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 these new provisions, 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.

In terms of reporting to be made by indirect shareholders, the Ministry of Finance indicates which shareholders are obliged to report:

• Shareholders holding shares as direct shareholders of shareholders of Polish real estate company (so called ‘grandmother’ companies);
• Upper level shareholders (above the level of a ‘grandmother’ company) are obliged to report only if they hold shares in a real estate company or as a direct shareholder of real estate company, through tax-transparent entities.

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 that 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.