POLAND Law and Practice Contributed by: Michał Wielhorski, Mateusz Prokopiuk, Małgorzata Wąsowska and Klaudia Michalec, act legal Poland
primarily based on the provisions of the Spatial Planning and Development Act. The main basis for determining the purpose of real estate is the local spatial development plan or a resolution on the adoption of an integrated investment plan. In the absence of a local spatial development plan, the purpose of real estate is determined on the basis of a decision on the conditions for development and land use. Additionally, in the case of multi-family hous - ing investments, it is possible to determine the parameters of such an investment on the basis of a special resolution provided for in the provisions of the Polish Special Housing Act – although this Act is currently valid only until the end of 2025. 2.9 Condemnation, Expropriation or Compulsory Purchase In the Polish legal system, real estate may be expropriated only for the benefit of the State Treasury or a local government unit. Expropria - tion may cover all or part of the real estate. The initiation of expropriation proceedings shall be preceded by negotiations aimed at acquiring real estate, perpetual usufruct or a limited right in rem by agreement. The person to be expro - priated may also be offered replacement real estate. Expropriation proceedings shall be initi - ated upon the ineffective expiry of a two-month period set for the person to be expropriated to conclude a possible agreement. The decision on expropriation of real estate, besides the elements specified in the provisions of the Code of Administrative Procedure, should also specify the amount of compensation. It is determined according to the condition and value of the expropriated real estate on the date of the expropriation decision.
The amount of compensation shall be calculat - ed after obtaining an opinion from a real estate appraiser, specifying the value of the property. 2.10 Taxes Applicable to a Transaction Typically, sale of real estate is structured as a single-asset deal taxed with standard 23% VAT (residential is taxed with 8% VAT). It is to be accrued by the seller and may be generally deducted by the buyer. Certain VAT exemptions may apply (for details, please refer to 8.1 VAT and Sales Tax ) – in which case, the buyer will be obliged to pay 2% tax on civil law transac - tions (TCLT) of the fair market value (FMV) of real estate. If the sale of real estate is structured as an enter - prise deal, no VAT should be accrued, but the transaction will be subject to TCLT amounting to 2% of the FMV of real estate and tangible assets and 1% of the FMV of property rights. TCLT is to be borne by the buyer. Assuming that the seller may not be considered as a holding company, the sale of shares should not fall within the scope of VAT-able activity, but 1% TCLT applies. The sale of real estate in any of the discussed forms gives rise to the obligation to recognise revenue on the part of the seller. Income is taxed as a rule with CIT according to the general rules (19% rate or 9% rate in case of small taxpay - ers; 19% rate applies as a rule to capital gains). Respective provisions of double tax treaty should apply accordingly. 2.11 Legal Restrictions on Foreign Investors A foreigner intending to acquire real estate (per - petual usufruct) in Poland is obliged to obtain – with certain exceptions – a permit issued by the
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