create full transparency in terms of shareholders of real property companies.
Are you in doubt? Do you need support in evaluating whether your company will be classified as a real property company?
Contact our team at the Konieczny Wierzbicki Law Firm: CLICK HERE
Mateusz Kozieł, Attorney-at-Law – firstname.lastname@example.org | +48 515 179 462