Real Estate Flash

Expenses incurred by an investor for paying subcontractors under joint and several liability with the general contractor constitute tax deductible costs. Such expenses do not differ from other costs related to business operations and can be classified as costs even if the investor had previously paid the general contractor.

The Supreme Administrative Court December 13, 2024

Only part of the payments made by a Polish company to a Dutch European company under a project financing agreement are subject to withholding tax as interest. While the underlying agreement can be treated as a loan, only the portion exceeding the initial financing amount (up to 3.3 times the nominal value) constitutes taxable interest, while the repayment of the principal amount is not subject to withholding tax.

The Supreme Administrative Court December 17, 2024

A lease agreement for an enterprise or its organized part can be qualified as a tax lease. Regulations on goodwill amortization explicitly allow for the acquisition of an enterprise through leasing.

The Provincial Administrative Court in Warsaw December 23, 2024

The "look through approach" should be applied when interest is paid through a British securitization vehicle. This means that tax consequences should be assessed in relation to the beneficial owners of the interest, not the intermediary entity. Consequently, the company can apply relevant double tax treaties with respect to the actual beneficiaries of the payments.

The Provincial Administrative Court in Warsaw January 3, 2025

In the case of limited partnership liquidation, the acquisition cost of shares should be the value of contribution in the form of shares in the transferred company, as specified in the partnership agreement and corresponding to the nominal value of shares received in exchange for the contribution in kind.

The Provincial Administrative Court in Warsaw December 13, 2024

The Court overturned the tax authority's tax ruling, stating that when a Polish company pays interest to a Cypriot entity, which is then transferred (in the form of share redemption or dividends) to an Israeli entity, the company may apply the look through approach and use the double tax treaty appropriate for the beneficial owner of the payments. The Court rejected the authority's position that only the direct recipient of payments can be considered the taxpayer.

The Provincial Administrative Court in Warsaw December 13, 2024

The Court overturned the tax authority's tax ruling, stating that when transferring real estate ownership to the lessee after lease termination through a disposal agreement (without a specified price), the tax deductible cost will be the non-depreciated value of buildings/structures according to Article 17c point 2 of the CIT Act. The Court indicated that settling the price through lease payments does not preclude the application of this provision.

he Provincial Administrative Court in Warsaw December 13, 2024

A real estate rich company can make tax depreciation write-offs from real estate in full amount, even if for accounting purposes it treats it as an investment property not subject to depreciation. The limitation of tax write-offs to the level of accounting write-offs applies only when the company makes depreciation for both tax and accounting purposes.

The Provincial Administrative Court in Gdańsk Decmeber 3, 2024

Hotel and conference services cannot be treated as revenues from lease or similar agreements for the purpose of defining a real estate rich company. The court highlighted significant differences between hotel agreements and lease contracts, emphasizing the comprehensive nature of hotel services and the lack of periodicity characteristic of lease agreements.

The Provincial Administrative Court in Warsaw December 11, 2024

The sale of a share in an undeveloped land plot will be subject to VAT without the possibility of applying an exemption. The seller was classified as a VAT taxpayer due to granting the buyer power of attorney to prepare the plot for development and the fact of its lease - these actions demonstrate activity in real estate trading characteristic of business activity. The exemption for undeveloped land does not apply as the plot is designated for residential development in the zoning plan.

The Director of the National Fiscal Information December 24, 2024

Cleaning services performed as part of a comprehensive property management service for residential buildings cannot benefit from the VAT exemption provided for property management services under § 3 par. 1 point 3 of the Regulation of the Minister of Finance dated December 20, 2013. Cleaning services are deemed independent services that are not inextricably linked to the primary service of property management. Consequently, they are subject to VAT at the rate applicable to this type of service.

The Director of the National Fiscal Information December 23, 2024

The sale of land to the perpetual usufructuary is not subject to VAT. It was indicated that establishing the right of perpetual usufruct before May 1, 2004, transferred the economic control over the property, excluding the subsequent sale from being classified as a separate supply of goods. From a tax perspective, this transaction constitutes a change in legal title rather than a new supply of real estate. Consequently, the sale of land to the perpetual usufructuary is VAT-neutral.

The Director of the National Fiscal Information December 23, 2024

The purchase of a property not formally put into use cannot benefit from an exemption from the TCLT. Although the ground floor of the property was completed and met basic residential needs, the building had not been officially put into use or reported as completed under the Building Law. Consequently, the property did not meet the criteria for a single-family residential building, excluding the possibility of applying the TCLT exemption under Article 9 point 17 of the TCLT Act.

The Director of the National Fiscal Information December 18, 2024

The authority confirmed that the initial value of a fixed asset (a touchless car wash) should include the value from the final invoice along with the advance payment made by the shareholder that was subsequently transferred to the company through assignment. However, the reservation fee, which was refundable and offset against the company’s receivables, should not be included in the initial value of the fixed asset.

The Director of the National Fiscal Information November 6, 202

Expenses related to the preparation of an architectural and spatial development concept, serving as the basis for project documentation for the construction of a vehicle service hall, increase the initial value of fixed assets for this investment. These costs were deemed directly related to the execution of the investment, as their incurrence is necessary to initiate and carry out the project. Consequently, they should be included in the initial value of fixed assets and amortized in accordance with the provisions of the CIT Act. The applicant's position that these costs should be treated as indirect costs at the time of their incurrence was found to be incorrect.

The Director of the National Fiscal Information December 17, 2024

Expenses incurred for replacing the roof cladding and internal works related to adapting a warehouse into a service premises should be classified as modernization of a fixed asset. These costs cannot be considered as repairs because the performed works increased the utility value of the building, improved its technical standards, and reduced operating costs. Consequently, these expenses increase the initial value of the fixed asset and must be amortized over time in accordance with Article 16 par. 1 point 1 letter c and Article 16g par. 13 of the CIT Act. Therefore, the applicant's position was deemed correct.

The Director of the National Fiscal Information December 16, 2024

Entering into a loan subrogation agreement, resulting in a change of creditor (lender), does not impose a withholding tax obligation on the company as a payer. The company will also not be required to withhold tax on interest accrued both before and after the agreement, provided that the conditions outlined in Article 21 par. 3 of the CIT Act are met, particularly those regarding the status of the beneficial owner and tax residency requirements. The decision was justified by provisions of the Civil Code and the CIT Act, which exclude tax liability when creditor changes arise from purely economic activities, such as group restructuring.

The Director of the National Fiscal Information December 10, 2024