Poland: Ruling on application of new rule on depreciation for real estate companies

Individual ruling on depreciation for real estate companies under provisions in force until 1 January 2022

Ruling on application of new rule

The tax authority on 31 March 2022 issued an individual ruling on depreciation for real estate companies under provisions in force until 1 January 2022.

The Ministry of Finance announced that effective 1 January 2022, real estate companies that perform asset valuations based on market price or otherwise determined at fair market value—and consequently that do not claim depreciation write-offs in line with the accounting provisions—are not eligible to claim tax-deductible depreciation write-offs for corporate income tax and individual (personal) income tax purposes. Read TaxNewsFlash

The taxpayer was not sure whether the new rule would apply to real estate companies not making depreciation write-offs in line with the accounting provisions. The tax authority ruled that since the taxpayer does not make depreciation write-offs on the held real estate in line with the accounting provisions, it would not be authorized to recognize tax-deductible costs on the account of depreciation write-offs.

The tax authority stated that the amending act does not provide for any interim provisions, meaning that the discussed regulations should apply to events occurring starting from 1 January 2022. Since depreciation write-offs are made “on an ongoing basis,” the tax and legal effects thereof should be assessed based on the regulations currently in force.

Read an April 2022 report prepared by the KPMG member firm in Poland

 

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