March 2023

Higher Tax Rates on ‘Home Offices’?

Poland’s Ministry of Finance has recently taken the position that if a residential building is rented out by a sole trader running a business, then this is considered a business activity even if the tenant is only renting out the property for purely residential purposes.

This may, of course, mean that tenants can expect a price hike in rent as the tax in these circumstances is 30 times higher. What is more, there is distinct possibility that a higher rate of tax on properties used as home offices may be levied.

A ruling of the Constitutional Tribunal of 24 February 2021, ref. SK 39/19, demonstrates that mere ownership of a building or premises by a businessperson cannot determine the rate of tax. What is significant is whether the property or a part of it actually serves in the operation of the business.

Crucially, the above ruling is important not only for individuals, but also for businesses and is transparent enough to allow the application of this position to both private individuals as well as other entities owning real estate.

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

Originally published 15.03.2023 by Prawo.pl.