1. Is stamp duty, transfer tax or a similar tax payable on the sale, purchase or leasing of real estate? If so, what are the rates and who is required to pay the duty or tax?

Polish tax on civil law transactions (PCC) is similar to stamp duty or transfer taxes in other countries. It can be levied on certain civil law activities, including contracts for the sale of real estate or parts thereof, if the activity (i.e. the transaction) enjoys an exemption from VAT or is outside the scope of VAT. 

PCC generally does not apply to sale transactions that are subject to VAT (with the exception of 6% PCC applicable to the sale of residential units in bulk - see additional comments below). 

Leasing of real estate is not subject to PCC. 

PCC is levied at 2% of the fair market value of real estate and is payable by the buyer. Moreover, as from 2024, under the PCC laws, where a buyer:

• purchases at least six residential units constituting separate immovable properties in one or more buildings constructed on a single land property;
• an interest in such units; or
• has already acquired at least five such units or an interest in them,

within a transaction that is subject to VAT, the PCC rate for the sale agreement with the same buyer of the sixth and each subsequent unit in that building or buildings, or an interest in such unit, is 6%. 

2. Is stamp duty, transfer tax or a similar tax payable on the indirect sale or purchase of real estate, e.g. by means of the sale of an SPV which holds real estate in the jurisdiction? If so, what are the rates and who is required to pay the duty or tax?

As a rule, the sale of shares in a Polish company (whether or not it owns Polish real estate) is subject to 1% PCC calculated on the fair market value of shares payable by the buyer. This 1% PCC is payable irrespective of whether the Polish company owns Polish real estate or not, and of whether the buyer of shares is a Polish or a foreign tax resident. Exemption from this tax may apply to sale of shares in a joint stock company if certain conditions are met. 

On the other hand, the sale of a foreign company (whether or not it owns Polish real estate) is not subject to Polish PCC, unless the buyer has a place of residence or is a company seated in Poland and the sale agreement was concluded in Poland.

3. Is value added tax, goods and services tax or a similar tax payable on the sale or purchase of real estate, and the letting of real estate? If so, what are the rates and who is required to pay the tax?

Generally, yes.

Sale of real estate

If the seller is an entity conducting the economic activity (within the meaning of the VAT laws) and sells the real estate during the said activity, it may be subject to VAT at the standard rate of 23% on the net price. The reduced 8% VAT rate may be applicable to the sale of residential property, provided certain conditions are met. Under certain conditions, sale of the real estate may be (i) exempt from VAT (parties may waive the VAT exemption) or (ii) fall outside the scope of VAT if the object of the transaction constitutes a transfer of going concern (TOGC). 

The proper VAT treatment of the sale of real property depends on whether (among other factors):

• the seller can be considered a VAT payer in respect of the sale agreement;
• the object of the sale is classified as TOGC; if so, the sale falls outside the scope of VAT;
• the plot of land subject to the sale is developed or not; if a plot of land is developed, the VAT treatment of land follows the VAT treatment of the buildings or structures (or their parts) developed thereon;
• the undeveloped land being sold is designated for other purposes than development; if so, such supply is generally exempt from VAT; and
• whether more than two years have lapsed from the first occupation within the meaning of the Polish VAT regulations of the building or structure subject to the transaction – if more than two years have lapsed from the first occupation, the transaction generally may be exempt but parties may waive the VAT exemption and opt for VAT taxation. 

Lease services

Lease services are generally subject to 23% VAT. However, the lease of residential units for residential purposes is exempt from VAT, and accommodation services (such as short-term lease of apartments to tourists) are subject to an 8% VAT rate.

4. Are there any annual taxes that may be payable on the ownership of real estate, e.g., annual land tax, municipal taxes, surtaxes, etc.?

Yes. Real estate tax (RET) is an annual tax which generally applies to the owners, perpetual usufructuaries and freeholders of properties. RET applies to: 

• land;
• buildings or parts thereof; and
• structures (e.g. internal roads, parkings) or parts thereof connected with business activity.  

RET is payable to local authorities in monthly instalments in the case of corporate legal persons.

