News

/ Law in Poland

Property development companies vs. real estate companies

Property development companies vs. real estate companies

/
Date21 Jun 2022
/

According to the recently presented position of the Director of the National Revenue Information, a real estate developer engaged in the construction of residential and non-residential buildings and their sale may be deemed a real estate company on the grounds of income tax regulations, thus resulting in the obligation to disclose specific information concerning both the company and its shareholders to the Head of the National Revenue Administration.


Definition of a real estate company

As a reminder, a real estate company is any entity other than a natural person that is obliged to prepare a balance sheet under accounting regulations.

An entity will be considered a real estate company if it meets the conditions, which differ depending on whether the entity is a start-up or is already operating on the market.

A start-up entity is considered a real estate company if:

  • on the first day of the tax year at least 50% of the market value of its assets (directly or indirectly) is constituted of the market value of real estate located on the territory of Poland or rights to such real estate, and
  • the market value of these properties exceeds PLN 10 million.

An operating entity is considered a real estate company if:

  • on the last day of the previous year at least 50% of the balance sheet value of its assets (directly or indirectly) was constituted by the market value of real estate located on the territory of Poland or rights to such real estate, and
  • the balance sheet value of these properties exceeded PLN 10 million
  • in the previous year, its revenue from: lease, sublease, tenancy, subtenancy, leasing, other contracts of a similar nature, transfer of the ownership (the subject of which is real estate or rights to the real estate) or from the shares in other real estate companies amounted to at least 60% of its total revenue.

Developers and the status of a real estate company

According to a recently issued individual interpretation from the Director of the National Revenue Information dated 6 May 2022, No. 0111-KDIB1-1.4010.523.2021.2.AW, when calculating the carrying amount of its assets, a developer should also include current assets related to the property, such as products, inventories, and goods, and not solely the value of land, buildings, fixed assets under construction and long-term investments.


Summary

With regard to the aforementioned position of the tax authority, it should be stressed that companies engaged in real estate development activities may be deemed real estate companies on the grounds of the Income Tax Acts and thus may be subject to the disclosure duties imposed on such companies by the provisions of the Income Tax Acts.

Therefore, we recommend that companies conducting developer activity (and PIT/CIT taxpayers holding directly or indirectly shares in such a company) verify whether the prerequisites indicated above are met.

It is important to note that the extended deadline for submitting the aforementioned information for the tax year 2021 to the Head of the National Tax Administration expires on September 30, 2022 (for companies with the tax year or fiscal year ending between the 31st of December 2021 and the 31st of May 2022).

If you have any questions regarding this topic or if you are in need for any additional information – please do not hesitate to contact us:

Ask a question »

CUSTOMER RELATIONSHIPS DEPARTMENT

Elżbieta Naron

ELŻBIETA NARON
Head of Customer Relationships
Department / Senior Manager
getsix® Group
pl en de

***

This publication is non-binding information and serves for general information purposes. The information provided does not constitute legal, tax or management advice and does not replace individual advice. Despite careful processing, all information in this publication is provided without any guarantee for the accuracy, up-to-date nature or completeness of the information. The information in this publication is not suitable as the sole basis for action and cannot replace actual advice in individual cases. The liability of the authors or getsix® are excluded. We kindly ask you to contact us directly for a binding consultation if required. The content of this publication iis the intellectual property of getsix® or its partner companies and is protected by copyright. Users of this information may download, print and copy the contents of the publication exclusively for their own purposes.

Our Memberships

Our MembershipsCCIFPOur Memberships

Our Certification

Our Certifications

Our Partnerships

Our Technology Partners

Competencies

Competencies