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11 April 2018

Poland proposes amendments to minimum levy on commercial real estate

On 6 April 2018, the Polish Ministry of Financed announced proposed changes to the minimum levy on commercial real estate following working consultations with the European Commission.

The minimum levy has been in force as of 1 January 2018 at the rate of 0.035% per month (approx. 0.42% per year) of the excess of the initial tax value of the building over PLN10m. The levy applies to certain commercial real estate (except for, e.g., warehouses or hotels) and it is possible to offset the tax due against corporate income tax due.

Based on the proposed amendments:

  • The tax would apply only to leased buildings (i.e., no tax on vacant buildings or parts of buildings) – this amendment would also apply retroactively in 2018
  • The minimum threshold of PLN10m, currently applicable to each building separately, would be applicable to a whole portfolio of buildings possessed by a given taxpayer
  • Currently the tax is due only on selected buildings like e.g., shopping malls, office buildings, but warehouses or hotels are excluded; under the proposed amendments all types of buildings would be subject to a minimum levy, with an exception for residential buildings leased under social housing programs
  • Taxpayers would be allowed to apply for a refund of the levy, if it is demonstrated that intra-group transactions were at arm's length – this amendment would also apply retroactively in 2018
  • There will be a targeted anti-abuse clause related specifically to the minimum levy and aimed at disregarding transfers made with the sole purpose of avoiding the tax

The information released by the Ministry of Finance does not provide many details at this time and also raises several questions. More details should be set forth once a draft amending bill is published.

Future Alerts will report on developments in this area.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Doradztwo Podatkowe Sp. z o.o., Warsaw

  • Andrzej Broda
    andrzej.broda@pl.ey.com
  • Tomasz Ozdzinski
    tomasz.ozdzinski@pl.ey.com
  • Marcin Opilowski
    marcin.opilowski@pl.ey.com
  • Michal Koper
    michal.koper@pl.ey.com

Ernst & Young Doradztwo Podatkowe Sp. z o.o., Wroclaw

  • Sebastian Ickiewicz
    sebastian.ickiewicz@pl.ey.com

Ernst & Young LLP, Polish Tax Desk, New York

  • Sylwia Migdal
    sylwia.migdal1@ey.com

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ATTACHMENT

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Document ID: 2018-5526

 
 

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