The maximum RET rates applicable as of January 2025 (local authorities may adopt lower rates) are as follows:

• for land used for business activity: PLN 1.38 per square meter;
• residential buildings or parts thereof: PLN 1.19 per m2 of usable area (calculated in accordance with the RET provisions);
• buildings or parts thereof related to business activities and on residential buildings or parts thereof occupied for business activities: PLN 34 per m2 of usable area (calculated in accordance with the RET provisions);
• for structures or parts thereof used for business activity: 2% of their initial value (from the tax books) adopted for income tax depreciation purposes.

Alternatively, land with specific characteristics may be taxed under agricultural / forestry tax regimes instead of RET. 

5. What is the tax rate imposed on rental income?

The taxable income from lease activity generated by corporate entities (legal persons) is subject to 19% corporate income tax (CIT) and is calculated under general rules. Taxpayers who meet certain criteria (including, income-related criteria) may settle CIT at the rate of 9%.

Rent constitutes the landlord’s taxable revenue. The landlord’s tax costs may be any expenses related to the business and incurred in order to generate, maintain, or secure the source of income, including, for example, depreciation write-offs, financing costs (subject to appropriate restrictions), RET, or general operating costs (such as legal, tax, accounting services, management costs, etc.). The CIT Act contains a list of costs that are not tax deductible (e.g., certain contractual penalties and damages, representation costs), as well as provisions limiting the possibility of including certain expenses as tax deductible costs (e.g., excessive financing costs).

In case of corporate income taxpayers, the landlord’s activity may also be subject to the tax on revenues from buildings (also known as the minimum CIT levy), which is 0.035% per month (0.42% annually) of the initial value adopted for tax purposes of the taxable building(s) (the basis for calculating the tax is reduced by PLN 10 million). To put it simply, this tax is ultimately imposed on the landlord’s activity only in cases where the amount of this tax is higher than the amount of CIT payable under the general rules.

Moreover, from 2024, another minimum CIT is applicable to CIT taxpayers declaring tax losses or negligible income (≤ 2% of revenue).

Information on taxation of individuals is presented in the reply to question 17. 

6. Is interest on borrowings used to acquire real estate deductible for tax purposes against rental income? If so: (i) are there any restrictions, such as thin capitalization, transfer pricing or interest limitation rules? and (ii) is there any withholding tax on the interest?

Yes, for entities subject to CIT. With respect to individuals subject to PIT, it depends whether the rental income is related to the private rental or business activities (see also comments to question 17). 

As a rule, interest may be tax deductible when paid (including set-off) or compounded (increasing loan principal). Accrued interest is not deductible for CIT purposes, however, if the financing concerns the development of fixed assets, accrued interest should be capitalized to the initial value of such assets (until the assets are put into use) and – along with the other cost of their development – subject to tax depreciation (unless limitations apply).

There are restrictions – in particular, the Polish CIT regulations limit the deduction of the excess of financing costs over interest income which constitutes a taxable revenue of the taxpayer in a given tax year (net financing costs) to 30% of tax-adjusted EBITDA or PLN 3 million whichever is higher. 

Moreover, there are rules limiting the deductibility of interest on financing that are based on the provisions implementing the ATAD II Directive (provisions preventing discrepancies in the tax qualification of hybrid structures). 

As to the transfer pricing regulations, any conditions set in the intra-group financing, in particular the interest rate, should be set at the market level, supported by a benchmarking study, and documented in transfer pricing documentation. Poland provides a safe harbor for loans under specific conditions. 

Interest paid to foreign tax resident is subject to (i) 20% WHT in Poland (in respect of interest payments to corporate entities) (ii) 19% WHT (in respect of the interest payments to individuals), unless (a) the interest may benefit from the WHT exemption under Polish CIT Law regulations implementing the EU Interest Royalties Directive or (b) the rate may be reduced under a respective double tax treaty (DTT).

Usually, the withholding tax rates on interest under a relevant DTT range between 5% and 10%. Some of Poland’s DTTs provide for a 0% withholding rate on interest (e.g., with the USA, Spain and France). 

Poland implemented EU Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States. Therefore, interest payments between a parent and a subsidiary, and between direct sister companies, are free from withholding tax if certain conditions are met.

7. Are deductions for capital expenditure available against rental income for tax purposes, for example capital allowances or deductions for depreciation? If so, are deductions available for expenditure on both land and buildings, or on buildings only?  

As a rule, expenses for the purchase of land do not constitute tax-deductible costs immediately (and land is not subject to tax depreciation). However, such expenses may be deducted for CIT purposes upon the sale of the property.

