Tax customs & excise /

Tax exemption on real estate sale transaction

The sale of real estate in Poland within five years counted from its purchase, as a rule is encumbered with 19% income tax. This matter is regulated in Polish Act on personal income tax, which contains several exemptions with regard to this matter. However, despite the existence of statutory regulations, in many cases the application of exemptions is not so obvious. In such cases, the Tax Authority issues an interpretation, which is subjected to review by administrative courts.

Resolution of Polish Supreme Administrative Court

One of the most significant resolution of Polish Supreme Administrative Court (NSA) issued with regard to the matter of 19% income tax exemption is Resolution of May 15th, 2017 in which NSA stated that in case, when two spouses are co-owners of real estate under the martial property and one of them dies, the other spouse does not re-acquire a part of real estate which belonged to the deceased spouse. According to such argumentation, the 5-year term during, which the transaction of sale of the real estate would be subject to 19% income tax does not run.

General interpretation of Ministry of Finance

The resolution of Supreme Administrative Court changed the position of Ministry of Finance. The change is favourable for taxpayers. The Minister of Finance followed the arguments of the Supreme Administrative Court and issued a general interpretation in which stated that acquisition of particular real estate takes place at the moment of obtaining the ownership right to the real estate. Therefore, the 5-year term does not run and the remaining spouse can sell the property without paying the 19% income tax.

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