General Tax Ruling on Reporting by Real Estate Companies

The need to undertake tax reporting by companies with more than 50% of assets in real estate is relatively new (reporting was undertaken for the first time on 31 October 2022).

In order to clarify any uncertainties in the interpretation of new provisions in this area, the Ministry of Finance has published a general tax ruling in this respect.

Main Issues

The general tax ruling confirms that the obligation to report concerns both Polish tax residents and non-residents. The ruling also provides that the obligation to report is incumbent on direct and indirect shareholders.

However, the Ministry of Finance has explained that indirect shareholders have to report only if shares are held through tax transparent entities. In other words, indirect shareholders with shares in non-transparent tax entities are not obliged to report.

Additional Points

The general tax ruling additionally clarifies that:

• The indirect share ratio should be determined on the grounds of transfer pricing regulations (the CIT Act and PIT Act, respectively);
• Shareholders of real estate companies are obliged to report regardless of whether taxable income was achieved from held shares;
• In the case of tax capital groups, the obligation to report is incumbent on companies belonging to the group and not on the group itself;
• Both types of reports (i.e. those of real estate companies and of their shareholders) should reflect their financial status as of the last day of the tax year (or financial year, in the case of reports of companies which are not taxpayers in Poland).

The statutory deadline for reporting will pass on 31 March, so there is still time to prepare for reporting.

For more detailed information and practical advice, please get in touch with our Head of Tax Piotr Prokocki.

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