Contracts

The personal residential lease as business activity

On 15th January, 2019 the Supreme Administrative Court has issued significant judgement on taxation of incomes arising from renting of residential real estates by natural persons (case reference number: II FSK 14/17).

The Supreme Administrative Court has sustained previous judgement of Voivodeship Administrative Court in Olsztyn of 29th June, 2016 (case reference number: I SA/Ol 435/16) according to which a lease of few apartments combined with outlook of further investments shall not be deemed as personal lease but as business activity. As results of that, the incomes from the lease cannot be taxed by privileged 8,5% tax rate, but it requires to taxation under the same rules as binding entrepreneurs.

The judgement of the Supreme Administrative Court may have significant impact on practice of Tax Offices as it shows that even small-scale renting activity comprising few apartments may be qualified as business activity. Obviously it should be taken into consideration that each case of such activity shall be judged independently bearing in mind the particular circumstances of each case. Furthermore, the criterion of “a few apartments” is very unclear and it may entail essential interpreting issues, in particular by side of tax payer. Nevertheless, the aforementioned judgements of administrative court will provide for tax authorities an additional argument in disputes with tax payers on correct tax qualification of incomes from residential lease.

Dudkowiak Kopeć Putyra Law Firm advises on planning residential lease business, including tax issues and risk assessment pertaining to such business activity.

Author team leader DKP Legal Marcin Kręglewski
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