What’s next with the REIT Act?
The Sejm of the 8th term, which is terminating shortly, did not manage to complete many bills before the end of the legislative process. One of them is the bill on companies investing in the rental of real estate, hailed as the Polish act on REIT. The bill was received by the Sejm on September 25, 2018. The first reading took place on October 2, 2018, and then the draft was proceeded at the Public Finance Committee of Sejm at its meeting on October 17, 2018. The bill of REIT, despite the general approval of above mentioned Committee, was not further discussed by the Sejm for the next year as part of the second reading. This situation is unlikely to change until the end of the current term of office of the Sejm. On the other hand, the parliament of the next term of office, in accordance with the principle of discontinuing the work of the Sejm, will deal with the project from the beginning, if there is political will.
The Bill of REIT, despite some shortcomings (limiting the investment portfolio to residential real estate), was the subject of great interest on the capital market and in the real estate industry. Let us remind you that the aforementioned Act is to enable specially appointed public listed companies to purchase a large portfolio of residential real estate and rent them, using tax preferences in the form of:
- Corporate Income Tax (CIT) rates on income obtained by REIT from the lease of residential real estate in the amount of 8.5%
- postponement of the tax liability for incomes of REIT from lease of residential real estate, from the sale of such real estates, from the sale of shares (stocks) of subsidiary companies of REIT. and from dividends and other incomes from the participation in profits of subsidiary companies of REIT – until their equivalent is paid as dividends for investors (stockholders)
- release of stockholders of REIT from income tax for paid dividends.
It is not known whether the Sejm of the next term of office will return to work on the Bill of REIT, or whether the new government will prepare another bill which will take into account the industry’s demands for including commercial real estate law.
Do you want to know more about investment in real estate sector in Poland? Please contact with our law firm.