Real Estate Flash

A VAT taxable person can be someone who sells land that was originally part of their personal property, entrusting the preparation of the sale to a professional entrepreneur acting as a proxy, if they undertake active measures in real estate trading (dividing plots, changing land designation, providing utilities, marketing).The fact that the land was originally acquired for personal needs does not preclude considering its sale as an economic activity.

CJEU Rulling, April 3, 2025

A limited partnership paying advances on profit to general partners during the tax year is not obliged to collect flat-rate income tax. The Court indicated that the calculation of tax should be made according to rules that take into account the deduction of a portion of the partnership's due tax, which is only possible after the end of the tax year and calculation of the partnership's due tax.

Supreme Administrative Court Ruling, March 26, 2025

A real estate company can include depreciation write-offs on fixed assets classified in group 1 of classification of assets (buildings) as tax-deductible costs, even though for accounting purposes it treats them as investment properties priced at fair value and does not make depreciation write-offs.The Court emphasized that the legislator did not introduce transitional provisions that would deprive the taxpayer of the possibility to continue the previously started tax depreciation.

Supreme Administrative Court Rulling, April 23, 2025

The expenses incurred for connection fees (for connecting electricity) cannot be included in the initial value of a newly constructed fixed asset (building). The Court indicated that the connection fee is not related to the actual process of constructing the building and does not increase its value, but is intended to provide energy supply in the future. This expense is related to the possibility of using the property for business activities and should be recognized as tax-deductible costs under general rules.

Supreme Administrative Court Rulling, April 23, 2025

The sale of shares for voluntary redemption is subject to general CIT taxation rules. The Court confirmed that currently, income from the sale of shares for voluntary redemption is taxed under general rules, which allows for recognition of full revenue and deduction of share acquisition costs, potentially resulting in a tax loss.

The Provincial Administrative Court in Warsaw Ruling, March 25, 2025

In the case of a merger of sister companies (having the same 100% shareholder) without issuing any new shares, no taxable income arises for the acquiring company. The Court indicated that since the merger does not involve issuing new shares or allocating them to a shareholder, there is no basis for applying a provision, which provides for taxation of the excess value of acquired assets over the issue value of allocated shares. This CIT provision assumes the existence of issued shares, and when there is no issuance, it cannot be assumed that the entire assets of the acquired company constitute taxable income.

The Provincial Administrative Court in Gliwice Ruling, April 16, 2025

When a company agreement initially stipulated that the distribution of assets of a liquidated company would occur in kind, such situation is not subject to taxation. The Court confirmed that the amendment to the provision made in 2021 does not change its essence - it still only applies to situations where initially the distribution of assets among shareholders was to be made in money, but ultimately property was distributed in kind (datio in solutum construction). Only in such a case does taxable income arise for the liquidated company.

The Provincial Administrative Court in Krakow Ruling, April 15, 2025

When the acquisition of shares serves to implement a long-term development strategy of the capital group and is related to operational rather than speculative activities, indirect acquisition costs (legal advisory, due diligence, consulting) may be allocated to two sources of income. The Court emphasized that when allocating such costs, a revenue-based allocation key should be used when it is not possible to assign them to a specific source of income.

The Provincial Administrative Court in Warsaw Ruling, April 17, 2025

The Court agreed that when a statement regarding the choice of taxation is included in a notarial deed, the formal requirements for effectively acknowledging that the parties have waived the tax exemption are met, even if the phrase "waiver of exemption" was not used. Consequently, the buyer of the property is entitled to deduct input VAT from the invoice documenting the purchase of the property.

The Provincial Administrative Court in Warsaw Ruling, April 17, 2025

The company is not entitled to deduct input VAT related to the purchase of commercial premises, as the parties to the transaction did not effectively submit a declaration waiving the tax exemption. Merely including information about taxation in the notarial deed and later notarizing a shareholders' resolution does not meet the requirements of the VAT Act. The declaration to opt for taxation must be made no later than at the moment of concluding the sales agreement, therefore supplementing documentation after the transaction has been completed is ineffective.

Individual ruling of the Director of the National Tax Information, March 21, 2025

A company's expenses on incentives for commercial property tenants, such as one-time payments to tenants and costs of premises adaptation, both in existing premises and new ones, constitute tax-deductible costs other than those directly related to revenues and are subject to one-time settlement on the date they are incurred. These expenses do not increase the utility value of the building but serve to acquire or retain tenants. Additionally, revenue from compensation for early termination of a lease agreement should be recognized on the date of actual receipt of payment, not on the date of issuing the debit note.

Individual ruling of the Director of the National Tax Information, March 24, 2025

A Polish company paying interest can benefit from not withholding tax on payments made to a tax-transparent US entity (the Lender), when the beneficial owners of the interest are: a US company (the Financing Entity) being the shareholder of the Lender, and a British bank, which provided funds for the loan. The application of the "look-through approach" allows for taxation of interest in accordance with double tax treaties concluded with the USA and UK. The exemption applies both to payments made through intermediary entities and to direct payments to the British bank, provided that due diligence is exercised and tax residence certificates are obtained.

Individual ruling of the Director of the National Tax Information, March 28, 2025

Wind farms constitute a long-term public infrastructure project. Consequently, the company should not include the costs of debt financing related to these farms when calculating the limit for deducting debt financing excess.

Individual ruling of the Director of the National Tax Information, April 2, 2025

According to the tax authority, the tax base is the entire amount of capitalized interest due to the Pool Leader, without reducing it by the amount of interest due to the company. The obligation to collect withholding tax arises not only at the time of physical payment of interest but also at the time of its capitalization. Tax collection should apply to the full amount of interest resulting from the negative balance, regardless of its subsequent offset with interest from the positive balance.

Individual ruling of the Director of the National Tax Information, April 4, 2025

A limited liability company paying remuneration to a foreign shareholder for voluntary redemption of shares is not obligated to withhold corporate income tax. According to the authority, income from voluntary redemption of shares is regulated in the CIT Act as income from the sale of shares, including sales made for the purpose of their redemption.

Individual ruling of the Director of the National Tax Information of April 4, 2025

A company purchasing adaptation works (including construction works) to adapt office premises for tenants' needs is not obliged to settle VAT under the reverse charge mechanism. In such a situation, the company acts as an investor, not as a main contractor, and contractors providing construction services do not act as subcontractors within the meaning of the regulations. Providing premises in a condition consistent with the lease agreement creates, together with the rental service, a single complex service, regardless of whether the adaptation costs are settled indirectly (by including them in the rent) or directly (through additional invoices). The company is entitled to deduct input VAT from invoices received from contractors.

Individual ruling of the Director of the National Tax Information of April 8, 2025

The Head of the National Tax Information ruled that the company's position was incorrect, as it sought to recognize a tax loss due to voluntary redemption of shares for a price lower than their acquisition costs. As a result, the taxpayer cannot recognize a capital loss in such a situation.

Individual ruling of the Director of the National Tax Information of 9 April 2025

The amount paid to a landlord by a tenant for early termination of a lease agreement is subject to VAT as remuneration for a service under the VAT Act. The landlord's service consists of refraining from performing activities (renting the property until the end of the originally envisaged period) and tolerating the situation related to early termination of the contract. This payment does not constitute compensation or a contractual penalty, but rather an equivalent for agreeing to early termination of the lease, and is therefore subject to VAT at the standard rate.

The Director of the National Tax Information, March 14, 2025