FAQ's - Poland

Yes, if you are in receipt of Polish rental income you have an obligation to declare this income before the Polish tax authorities.

Yes, a Polish tax ID number (NIP number) is required for any tax filing purposes. Non-resident individuals are obliged to obtain a Polish NIP number in order to file any tax returns.

The type of property being purchased will determine the Polish VAT rate. The purchase of second hand properties will incur a Polish VAT rate of 22%. New Polish buildings also incur a 22% VAT rate. Before 01.01.2008 the tax rate was 7%. However, the increase of the tax rate relates only to houses over 300sqm and apartments over 150sqm. A property becomes second hand after 5 years.

The following are some of the Polish taxes applicable when buying property:

• Polish VAT – between 7% and 22% - depending on whether this is new property or second hand as well as size of property
• Polish stamp duties and Polish court fees – Depend on the value of the Polish property. 
• Polish real estate agent fees – vary between 2.9% and 5% of the Polish property value

There are two basic Polish income taxation methods:

• Progressive scale method – Polish tax office will assign this method as the default process unless the tax payer state otherwise before beginning of the new tax year. Polish income tax is paid on actual profit, which is difference between income and allowable costs.
• Fixed rate method. No tax deductions allowed. Polish income tax is calculated on gross income

According to the Progressive scale method (tax rates for 2008):

According to the Fixed rate method:

• 8.5% - up to the income of Euro 4 000
•  20% - above income of Euro 4 000

The Polish income tax filing deadline depends on the chosen method of taxation

• According to the Progressive scale method, the deadline is April 30^th
• According to the Fixed rate method, the deadline is January 31^st

Non-residents are obligated to file a Polish Capital Gains Tax (CGT) return after the sale of a property in Poland.

The rate of Polish CGT depends on date of purchase of the Polish property

• for Polish properties purchased before 01.01.2007, Polish CGT is calculated as 10% of the sale price less sale expenses
• for Polish properties purchased after 01.01.2007, Polish CGT is calculated as 19% of the net profit (sale price less sale expenses less gross purchase price).

The deadline for Polish CGT filing depends on date of purchase of the property:

• for Polish properties purchased before 01.01.2007, Polish CGT filing deadline is 14 days after the signing the final sale deed.
• for Polish properties purchased after 01.01.2007 the CGT return is submitted along with the annual Polish income tax return. The deadline is April 30^th of following year after income was received.

Yes, Polish CGT is exempt if:

• the property is sold after 5 years of ownership
• the property is sold less than 5 years after the purchase date, but within 2 years after purchasing it, all the money will be used to buy another property/renovation/paying off mortgage/buying a land.