On the other hand, as a rule, expenses for the purchase (or development) of a building or premises, which will be used by the buyer for a period longer than one year (and are subject to accounting depreciation) may be recognized as tax-deductible costs via depreciation write-offs.

Depreciation rates:

• 2.5% per annum for new non-residential premises (e.g. service premises);
• a higher rate (up to 10%) for buildings and premises used by previous owners for a period of at least 60 months; and
• 4.5% per annum for building structures (e.g. parking plots). 

Important note

As from January 1, 2022, residential buildings, apartments constituting separate properties, cooperative ownership rights to apartments and rights to a single-family house in a housing cooperative (used for business purposes) are not depreciable for Polish income tax purposes (costs of acquisition or development of such facilities are recognized only upon sale). 

For buildings and premises other than residential owned by real estate companies (as defined under the Polish CIT rules), tax depreciation write-offs that are qualified as tax-deductible are limited by the amount of depreciation write-offs made for accounting purposes and charged (claimed) to the entity’s financial result in the fiscal year. Nevertheless, based on recent case law, there are arguments to claim that if the property is not subject to standard accounting depreciation but is recognized for accounting purposes as a so-called investment property (where the value for accounting purposes is revaluated annually to its fair market value), the above limitation should not apply.

8. Are there any other material restrictions on the costs and expenses which may be deducted in calculating a person’s taxable rental income, e.g. transfer pricing or anti-hybrid rules?  

Yes. The transfer pricing and anti-hybrid rules may be applicable not only to interest and other financing expenses, but also to the other costs and expenses a person may incur in the course of carrying on a real estate letting business. Polish CIT Law also includes a list of costs that cannot be deducted (e.g. certain contractual penalties).

9. Are there any restrictions on the use, and/or the carry-forward, of losses?

Yes. Tax losses may be carried forward for five consecutive years and fully offset against tax profits during that time. However, not more than 50% of the tax loss may be offset against tax profits in any one of these five years. 

Alternatively, tax losses generated in a given year may also be offset during one of the immediately following five tax years by an amount not exceeding PLN 5 million. In this scenario, the remaining not utilized loss may be deducted within the remaining years of this five-year period (the amount of such a reduction in any of these years may not be higher than 50% of the amount of the tax loss).

Tax losses resulting from a specific source of revenue (capital gains or other revenue sources) can only be deducted from incomes from the same source of revenue.

Tax losses cannot be carried back.

10. Are capital gains arising on the sale of real estate taxable? If so, what are the rates and are there any exemptions?

The taxable income from the sale of real estate generated by corporate entities (legal persons) is subject to 19% CIT and is calculated under general rules. Taxpayers who meet certain criteria (including income-related criteria) may settle CIT at the rate of 9%. 

Comments on the taxation of individuals are presented in the response to question 17.

11. Are capital gains arising on the indirect sale of real estate taxable, e.g. by means of the sale of an SPV which holds real estate in the jurisdiction? If so, what are the rates and are there any exemptions? 

Yes. Capital gains arising from the indirect sale of Polish real estate may be taxable in Poland. 

A Polish-resident company is subject to Polish CIT, and a Polish-resident individual is subject to Polish personal income tax, on their worldwide gains, including gains derived from the disposal of shares in a Polish-resident or non-Polish resident company which holds an interest in real estate.  

A non-Polish resident person may be subject to Polish taxes on gains from the disposal of shares in a company, if at least 50% of the value of assets of such a company consists (directly or indirectly) of real estate located in Poland or rights to such real estate.

However, the indirect disposal of real estate via the sale of shares in a company by a foreign shareholder is not subject to taxation in Poland unless the relevant DTT contains the so-called “real estate clause” (e.g. the current DTT with the US and Cyprus do not contain such a clause).

In the case of a sale by a foreign shareholder of at least 5% of shares (stocks) in a Polish real estate company (as defined in the CIT Act), the obligation to pay a CIT advance on the capital gains may be imposed on the company being sold (acting as a tax remitter – the seller of the shares (stocks) should provide the company with funds to pay this tax advance). However, this obligation arises only if the double tax treaty includes a real estate clause. 

12. Is there a withholding tax on rental income?

No. If a foreign entity owns real estate located in Poland, any rental income should be subject to taxation in Poland under general rules (i.e. the foreign owner must register for tax purposes in Poland and pay taxes directly to Polish authorities).

