Tax customs & excise

Building income tax exemption until the COVID-19 epidemic state is cancelled

The amendment to the tax laws prepared by the government is causing not without reason a lot of controversy related mainly to the planned taxation of limited partnerships with CIT as well as imposing on real estate companies the obligation to pay income tax on the sale of share rights in this company.

More information on the tax obligations of a real estate company can be found here [https://www.dudkowiak.com/blog/real-estate-real-estate-company-in-the-amplements-to-the-cit-act.html] .

It is worth noting, however, that the planned amendment also provides for the extension of the period of exemption from building tax. Currently, the provisions of the PIT and CIT Act introduced under the so-called Shields 4.0 provides for an exemption from tax on income from buildings, revenues for the period from March 1, 2020 to December 31, 2020. The envisaged changes are to extend the tax exemption period until the end of the month in which the state of epidemic announced in connection with COVID-19.

Tax on revenues from buildings is the income tax payable on revenues from a fixed asset being a building which:

1) is owned or jointly owned by the taxpayer,

2) has been handed over for use in whole or in part on the basis of a lease, tenancy or other contract of a similar nature,

3) is located on the territory of the Republic of Poland.

The revenue is the initial value of the building determined on the first day of each month, resulting from the kept records. The tax base is the sum of revenues from individual buildings, less PLN 10,000,000. The tax rate is 0.035% of the tax base for each month.

The tax on revenues from buildings in practice applies to larger commercial properties. Although the planned changes entail additional tax savings, it does not seem to constitute a tangible financial support for owners of facilities affected by the epidemic (e.g. shopping centers, entertainment facilities), especially in the event of serious financial problems of many of their tenants.

Author team leader DKP Legal Marcin Kręglewski
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