Poland: Proposed changes to tax treatment of real estate market

Revisions to tax provisions that could affect real estate market

Revisions to tax provisions that could affect real estate market

Update: Amendments to the tax law—referred to as the “Polish Deal” (Polski Ład) and passed in late October 2021 and submitted for the president’s signature—include measures that may negatively affect the real estate sector. Read a November 2021 report prepared by the KPMG member firm in Poland


The Sejm on 1 October 2021 passed a bill under the “Polish Deal,” thereby sending the bill on to the Senate for its consideration.

The version of the bill passed by the Sejm includes revisions to the tax provisions that could affect the real estate market. For instance, the bill includes proposed changes that would limit up to the value of accounting depreciation, the amount of deduction of tax depreciation write-offs of real estate assets in real estate companies.

Another measure would provide residential real estate would not be allowed tax depreciation. Rather, a taxpayer would be allowed to recognize costs incurred for acquisition of an asset upon disposal.

Another provision would impose a new minimum income tax of 10% of the tax base. This new minimum tax would be imposed on corporate income taxpayers (including tax capital groups and foreign entities with a permanent establishment in Poland) that:

  • Incur losses from income other than capital gains, or
  • Satisfy a “low profitability ratio”

To determine whether an entity would be subject to this minimum tax, the tax loss or tax income would need to be adjusted by the value of expenses or depreciation write-offs for fixed assets.

Read an October 2021 report prepared by the KPMG member firm in Poland

 

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