13. Is there a withholding tax on capital gains derived from real estate? If so, does the withholding tax apply to both direct and indirect sales, or to direct sales only?

There is no withholding tax on capital gains derived from the direct sale of real estate. However in the case of a sale by a foreign shareholder of at least 5% of shares (stocks) in a Polish real estate company (as defined in the CIT Act), the obligation to pay a CIT advance on the capital gains may be imposed on the company being sold (acting as a tax remitter).  

14. Does the jurisdiction have a REIT regime? If so, please outline the tax treatment of the REIT and the main conditions that must be satisfied to enter and remain within the regime.  

No, there is no REIT regime available in Poland at the moment. However, in early April 2024, the Ministry of Development and Technology presented preliminary assumptions for a draft law introducing a REIT regime in Poland. According to the presented assumptions, the Polish REIT would be a listed company with a minimum share capital of PLN 100 million (approx. €25 million), earning at least 90% of its revenue from the rental or sale of real estate, or the sale of shares in subsidiaries investing in real estate, and distributing at least 90% of its profits to the shareholders annually. According to the assumptions presented, Polish REITs would enjoy preferential taxation with a 10% CIT payable only upon dividend payments. However, it is not known when the changes will be introduced, and that the main assumptions behind that system may change.

15. Apart from REITs, are there any other tax-efficient real estate investment vehicles or structures which are commonly used to acquire, hold and exploit real estate in the jurisdiction?

A standard Polish limited liability company is the vehicle used most often for structuring investments on the Polish real estate market.  

16. Are there any structures commonly used to mitigate real estate tax liabilities on acquiring and/or disposing of real estate?

No. Typical investment structures for Polish real estate are:

• structure EU HoldCo-Polish PropCos; and
• structure with foreign PropCos investing in Poland directly.

One of advantages of having foreign PropCos invest directly in Poland is that such a structure typically avoids triggering Polish withholding tax (WHT) on dividends. In contrast, structures involving Polish PropCos (including EU HoldCo-Polish PropCos structure) require specific conditions to be met for dividends to qualify for WHT exemption or reduced rates. Otherwise, the standard Polish WHT rate of 19% on dividends applies.

17. Are there any material differences in the way individuals and companies are taxed on acquiring, letting and/or disposing of real estate?

Yes, for example:

• The taxable income generated by corporate entities (legal persons) is subject to 19% CIT and is calculated under the general rules. Taxpayers who meet certain criteria (including income-related criteria, i.e., annual income lower than equivalent of €2 million) may settle CIT at the rate of 9%. The 9% CIT rate does not apply to income from capital gains. The above CIT rates will apply both in the case of income from the disposal and letting of real estate.
• Income generated by individuals is subject to Polish PIT, the basic tax rates are 12% (for income up to PLN 120,000 a year) and 32% (for income exceeding the PLN 120,000 threshold). Additionally, the solidarity levy of 4% applies to part of the overall annual income above PLN 1 million. The PIT rate for entrepreneurs is 19%. One may also choose to be taxed with a flat rate revenue tax, with rates ranging from 2% to 17%. Capital gains income is taxed at a 19% rate.
• Nevertheless, the rules for PIT taxation on income from real estate are different. The PIT rate for income earned on the disposal of real estate is 19% PIT. Under certain conditions, the income of individuals from disposal of the real property can be tax-exempt (i.e., if the income generated from such disposal is used for private residential purposes of an individual within three years, specific conditions must be met to benefit from this exemption).
• Rental income earned by individuals is taxed as follows:
  

  For so-called private rental:

  • a flat 8.5% PIT rate on annual income not exceeding PLN 100,000 a year;
  • a flat 12.5% PIT rate on income exceeding PLN 100,000;
  • no costs can be deducted from tax base.

  For rental of real estate as part of business activities, individuals have two options:

  • apply the same rules as for private rental if specific conditions are met; or
  • use standard business activity taxation rules where:
    • income is calculated as rental revenue minus tax-deductible costs; and
    • tax rates of 12% and 32% apply, or alternatively a flat 19% rate.

This guide does not constitute tax advice and readers should note that the laws of each jurisdiction are regularly refined and/or revised, so the statements made in this report are not definitive. However, this guide does provide a summary overview of the state of the law as at 31 January 2025 and will hopefully serve as a useful tool for investors to ensure they understand the unique provisions and distinctions in the various jurisdictions.