Immigration law /

What are the consequences of a no-deal brexit for investors from Great Britain?

The increasingly likely scenario of the UK leaving the European Union in the „no-deal brexit” variant raises questions about the impact of such a scenario on foreign investments of investors from Great Britain in Poland in the real estate sector. From a legal point of view, the UK’s withdrawal from the EU will significantly hinder the purchase of real estate in Poland by UK entrepreneurs in the form of direct „asset deal” transactions, as well as indirect investments consisting of the acquisition of shares in companies that own property („share deal” transactions type).

Loss of EEA member status – requirement to obtain a purchase permit
As a result of withdrawing from the EU through the so-called „Hard brexit” the United Kingdom will simultaneously lose the status of a member of the European Economic Area. As a consequence, citizens and entrepreneurs from the UK will be treated as non-EEA entities under Polish law. In the vast majority of cases, the acquisition of real estate in Poland or shares in a Polish companies that owns a property in Poland will require the prior consent of the Minister of Interior Affairs and Administration. The requirement to obtain a permit will also apply to a legal person and a commercial company without legal personality having its registered office in the territory of the Republic of Poland, which is controlled directly or indirectly by British citizens or a company incorporated under British law.

The permit of the Minister of Interior Affairs and Administration is issued at the request of a foreigner if:
1) the acquisition of real estate by a foreigner will not cause a threat to defense, state security or public order, and social policy and public health are not opposed to it;
2) it shows that there are circumstances confirming his ties with the Republic of Poland.

Importantly, the conclusion of a contract for the purchase of real estate or shares in violation of the provisions of the Act, results in the invalidity of such a contract.

The requirement of prior authorization by investors from the UK will extend the transaction process and increase uncertainty as to the possibility of conducting the transaction, due to the need to prove the basis for obtaining a permit to purchase real estate. It should be mentioned, however, that a foreigner intending to purchase a property may apply for a promise to issue a permit, called a „promesa„. Promesa is valid one year from the date of its issuance. During the validity period, the permit may not be refused, unless the facts relevant to the case have changed.

When the permit will not be required?
Despite the loss of the status of an EEA member, citizens and entrepreneurs from the United Kingdom will still be able to acquire without permission, among others :

  • independent residential premises;
  • independent premises intended for a garage or share in such premises, if it is related to the satisfaction of housing needs;
  • shares in companies listed on the Warsaw Stock Exchange, who own property.

In addition, a British citizen will be able to purchase a property in Poland if:
– he/she lives in Poland for at least 5 years from granting him/her a permanent residence permit or long-term resident’s EU residence permit;
– is a spouse of a Polish citizen and has been residing in the Republic of Poland for at least 2 years from granting him/her a permanent residence permit or a long-term resident’s EU residence permit; the acquisition of real estate
without a permit must be made by both spouses to their joint marital ownership.

Do you want to know how to carry out a transaction in Poland legally? Please feel free to contact us. Our law firm provides legal assistance for entities from the United Kingdom and other countries outside the EU and the EEA in the field of foreign investment in Poland such as „share deal” and „asset deal”.

Author team leader DKP Legal Marcin Kręglewski
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