The total volume of real estate investments in Central and Eastern Europe (CEE), excluding Russia, amounted to about EUR 10 billion in 2020. Analysts do not fully agree on the impact of COVID-19, estimating that investments decreased by 24-32% compared to the pre-pandemic level. The first three quarters of 2021 brought another decline of at least 10% compared to the same period of 2020. Yet, major CEE economies recorded lower recession in 2020 than the entire EU and the European Commission itself forecasts faster rebound in 2022-2023 in these countries. Therefore, outlook for CEE real estate investments seems to be positive but may be challenged by supply shortages and next infection waves.

Poland remains the dominant investment destination in this part of the continent, followed by the Czech Republic. In 2021, Slovakia saw the largest real estate transaction in its history, which at the same time was one of the most valuable deals in the region. Czech Republic on the other hand became the largest investor in CEE. In recent quarters, analysts observed the strengthening trend of domestic acquisitions in the region. Overall, most of the capital flew from companies seated in the EU Member States. Most investments are currently focused on offices and industrial. According to various analyses, they are responsible for 67-74% of the investment volume in the region. The demand for office investments, although still the largest, has decreased over the last year. Retail investments, which were also strongly affected by the COVID-19 pandemic, still maintain a strong position and in comparison to last year - increased their share.

The Guide to Taxes on Real Estate in CEE provides an overview of the key tax aspects related to the real estate sector in the following countries:

  • Albania
  • Bosnia and Herzegovina
  • Bulgaria
  • Croatia
  • Czech Republic
  • Estonia
  • Hungary
  • Lithuania
  • Montenegro
  • Poland
  • Romania
  • Serbia
  • Slovakia
  • Slovenia

This, our 8th edition, highlights the most important tax benefits and burdens connected with operations in the real estate sector. Each summary was prepared based on the situation as at 2021 and focuses on the following areas:

  • Value added tax
  • Corporate income tax and capital gains
  • Tax depreciation
  • Tax implications of financing investments (thin capitalization, dividends, withholding tax, interest and losses carried forward)
  • Real estate tax
  • Real estate transfer tax

We trust that this comprehensive survey of real estate taxation within our region will prove valuable to your business objectives and encourage you to contact us should you have any further questions on the issues covered herein.

Guide to Taxes on Real Estate in Central and Eastern Europe – Edition 2021
The total volume of real estate investments in Central and Eastern Europe (CEE), excluding Russia, amounted to about EUR 10 billion in 2020. Analysts do not fully agree on the impact of COVID-19, estimating that investments decreased by 24-32% compared to the pre-pandemic level. The first three quarters of 2021 brought another decline of at least 10% compared to the same period of 2020. Yet, major CEE economies recorded lower recession in 2020 than the entire EU and the European Commission itself forecasts faster rebound in 2022-2023 in these countries. Therefore, outlook for CEE real estate investments seems to be positive but may be challenged by supply shortages and next infection waves.